An MBA is still your best bet for a seat on the world’s top boardrooms, according to new analysis by the Harvard Business Review.
Just under a third of the world’s best performing chief executives leading publically traded companies have MBA degrees, data from the report The Best-Performing CEOs in the World show.
Harvard Business Review’s report, in the November edition, ranked chief executives on how much return their companies' shareholders earned on their investment and how much the chief executives increased their companies’ market values.
It shows that 29 of the best 100 performing CEOs have MBA degrees, including Gregory Case, chief executive of insurance group Aon, and John Chambers, CEO of Cisco Systems, the networking equipment company.
Harvard Business School produced the most chief executives – seven – and the list is dominated by US-based business schools.
California’s Stanford Graduate School of Business produced two chief executives – Carlos Alves de Brito of Anheuser-Busch InBev, and Stephen Luczo, who leads Seagate Technology – as did Columbia Business School, which counts David Simon of Simon Property Group and Ed Heffernan, CEO of Alliance Data Systems, as alumni.
David Pyott, chief executive of drugs giant Allergan who earned an MBA at London Business School, and Paul Desmarais Jr who is CEO of Power Corporation of Canada and studied at INSEAD, are the only MBAs who attended European business schools.
However, the findings suggest that the world’s leading companies place value in MBAs at a time when the degree is facing stiff competition from a host of other programs and professional qualifications.
But only 13 of the 29 leaders have MBAs from the top-ten ranked MBA programs, suggesting it matters less which business school you attend when climbing the corporate ladder.
Only 3% of the CEOs are women, reflecting the lack of women enrolled at the world’s leading business schools. The median age of these females is 58.
The highest-paid chief executive does not hold an MBA. Bob Iger, CEO of Disney, has a total pay package of $34.3 million, according to the report.
Harvard also found that American CEOs are paid the most – $12.1 million, compared with $6.4 million for non-US chief executives.
The report found that the top 50 have on average delivered total shareholder returns of 1,350% during their time as chief executives, adjusted for exchange-rate movements.
However, leading a company and creating value depend on many skills that are hard to measure and not included in Harvard’s analysis, including strategic vision, authenticity and long-term planning.
Harvard’s findings echo a similar ranking of CEOs in the FT500 index earlier this year. The Financial Times data show that 29% of companies featured in the FT500 are led by an MBA graduate.
Nearly a quarter of the CEOs in Harvard’s list have engineering degrees – 24 out of 100 – including Jeffrey Sprecher who leads Intercontinental Exchange, the financial services company.
“Studying engineering gives someone a practical, pragmatic orientation,” said Nitin Nohria, dean of Harvard Business School, who holds an undergraduate degree in chemical engineering from the Indian Institute of Technology, Bombay.
“It makes you think about costs versus performance. These are principles that can be deeply important when you think about organizations,” he added.
The best performing CEO, Jeff Bezoz of online retailer Amazon, also has an engineering degree.
Asked how he balances the long-term versus the short-term when thinking about innovation – a skill acknowledged as important when leading a company – he said in the report: “I bet 70% of the invention we do focuses on slightly improving a process. That incremental invention is a huge part of what makes Amazon tick.
“There’s a second kind of invention, which is more clean-sheet and larger scale – things like the Kindle or Amazon Web Services. We have a culture that supports the risk-taking and time frames required for that.”