Importance of MBA (Master of Business Administration)

Importance of MBA (Master of Business Administration)

MBA programs in business administration are still by far the most popular graduate business degree program. Prospective students often narrow their research exclusively to programs that award MBAs. To aid their efforts, U.S. News publishes its annual rankings of distance education MBA programs.

The 2020 Best Online MBA Programs rankings evaluate schools based solely on data related to their distance education MBA programs. U.S. News has assessed non-MBA graduate business degrees in areas such as finance, marketing and management separately for a different ranking, Best Online Graduate Business Programs.

Schools with MBA and non-MBA business programs offered online are included in both rankings, but they are evaluated on entirely separate data.

For the 2020 edition, U.S. News ranked online MBA programs using five categories. Here is a look at each category and its weight in the current ranking formula.

Engagement (30%): Quality online MBA programs promote participation in courses, allowing students opportunities to readily interact with their instructors and classmates, as is possible in a campus-based setting. In turn, instructors are not only accessible and responsive, but they are also tasked with helping to create an experience rewarding enough that students stay enrolled and complete their degrees in a reasonable amount of time.

Expert Opinion (25%): A survey of high-ranking academic officials at MBA programs helps account for intangible factors affecting program quality that statistics do not capture. Also, employers may hold in high regard MBAs earned from programs that academics respect.

Faculty Credentials and Training (15%): Strong online MBA programs employ instructors with academic credentials that mirror those of instructors for campus-based programs, and they have the resources to train these instructors to teach distance learners.

Student Excellence (15%): MBA student bodies entering with proven aptitudes, ambitions and accomplishments can handle the demands of rigorous coursework. Furthermore, online degrees that schools award judiciously will have greater legitimacy in the job market.

Student Services and Technologies (15%): MBA programs that incorporate diverse online learning technologies allow greater flexibility for students to take classes from a distance. Outside of classes, strong support structures provide learning assistance, career guidance and financial aid resources commensurate with quality campus-based programs.

How the Rankings Were Calculated

U.S. News selects factors, known as ranking indicators, to assess each program in the categories outlined above. A program’s score for each ranking indicator is calculated using data that the program reported to U.S. News in a statistical survey and from data collected in a separate peer reputation survey.

Schools that failed to report data on a ranking indicator or reported on cohorts too small to be analyzed receive estimates that for most ranking indicators equaled the lowest-scoring value among respondents who reported the data. In other words, schools almost always benefited by demonstrating they were willing and able to provide information on their programs versus leaving questions blank. U.S. News does not publish the estimates used for internal ranking calculation purposes.

The indicator value used for each program in the rankings is the number of standard deviations its indicator score is from the mean indicator score of all other ranked programs. This accounts for statistical variance.

U.S. News multiplies these standardized values by the weights it has selected for the ranking indicators and then sums these values to compute the five separate category scores. Each of these category scores is rescaled for display purposes on usnews.com so that the top-scoring school receives a display score of 100 and the bottom-scoring school receives a display score of zero.

To produce the overall scores, U.S. News takes the raw category scores prior to rescaling and multiplies them by the category weights detailed above. The resulting scores are then rescaled and rounded to the nearest integers from zero to 100. In effect, a program’s overall score reflects its distance from the highest scoring program.

Numerical rankings are assigned to programs in descending order of their overall scores, with the highest-scoring program ranked No. 1. Schools with the same scores are tied in the rankings.

U.S. News does not publish the individual ranks for programs whose overall scores place outside the top 75% but instead publishes the range of all ranked schools in the bottom quartile and displays them alphabetically.

For the 2020 rankings, 14 schools are designated as unranked because they reported having fewer than 10 students enrolled or because their programs were less than a year old at the time of the data collection. U.S. News did not calculate a numerical rank for these schools.

All programs with a ranking range or that are unranked are still listed in the U.S. News directory.

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Data Collection

Gathering the information necessary to create the 2020 Best Online MBA Programs rankings required two steps. Step one was compiling a list of business schools offering online MBA programs. Step two was collecting data from these schools. 

To complete step one, U.S. News sent statistical questionnaires to regionally accredited public, private and for-profit institutions that granted master’s degrees in business. Respondents were asked if they would be offering an MBA program through internet-based distance education courses in the 2019-2020 academic year. 

U.S. News defines a distance education program as follows, along the same lines as the U.S. Department of Education’s definition:  A program for which all the required coursework for program completion is able to be completed via distance education courses that incorporate internet-based learning technologies.

Distance education courses are courses that deliver instruction to students who are separated from the instructor and support regular and substantive interaction between the students and the instructor synchronously or asynchronously.

Note: Requirements for coming to campus for orientation, testing or academic support services do not exclude a program from being classified as an online master’s in business administration degree program.

Between the start of data collection in August 2019 and the October 2019 closing date, 335 schools – up from 301 the previous year – said they would be offering online MBAs in accordance with the definition. The rest either said they would not or chose not to respond. 

Importance of MBA (Master of Business Administration)

To complete step two, U.S. News used the same questionnaire to collect additional statistical information from the 335 schools with online MBA programs. This information was scored as outlined in the table below. Note: All student and faculty statistical data is for cohorts from July 1, 2018, to June 30, 2019, while the remaining data reflects policies, services and technologies in place at the time of the questionnaire completion in the second half of 2019. 

Engagement (30% of ranking up from 28%):

Ranking indicator Category weight (percent) Scoring process
Graduation rate 35 A two-year average of the percentage of students who graduated within three years of program entry. A program must have at least 10 graduates in its reporting cohort for its data to be included in the average. New this edition: programs were slightly discounted if they did not report a graduation rate from at least 10 graduates in the 2018-2019 graduating cohort.
Best practices 35 An index in which half the score is based on a program having accreditation from the Association to Advance Collegiate Schools of Business (half-credit is awarded for accreditation from the Accreditation Council for Business Schools and Programs or the International Assembly for Collegiate Business Education). The other half is based on 10 equal factors: Americans with Disabilities Act policy, anti-plagiarism policy, use of certified instructional designers, use of collaborative coursework, required course evaluation, course evaluation response rate, formal copyright policy, number of instructor office hours, signed ethics statement from students and system to track students after graduation.
Class size 10 The greater proportion of smaller classes, the better a program scores. Specifically, U.S. News calculated an index in which class sections with fewer than 20 students receive full credit, with decreasing credit awarded for sections of 20-29, 30-39 and 40-49 students. Sections with at least 50 students receive no credit.
One-year retention rates 10 The mean re-enrollment rate over four years for the years in which the school reported data. Deductions are applied for programs that report fewer years of data.
Time to degree deadline 10 Schools that require students to complete their degree or retake coursework within 1.5 times the program length receive the full score. Other schools score progressively lower the longer their time to degree deadlines.

Student Excellence (15% of ranking down from 25%):

Ranking indicator Category weight (percent) Scoring process
Standardized test scores 40 Mean GMAT and mean quantitative and verbal GRE scores are converted to their percentile distributions and weighted by the percentages of new entrants taking each exam. Schools reporting GMAT and GRE scores on new entrants that combine to less than 25% of the entering class have their scores discounted. In the previous edition, the discounted started at 75%. At least five students must have been new entrants in the previous academic year for a program to receive credit.
Undergraduate GPA 25 The mean GPA of new entrants. Schools reporting on less than 75% of new entrants have their values discounted on a sliding scale. At least five students must have been new entrants in the previous academic year for a school to receive credit.
Experience 20 An index based on three equally weighted parts: the extent to which work experience and undergraduate business coursework are required for admittance; whether applicants are required to submit three letters of recommendation, including one from a professional contact; and the percentage of new entrants sponsored by an employer.
Acceptance rates 15 A school’s admitted students divided by applicants. At least 10 students must have been offered admittance in the previous academic year for a school to receive credit.

Expert Opinion (25% of ranking):

Ranking indicator Category weight (percent) Scoring process
Score 100 A school’s weighted mean of scores on a 1-5 scale as rated by high-ranking school officials in online MBA programs.

Faculty Credentials and Training (15% of ranking up from 11%):

Ranking indicator Category weight (percent) Scoring process
Terminal degree faculty 40 Programs receive the full score as long as at least 50% of their faculty members have terminal degrees; schools below 50% receive a score based on how close they are to 50%. Part-time faculty are treated as one-third of full-time faculty for the calculation. Programs with five or fewer individual faculty members receive a deduction.
Preparedness to teach distance learners 40 Two-thirds of this score is based on whether the school finances training for online teaching best practices and the number of training hours required; one-third is based on whether continuing training is required and whether a system of peer review is in place.
Tenured faculty 20 The percentage of full-time faculty who are tenured or tenure-track faculty.

Student Services and Technologies (15% of ranking up from 11%):

Ranking indicator Category weight (percent) Scoring process
Student indebtedness 50 Half of the score is a program’s two-year average of mean student debt at graduation. The other half is a program’s two-year average of the percentage of graduates with debt. In both cases, each program’s reported value is subtracted from the largest reported value among all schools before being averaged and assessed. Programs with fewer than 10 graduates in the 2018-2019 academic year or that did not report graduate debt data received estimates that assume a low score but not the lowest score.
Technological infrastructure 25 An index based on student access to 10 equally weighted technologies: application for smartphone, application for tablet, remote access to chat rooms, simulations, software-based readers, streaming audio, streaming video, visual software, learning analytics platform and adaptive learning.
Support services 25 An index based on student access to 10 equally weighted services: academic advising, 24/7 tech support, live librarian, mentoring, live tutoring, writing workshops, career placement assistance, resume writing help, online course registration and admissions counseling. The latter three are new and replaced bookstore, financial aid and local area network.

Data Reporting

Respondents were instructed to provide information specific to their online MBA programs. This means they could not report on any of their separate campus-based MBA programs. However, programs that allowed students to attend classes on campus could be included if all components besides orientation, testing and academic support services were always accessible via distance education.

Survey questions that asked for descriptive statistics on students and faculty – such as enrollment or graduation rates – requested aggregations of data only across schools’ online MBA programs. For profile data that may vary among these programs, such as tuition or application deadline, schools with more than one online MBA program were instructed to report on the program with the largest enrollment.

More on Expert Opinion

Complementing the statistical data from this questionnaire was a separate peer assessment survey that for the second consecutive year U.S. News administered directly to deans of business schools with online MBA programs and top distance-learning officials at those institutions. The new process doubled the number of completions from the previous year.

Schools received two surveys. From August to October 2019, business school academics responded by rating the academic quality of other MBA programs listed on the survey on a scale of 1 (marginal) to 5 (outstanding) or by responding “don’t know” about any program with which they were unfamiliar.

To increase the number of ratings for a better representation of schools, U.S. News aggregated the peer assessment data collected in 2019 with data collected in 2018 and 2017. In total, U.S. News used 769 surveys completed by academics at schools with online MBA programs. Nearly half came just from the 2019 cohort.

The two highest and lowest scores every year for each school were trimmed from the totals before calculating the average peer score among those who rated the program.

Among the 321 ranked schools, 21 programs that did not participate in the three previous ranking editions were not included in the peer reputation survey and did not receive any ratings. For ranking purposes, these schools were assigned the median peer assessment score among all 2019 surveyed programs. 

These imputed values are not published and will not be carried over into future rankings calculations, and the programs will be surveyed in the peer reputation survey administered in fall 2020 for the 2021 edition of the rankings.

The specialty rankings of MBAs with focuses in General Management, Finance, Marketing and Business Analytics are based entirely on responses to the peer assessment survey. For each specialty, respondents were asked to volunteer up to 15 institutions that they believed had strength in these areas.

Schools were ranked in descending order of total ratings received by peer institutions.

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To be rank-eligible, a school must have received at least five ratings from peer institutions, been ranked in the main online MBA rankings (in other words, completed the statistical survey), and verified in the peer assessment they offer the specialty or else had this verified by U.S. News.

Reference

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