The Best B Schools

Our groundbreaking survey expands--and measures brainpower to boot

Call it the Peace Corps meets B-school. When Steven Page enrolled at Wharton, he had his sights set on an investment banking career. But before joining the capitalist ranks, he wanted to do some good. So, like a lot of Wharton students, he signed up for the school's Christmas in April program. For six straight weekends, he toiled in gritty West Philadelphia with about 1,000 of his classmates, divided into teams of sixty. The students worked long days, fixing windows, painting houses inside and out, and doing whatever else needed to be done in the neglected neighborhood. After graduation, Page shipped off to his dream job at Goldman, Sachs & Co. But he says he won't soon forget those Philly weekends. "It's a great experience because you're bonding with your cohorts," says Page. "But you're also doing something worthwhile."

Page's experience goes a long way toward explaining why the University of Pennsylvania's Wharton School once again finished No. 1 in BUSINESS WEEK's ranking of the best B-schools. It has been a remarkable run for Wharton, which has held on to the top spot since 1994. Indeed, Wharton's first-place showing hardly comes as a shocker. Students rave about its can-do culture. And the school shows up near the top of every recruiter's wish list as well. Wharton's innovative curriculum, they say, consistently results in grads with powerful technical skills who can excel in big jobs anywhere around the globe.

But if winning the gold for Wharton is by now a familiar experience, the school and its students had better enjoy that grand top-of-the-mountain feeling while it lasts. Nipping at their heels is Northwestern University's J.L. Kellogg Graduate School of Management, which ranked No. 1 from 1988 through 1992 and which this year greatly narrowed Wharton's lead, thanks to even more glowing reviews from its students. At Kellogg, grads especially like the school's camaraderie and family-like, nurturing atmosphere, which encourages learning and growing as a group. "Kellogg is a culture that reinvents itself based on what students want and need," says recent grad David Peacock from his new post as an associate with Bain & Co. in Sydney, Australia.

Almost as dramatic as the neck-and-neck race between Wharton and Kellogg is the huge gain made this year by Massachusetts Institute of Technology's Sloan School of Management. Sloan leapt all the way into the No. 4 spot from No. 15 in 1998, an astounding jump, making it the most improved of our top 30 schools. Students say Sloan's entrepreneurial environment and small size--about 350 students per class--make it an especially rewarding place to get an education. Camaraderie and connections also played big roles in boosting Harvard Business School to the No. 3 spot after it had fallen to No. 5 two years ago. Rounding out the top five was Duke University's J.B. Fuqua School of Business, which has been on a steady climb since 1994. Students appreciate that Duke has made a big effort to increase the enrollment of women and minorities. This year, 41% of Duke's entering class are women, more than any other B-school, while its 20% minority enrollment is also near the top. The year saw other strides up the list as well. University of Virginia's Darden Graduate School of Business Administration nudged into the top 10 with its No. 9 finish, up from its 11th-place rank in 1998. The school's new dean, Edward A. Snyder, particularly impressed students.

But some schools took a real bellyflop in 2000. The University of Chicago Graduate School of Business got bounced down to 10th place from third, with students complaining about a lack of cohesive community and inadequate facilities. Two other schools, Stanford University's Graduate School of Business and Dartmouth College's Tuck School of Business--where the MBA degree was first invented in 1900--fell out of the top 10 altogether. Stanford, which placed No. 7 in 1996, slid from ninth in 1998 to 11th place as students continued to give low marks for teaching and administrative responsiveness. Dartmouth tumbled all the way from 10th to 16th after both recruiters and students showed their disappointment in the school's placement office.

Ever since we unveiled our groundbreaking B-school rankings back in 1988, we have been improving and refining our methods. This year, we expanded the survey, ranking 30 top schools instead of 25. We did this to reflect rising enrollment and the ever-widening market for a Master's of Business Administration. But expanding the list was hardly the only improvement we made to the rankings. We've pushed the envelope even further with our first-ever ranking of European and Canadian business schools. We've also made an ambitious stab at measuring the power and quality of ideas generated by B-school faculties. We're calling that part of the ranking intellectual capital. Duke came out the winner by this measure, with MIT a close second. Cornell University's Johnson Graduate School of Management and Stanford also got a boost in the overall rankings thanks to their intellectual-capital score. Others, however, such as University of Michigan Business School, Virginia, and New York University's Leonard N. Stern School of Business, were penalized by their lower scores.

This year's improvements are important enhancements to a winning formula. BUSINESS WEEK doesn't rely on Graduate Management Admissions Test scores or arbitrary assumptions about prestige to arrive at our rankings. Instead, we go straight to the customers of MBA programs: graduates and corporate recruiters. To that end, we sent lengthy questionnaires to 16,843 MBAs of the class of 2000 at 82 schools, 15 of them outside the U.S.. It was our largest pool of schools and graduates ever. We also sent surveys to 419 companies that recruit MBAs, including more high-tech and Internet companies to reflect the changes in the business landscape. Of those polled, 10,039 students and 247 companies responded. As in past years, we weighted the student and recruiter survey results equally. This year, because of the introduction of our intellectual-capital component, both counted for 45% of the final results. And in another milestone, this year we will post our profiles of more than 225 schools, along with much more additional data, on our special BW Online B-school edition.

So, what did we learn after culling survey responses and crunching the data? Plenty. What comes through loud and clear from this year's survey results: In the business world, where technology and globalization seem to continually transform the landscape, the schools that rank highest are those that are able to keep up with the changes. More than ever, both students and the companies that hire them are demanding that schools stay on the cutting edge of the technological shifts that are sweeping the global economy. In today's marketplace, where students can get their MBA online, go to a great school overseas, or simply skip B-school and move straight into a high-paying job, the competition for students has never been more fierce.

MENTORS, TOO. That's why students are demanding, though not always getting, more relevant course work taught in more compelling ways by the schools' top minds. And many B-schools agree they need to do a better job on that score. Some, like Duke, have turned to mentoring programs to help professors--who are sometimes better thinkers than teachers. "If we don't teach well, we don't eat," Duke's Dean, Rex D. Adams says.

What's relevant this year, of course, might be next year's stale subject matter, depending on which way the markets go. But for now, at least, students are clamoring for special programs to help launch their careers as Internet and other sorts of entrepreneurs. And schools are responding. "In my first year, I only remember a few e-commerce classes," says Wharton grad Ashley Fox, 29, who took a job with a technology company in Washington, D.C. "But in my second year, it really caught fire and there were more than you could even have time to take."

Truth is, though, less than 8% of U.S. B-school students surveyed in 2000 went to startups or entrepreneurial ventures--up only a couple of points from 1998. Even so, as Old Economy companies branch out into more Internet-related businesses, they will demand that B-school grads know how to manage amid the new technology. General Motors Corp., for example, is making a push into e-commerce, and companies such as Intel Corp. are cranking up Internet product divisions that are run like stand-alone startups.

Internet jobs at big corporations may prove plenty appealing to MBAs now that the startup boom has cooled. Grads say that they like the kind of intellectually challenging, responsibility-laden jobs that the dot-coms once seemed to promise. Only these days, they're leaning toward a New Economy job with the stability of a brand-name company behind it. Despite all the e-hype, our research shows there are still lots of grads landing in traditional fields such as consulting, finance, marketing, and investment banking. But not as many as before: Today, 74% of those surveyed said they were going into those more traditional jobs, down from more than 80% in 1996.

This year, there were more MBAs than ever hitting the marketplace. But not to worry: There were plenty of jobs--and money--for everyone. The 247 recruiters who responded to our survey hired 15,558 MBAs in the last two years compared with 1997 and 1998, when 259 companies hired 10,348 MBAs. A robust economy and increasing demand for MBA talent meant an average of 3.2 job offers for each student we surveyed at the top 30 schools.

Corporations' hunger for bright MBAs meant fat starting salaries: Grads at the top 30 B-schools saw their median pay packages increased to $126,930, up 14% from $111,420 in 1998. For MBAs at 28 of the schools, median annual compensation surpassed $100,000, up from 18 schools in 1998 and just five in 1996. Corporations are also bumping up relocation packages and throwing in some hefty bonuses. Many employers are even offering to pay off B-school loans when grads join up. Those loans typically range as high as $75,000 for degrees at the pricier schools. All in all, MBAs have never had it so good.

That's especially true for those 740 students talented and lucky enough to graduate from Wharton this year. The school shows up in the top five in each of the skill categories recruiters grade. It garners accolades for an innovative curriculum from recruiters, who also admire Wharton grads' razor sharp financial skills. The school does a good job staying in step with the business world, adjusting its curriculum, and keeping pace with industry doings, according to follow-up interviews with both students and recruiters. And Wharton's career placement office comes out a winner, too, receiving stellar grades from students, who get an average of 3.6 job offers each, among the highest in our survey. Grads marvel that just the word Wharton opens doors.

Students also benefit from first-class faculty, such as finance Professor Jeremy Siegel, whose morning wrap-ups on the markets are standing-room-only, and real estate and economics Professor Robert Inman. Inman tries to schedule extra classes to accommodate demand, but often there's no space. Indeed, both students and faculty complain about the school's outdated and inadequate physical plant. But that will soon be addressed with a new $140 million complex expected to open in the spring of 2002.

SUCCESSION BLUES. Despite its victory, Wharton has nonetheless been steadily slipping in several key measures. Student satisfaction, though still high, is declining, with a greater percentage of respondents saying the program did not meet expectations. Part of the slippage, no doubt, is explained by a transition in deans. Patrick T. Harker, who moved into the dean's office in February, has a hard act to follow. The popular Thomas P. Gerrity led the school to the No. 1 spot in 1994, where it has remained. Says Harker: "The [students] are skeptical of change."

Second-ranked Kellogg will soon face its own succession dilemma. Although its 73-year-old dean, Donald P. Jacobs, has made it clear he wants to stay on, perhaps as a teacher, many on campus wonder if he'll still be dean by this time next year. Whenever he steps down, Jacobs' mark won't soon fade. Kellogg's new Donald P. Jacobs-Kellogg Center, a $25 million, six-story facility, will feature space for a new-business incubator, additional classrooms, and some 50 study rooms.

Other schools, perhaps eyeing Kellogg's success, are trying to make those two years of relentless hard work a bit more user-friendly. That's the philosophy of Virginia's Darden and Snyder, its dean. His openness with students wowed grads, many of whom shared Sunday dinner with Snyder's family at his home on campus. Most grads have chatted with him over morning coffee--a daily ritual for Snyder. "You've got to treat students as colleagues, as part of the community, and as partners in the institution," he says.

Although Kellogg's students were the happiest of any surveyed, students at MIT's Sloan gave the school high marks for encouraging teamwork and for the wide range of on-campus recruiters. Students said they also appreciated meeting with administrators in open forums to work together in redesigning the school's first-year curriculum. Even outings to nearby Boston's Beacon Hill for a beer often turned into a group discussion about the next day's classes. "I really got to know my classmates well," says Sloan grad Elizabeth Lin. "We all worked together, and not just in class."

Schools with a large population of students from other countries, like Sloan, were also viewed favorably. "The international exposure I got from my classmates is helping me in business situations now," says Scott Ball, 30, who took a job in Dallas with I2 Technologies, a software consulting firm, after graduating from Sloan. The former Army cavalry officer recently spent time in Korea pitching his company's services. From his Asian classmates at Sloan, he had already learned that the typical hard-sell pitch that dazzles American companies just doesn't work in Asia. "Because I'd been exposed to so many different cultures," he says, "I knew how I needed to approach it."

Just up the river, third-ranked Harvard got mileage out of its 92-year history and prestigious name. Students love the fact that the school has turned out more leaders than most any other B-school. And they appreciate its network of alumni, which at nearly 40,000, is a powerful tool for them. Grads also praised the quality of teaching and the range of elective courses, though they complained that professors were often unavailable for consultation outside of class. At the same time, recruiters boosted the school three notches in the corporate poll. Recruiters put Harvard in the top five in almost every category, from producing grads with excellent marketing skills to top-notch finance abilities.

Duke's B-school is also on an upswing, capturing the No. 5 spot. With 41% of Duke's entering class women, the school is well ahead of the B-school average of about 30% women. The Durham (N.C.) school has taken the B-school world by storm, climbing six spots since 1994 with steady improvements to its program and its brand. The school also got a small boost from our intellectual capital ranking. Grads gave its placement office the highest score in the survey, while recruiters lauded the school's program as the most improved. Says Dean Adams: "There's no one trying harder than we are: It's our culture, it's our ethic."

A few others also made big strides this year. Virginia's Darden school rallied back, snagging the No. 2 spot in the graduate satisfaction poll, after falling to a dismal 15 in satisfaction in 1998. That pushed the school up two spots overall, to No. 9. Virginia might have gained another notch, but it fell short in the intellectual capital component. Still, students named it tops in teaching. "Even professors I do not have know my name," says Reid Townsend, a 2000 grad who told the story of a professor who came in on a Sunday to give him a personal tutoring session before a tough macroeconomics exam. Grads also praised a slightly lighter workload in what has become known as the boot camp of B-schools.

Some B-schools in our ranking could work a bit harder themselves. One that certainly needs extra help is the University of Chicago, which saw its student ranking plummet after a healthy improvement in 1998. Grads say the efforts the school has made to improve quality of life haven't gone far enough--and they name the school's faculty the least accessible of any B-school in the top 30. At No. 24 in MBA satisfaction, the school has the lowest graduate ranking among the top 10. Dean Robert S. Hamada says the school is doing all it can to satisfy students, but its facilities are admittedly lacking and its efforts to foster team spirit have fallen short. Says Hamada: "Our students, rightfully so, say both need to be improved. But it takes time."

Stanford University was another that got clobbered this year. Stanford students gave the school the lowest marks for teaching and for class offerings. The slide would have been steeper had Stanford not benefited from its high intellectual-capital ranking, produced by professors like Jeffrey Pfeffer and Hau L. Lee for their research in organizational behavior and supply-chain management, respectively. Indeed, Stanford's tradition of academic research is the backbone of the school, according to Robert L. Joss, Stanford's dean. "In the long run, that's what makes us strong," he says, "but that's hard for students to see."

Maybe so. But the school's academic excellence hasn't been enough to impress recruiters. They scored its placement office the worst overall, calling its outreach ineffective. The school has lost many coveted recruiters from its on-campus interview schedule, including Intel and Dell Computer Corp.

Stanford grads, on the other hand, weren't complaining about their paychecks. And why should they? They snagged a median starting pay package, which includes salary, bonus, and other compensation, of $165,000. Even so, they penalized the school for a lack of responsiveness on the part of the faculty and administration and for what they saw as a faculty that compromises teaching for the sake of research. That sent Stanford's student ranking down seven spots, from eighth in 1998 to No. 15 in this year's survey. That just goes to show that when it comes to satisfying this year's crop of demanding B-school graduates, it takes a whole lot more than showering them with the big bucks.

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