B School Confidential

With Corporate America snapping up graduates faster than you can say “salary plus bonus” and business schools focusing more than ever on providing relevance and value to their customers, it’s no surprise that the ranks of aspiring MBAs are growing. Across the country, the number of people taking the Graduate Management Admission Test (GMAT)—which is required for admission to many MBA programs—is on the rise. During the 1996-97 academic year (the most recent for which data are available), 12,162 Texans took the anxiety-inducing test, a 15 percent increase over the year before, according to the Graduate Management Admission Council. The average age of B school applicants is also going up: It’s currently 28 nationwide, up from 25 a decade ago. That’s a plus in the classroom, where mature students are sharing their real-world experience, and also good news for employers interested in new hires who can hit the ground running.

Because MBAs are such a hot commodity these days, we decided to take a look at what Texas B schools have to offer and rank the top-ten programs. Our survey of the Texas MBA scene found that this is a great place to get a degree. Granted, the last time we checked, the country’s top MBA programs—Harvard University Graduate School of Business Administration, the Wharton School at the University of Pennsylvania, the J. L. Kellogg Graduate School of Management at Northwestern University, the University of Chicago Graduate School of Business, and the University of Michigan Business School—were all in other states. But Texas is home to at least one nationally ranked top-tier school, the Graduate School of Business at the University of Texas at Austin, and several up-and-comers are vying for elite status. Then there’s the money issue. At top schools, tuition, room and board, books, and two years of forfeited income (that is, money you’re not earning but could be) can add up to more than $150,000 for a full-time two-year program. Texas schools, however, are significantly cheaper. In fact, for the price conscious, a Texas MBA can be “one of the great bargains in the world,” crows A. Benton Cocanougher, the dean of the Lowry Mays College MBA program at Texas A&M University.

Because rankings are a necessary evil in the eyes of most business school administrators, we braced ourselves for a collective moan when we called around for statistics, mission statements, and the like. “They’re the bane of almost any dean’s existence,” admits Robert G. May, the dean of UT-Austin’s business school, which is in the enviable position of having been ranked eighteenth in the nation in Business Week’s latest biennial report on the nation’s MBA programs. Nevertheless, with a few exceptions, the schools we contacted were enthusiastic about participating in our survey. In particular, the second-tier B schools—those generally overlooked by Business Week and the other magazine that ranks MBA programs, U.S. News and World Report—were especially eager to strut their stuff.

The methodology behind our rankings is simple. MBA programs were graded in three areas: selectivity of admissions, which counted for 20 percent of the total score; placement, 40 percent; and academic reputation, 40 percent. Of course, every ranking system contains inherent biases. One of ours was to value placement twice as much as selectivity. In other words, we put more emphasis on output than input.

To narrow the field—and to ensure that we focused on the best of the best—we contacted only the seventeen Texas MBA programs accredited by the International Association for Management Education, the nation’s premier accrediting agency for master’s programs in business administration and accounting. (U.S. News also limits its survey to accredited schools; Business Week does not.) Those programs were asked to provide a wealth of information. To gauge selectivity of admissions, we requested average GMAT scores, grade point averages, and years of work experience for students in the class of 2000; to evaluate placement success, we asked for average starting salaries, the number of job offers received, and the number of graduates employed three months after receiving their degree. Most MBA programs collect this data, so it’s fairly easy to make objective comparisons. Measuring a program’s academic reputation, however, isn’t as straightforward. Here we chose to rely on the experts: the deans and the admissions directors of the programs we surveyed. They were asked to rank the top ten programs in Texas (excluding their own) and to rate the quality of students, teachers, curriculum, and graduates at each on a scale of one to ten.

How did the schools measure up? UT-Austin finished first, which wasn’t unexpected, but other findings were. The race for slots two through four was close, with only six points separating Rice University, Southern Methodist University, and Texas A&M. The University of Houston’s strong showing—it placed fifth—was the biggest shock; thanks mainly to its strong placement record, it outpaced the well-regarded private MBA programs at Baylor University and Texas Christian University.

Read on to learn our up-close impressions of the five best schools, which we visited in search of color and detail. But even if you only glance at the order of the top-ten schools, keep this in mind: Rankings should be used only as a guide. Texas has many fine programs across a range of budgets and GMAT scores; the only one who knows what’s best for you is you. “An MBA education is far too complex to reduce to a number,” warns Robert Duvic, an assistant dean for UT-Austin’s MBA program, who adds perhaps the best advice of all for future job seekers: “Go where the recruiters you want to work for go.”

The Top Ten

1. The University of Texas at Austin
Graduate School of Business

Austin, Texas 78712-1170
Web address: mba.mccombs.utexas.edu

Class of 2000
Enrollment: 347
Average undergraduate GPA: 3.4
Average GMAT: 660 (out of a possible 700)
Average age: 29
Average years of work experience: 5
Percentage of applicants accepted: 23
Annual tuition and fees:
in state, $7,418; out of state, $18,758;
international, $18,858

Class of 1998
Average starting base salary: $70,890
Average number of job offers: 3.1*
Percentage employed three months after graduation: 89

*Source: Business Week. UT-Austin does not release this information.

Texas’ premier MBA program has a problem. Apparently its highly intelligent, experienced students don’t know a bargain when they see one. Because a graduate degree in business from the University of Texas at Austin is relatively cheap—it has the lowest cost of any top-twenty B school in the country—students assume they must be receiving a subpar product. “In the past the school has suffered from the belief that things must be better at the higher-cost programs,” says May. “This used to drive down student satisfaction.”

Customer satisfaction, as any MBA worth his or her degree knows, is everything in business today. The same is true in the competitive realm of business education. Stung by low marks on student evaluations in the mid-nineties, UT-Austin has attempted to address the areas most frequently cited as needing improvement: access to elective courses, demand for top-quality career services, and especially, the quality of core teaching. UT-Austin’s relatively low tuition means its student-to-faculty ratio is higher than at most of the elite MBA programs. With a total of about 180 faculty members, the school boasts tremendous depth and variety—yet they’re shared by not only 726 full-time graduate students but also some 4,400 undergraduates. Students say that the quality of the core-course teaching is good overall, though there are still areas of weakness: Some complain that the finance department, for instance, needs help. “They need to attract and retain high-quality professors,” says Milind Pasad, a 26-year-old from Bombay, India, whose concentration is in energy finance.

On the recruiting front, UT-Austin has been eager to please its burgeoning list of corporate visitors, who numbered 437 last year—678 if you count discrete company divisions. (Consulting firms like A. T. Kearney and PricewaterhouseCoopers are UT-Austin’s biggest recruiters; right behind them are high-tech firms and investment banks.) The new Ford Career Center, a 10,000-square-foot wood-and-glass interviewing suite worthy of a Fortune 500 company, opened in February 1998. Ten new dressing rooms nearby mean students no longer have to change into suits in the restroom.

Clearly UT’s struggle to deliver a first-class MBA program despite financial constraints has paid off. The most recent Business Week survey ranked UT-Austin two spots higher than its previous ranking of twentieth. UT-Austin also came in eighteenth on U.S. News and World Report’s latest ranking, tying with Pittsburgh’s Carnegie Mellon University. “Quite frankly, we’re a fall-back school for a lot of people who apply to Stanford, Wharton, Harvard, and Northwestern,” says May. “On the other hand, we’re a lot of people’s first choice.” That’s not surprising when you look at the pay packages UT-Austin students command. Salaries for its MBA graduates have risen dramatically in the nineties: In 1998 they averaged $71,000 a year, versus just $41,000 in 1989. Twenty-two percent of the members of the class of 1998 took consulting jobs with an average salary of $84,636 plus an average bonus of nearly $19,500.

Fans of UT-Austin also point to its innovative curriculum. In 1997 Computerworld ranked the school’s Techno MBA program—a study of business technology and its relationship to management—second in the nation (the Sloan School of Management at the Massachusetts Institute of Technology was first). Thanks to lucrative corporate partnerships and private support, UT-Austin has plenty of cutting-edge technology, including a large Windows NT lab and the EDS Financial Trading and Technology Center, a scaled-down version of the famous Salomon Brothers trading room. Strong ties to Austin’s high-tech communities—including its relationship with the Austin Technology Incubator and the IC² Institute, founded by one of the B school’s former deans, George Kozmetsky—have made UT-Austin a hotbed of entrepreneurship. Its annual Moot Corp Business Plan Competition draws MBAs from the world’s best schools to Austin to compete for venture capital. Meanwhile, students can opt for the Spanish-language track, a three-course language sequence for MBAs followed by the possibility of internships or study in Mexico, Venezuela, Chile, Brazil, or Peru. UT-Austin’s close ties with Monterrey Tech, Mexico’s highly regarded business school, is part of its growing focus on Latin America.

Now that UT-Austin has shored up its position among the nation’s elite, it’s making the most of its bragging rights. But don’t look for the school to rest on its laurels. “You can make vast improvements in your school,” May says, “but if everybody else makes more, you’re still in the dumpster.”

2. Rice University
Jesse H. Jones Graduate School of Management

P.O. Box 1892
Houston, Texas 77251-1892, MS 531
E-mail address: [email-hidden]
Web address: www.rice.edu/jgs

Class of 2000
Enrollment: 132
Average undergraduate GPA: 3.2
Average GMAT: 632
Average age: 28
Average years of work experience: 5
Percentage of applicants accepted: 49
Annual tuition: $17,000

Class of 1998
Average starting base salary: $67,000
Average number of job offers: 3
Percentage employed three months after graduation: 100

In the early nineties, faced with a small enrollment and no national ranking, Rice University officials decided they had a choice: They could either fix the Jones Graduate School of Management or close it down. Following an external audit that pronounced the MBA program not great but still pretty good, they opted for the former and put out the word that they were looking for Mr.—or Ms.—Fix It. Enter Gilbert Whitaker, a Rice alumnus who spent nearly a dozen years as the dean of the business school and later the provost at the University of Michigan. During Whitaker’s tenure at Michigan, he helped propel its B school into the top tier of the nation’s MBA programs. Now he hopes to do the same for his alma mater.

While the Jones School has long been a popular option for Texans who plan to work in the state or the region after graduation, it has had almost no profile nationally. One reason is that until 1998 it lacked accreditation, which kept it off the annual U.S. News rankings. (Business Week, however, has recognized the Jones School on its unranked listing of runner-up MBA programs.) “The Jones School has just been languishing in terms of attention,” says Whitaker, who made accreditation his first priority when he arrived in 1997. Beyond that, he wanted to step up the quality and visibility of the program so that it could compete for students and recruiters with top-ranked schools.

Central to that bid for vaunted status is a new curriculum called Action Learning, the Jones School’s version of real-world experience. First-year students now spend the last five weeks of their second semester at one of 21 Houston-based companies, including BMC Software and Compaq, where they work in small groups as unpaid consultants tackling real—as opposed to hypothetical—business problems. Students are also expected to master “soft skills” like communication, leadership, and teamwork. And there is a whole slate of new courses for them to enroll in, covering topics from effective negotiating and partnership building to communicating with hostile audiences.

Other changes are in store too: The average class size will increase to 180 from 132 in hopes of diversifying its student body and providing more job candidates for recruiters who come to campus, and the number of full-time faculty will go up to 45 from 32. Best of all, the university will break ground next summer on a new facility for the Jones School, roughly tripling its existing space. Such improvements will surely make a difference, but things take time, of course. Even in Whitaker’s capable hands, it took nearly a decade before Michigan was recognized as a top-tier program. Rice MBAs should expect a similar timetable. “It’s a building process,” Whitaker says, “so it will take five to ten years.”

3. Southern Methodist University
Edwin L. Cox School of Business

P.O. Box 750333
Dallas, Texas 75275-0333
E-mail address: [email-hidden]
Web address: www.cox.smu.edu

Class of 2000
Enrollment: 119
Average undergraduate GPA: 3.2
Average GMAT: 636
Average age: 27.6
Average years of work experience: 4.3
Percentage of applicants accepted: 31.9
Annual tuition: $20,830

Class of 1998
Average starting base salary: $63,408
Average number of job offers: 2.4
Percentage employed three months
after graduation: 98

If you’re planning on attending SMU’s Cox School of Business, you’d better bring your passport. Starting with the class of 2001, all MBA candidates are required to participate in the school’s brand-new Global Leadership Program (GLP), which will take them to either Asia, Latin America, or Europe for two weeks at the end of their first year.

The GLP is the pet project of the Cox School’s dean, Albert W. Niemi, Jr., who arrived in 1997 following fourteen years as the dean of the University of Georgia’s business school and one year at the University of Alabama. In the past Cox did “global” like most MBA programs: by requiring a course in global business. “No one is really doing the global thing very well at all,” Niemi says. So he decided to take his students out into the global economy—literally. “We’ll be able to say that we do global differently and hopefully better than any MBA program out there,” he boasts. And the best part for students is that they won’t have to pay for it: Niemi plans to raise corporate money to foot the bill.

The Cox School’s efforts to establish an international reputation haven’t gone unrecognized. Its global focus was one of the criteria considered last January by London’s Financial Times in its ranking of the top-fifty MBA programs in the world. Cox, which ranked thirtieth in the world and twenty-fourth in the U.S., was the only Texas business school to make the list. (UT-Austin declined to provide the necessary data and therefore was not ranked.)

Another noteworthy offering by Cox—whose course of study went from one year to two years in the early nineties—is its longtime Executive Mentor Program. Following a mentor-student mixer early in the first semester, Cox students select their top-three choices from among some two hundred volunteer corporate executives and soon after are paired up. The mentors—about half are Cox or SMU alums—are professionals from such big companies as Bank of America, Sprint, and Deloitte Touche Tohmatsu, as well as entrepreneurs who provide everything from personalized career advice to all-important business contacts. And contact with the business community doesn’t stop there. SMU’s Business Leadership Center (BLC) offers non-credit professional development courses taught exclusively by corporate leaders. The BLC was established to provide Cox students with the skills employers identified as lacking in their new MBA hires, including team building, presentation techniques, business writing, and negotiating. Currently the BLC offers more than thirty seminars.

By carving out a niche in global business, burnishing assets like the BLC and the Executive Mentor Program, and keeping enrollments small—there is a cap of 120 students per entering class—Niemi believes Cox will thrive. Continuing to boost the GMAT scores of its students will help: The goal for this fall’s entering class is an average score of 650 and higher thereafter. “We’re in everybody’s top forty,” Niemi says, referring to the U.S. News, Business Week, and Financial Times rankings. That’s good but not good enough. Three years from now he predicts Cox will be in the top twenty nationally. And number one in Texas.

4. Texas A&M University
Lowry Mays College, Graduate School of Business

212 Wehner Building
College Station, Texas 77843-4117
E-mail address: [email-hidden]
Web address: mba.tamu.edu

Class of 2000
Enrollment: 91
Average undergraduate GPA: 3.3
Average GMAT: 619
Average age: 28
Average years of work experience: 4.4
Percentage of applicants accepted: 33.6
Annual tuition and fees: in state, $3,828; out of state, $10,055

Class of 1998
Average starting base salary: $63,100
Average number of job offers: 2.3
Percentage employed three months
after graduation: 98

If Texas A&M’s small but high-quality graduate business program had a slogan, it would have to be “Extreme Teamwork.” Group dynamics is central to the MBA experience at the Mays School. While team building and team-based learning are common elements of most programs today, Aggie MBAs take it further than most. In fact, personal interviews are now required to assess prospective students’ ability to work together.

From the day new MBA candidates arrive on campus they are assigned to a team of five or six students (designed to maximize diversity) with whom they’ll partner through the first semester. The semester kicks off with Challenge Week, in which new teams must pull together to tackle an outdoor ropes course, solve a murder mystery, and compete against other teams in management exercises. “The amount of encouragement you get from your teammates is tremendous,” says Randy Wood, a certified public accountant who left a Houston insurance company to pursue an MBA at A&M. The point, of course, is to prepare Mays MBAs to work effectively on teams in a corporate environment after graduation. Throughout the first semester, the core courses incorporate two major team efforts: a corporate financial forecasting project and a competitive consulting project, in which the teams analyze multiple issues at a Fortune 500 company and develop recommendations.

With a total enrollment of only 181, the Mays MBA program pales by comparison to A&M proper, whose student body numbers some 43,000. But rather than get lost in the crowd, MBA candidates get plenty of personal attention. “The size is key,” says Steve Long, who graduated in May and now works at Nortel as a financial analyst in the company’s financial leadership development program. Long and his classmates say they appreciate the faculty’s willingness to listen to their ideas regarding the direction of the program. They also like the easy access to elective courses.

And they love the technology. What the Mays School lacks in charm—compared with, say, the gracious Georgian architecture of SMU’s Cox School—it makes up for in facilities. Its four-year-old building on the western edge of campus is crammed full of the latest gadgets and tools of the trade: The Experiential Learning Lab, the Masters Computer Lab, and multimedia, networking, and systems application program labs are all state-of-the-art facilities. Computerworld magazine recently ranked A&M’s TechnoMBA program the nation’s eleventh best.

If the equipment is newer, the students are older: By design the Mays MBA program these days attracts a more experienced group of students. In the class of 2000, for instance, the average age is 28, up from 25.6 only a few years ago. That class was also the first to have a minimum two-year work requirement for admission, although entering students already have on average more than four years on the job. The emphasis on experience has paid off in the classroom—where students bring their diverse real-world expertise to discussions—as well as after graduation: The average starting salary for 1998 grads was $63,100, which is particularly impressive when you consider how cheap it was to get the degree in the first place. Business Week named the Mays program the nation’s sixth-best MBA value and among the top five in terms of return on educational investment.

Of course, it’s the other ranking that really counts. In 1999 Mays placed thirty-sixth on the U.S. News list and made the unranked bottom half of Business Week’s survey of the nation’s fifty best MBA programs. That doesn’t sit well with Cocanougher, the school’s dean. “Our stated goal is to be in the top-ten public business programs in the U.S.,” he says. “We’re well in reach of that.”

5. University of Houston
College Of Business Administration

Houston, Texas 77204-6283
E-mail address: [email-hidden]
Web address: cba.uh.edu

Class of 2000
Enrollment: 453
Average undergraduate GPA: 3.19
Average GMAT: 575
Average age: 28
Average years of
work experience: 5.4
Percentage of applicants accepted: 70.4
Annual tuition and fees: in state, $2,126; out of state, $6,566

Class of 1998
Average starting base salary: $63,417
Average number of job offers: 2
Percentage employed three months
after graduation: 91

The Target of Texas B schools, the University of Houston’s College of Business Administration may not be pretty, but the price and product make it an amazing value. Located minutes from downtown Houston just off Interstate 45, the CBA’s nondescript three-story concrete-and-glass building is just the type of utilitarian structure you’d expect to find on an urban campus. “We’re truly the working man’s MBA program,” says William R. Pasewark, U of H’s director of MBA programs. In fact, the CBA offers one of the lowest tuition rates—not just in the state but in the nation.

Another superlative: The CBA is the largest MBA program in the state and one of the largest in the country, with 1,200 students. By design, part-timers outnumber full-timers by a ratio of three to two. “We’re serving a community that doesn’t have the luxury of leaving the job market for two years,” says interim dean Keith K. Cox. To meet the demands of working people, the CBA has made getting an MBA as flexible as possible, offering day, night, and Saturday courses as well as six of ten core courses over the Internet.

The traditional two-year, full-time MBA program requires 54 semester hours for graduation. (Anyone with a four-year undergraduate degree in business administration from an accredited school is eligible for a 36-hour program.) Students can opt for a general MBA or a degree with a concentration in one of nine areas—among them, accounting, finance, international business, and taxation. The CBA also offers six joint-degree programs, including an MBA­master’s of international management degree in cooperation with Thunderbird, the American Graduate School of International Management in Glendale, Arizona, which is first in the nation in its field, according to U.S. News.

The downside of U of H’s low tuition is, of course, not enough money to fund new programs. “I’d rather not be as good a buy and have additional revenue sources,” Cox admits. “We need to attract private money for innovative programs.” One such donation was used in 1997 to establish the Elizabeth D. Rockwell Career Services Center. An alumnus of U of H who is the executive director of the private client division at CIBC World Markets, Rockwell donated $250,000 to fund the CSC, which offers traditional recruiting services as well as Web-based technology, including online job listings and a full-service online MBA résumé database to help recruiters identify, recruit, and hire qualified job candidates. There are also tips on interviewing, résumé and cover-letter writing, and leads on summer internships.

It must be a helpful service: With more than nine-tenths of its students employed while the ink on their diploma is still wet, the CBA has no trouble on the job-placement front. “All major Houston employers come here,” says CSC director Rachel Seff. They include big oil and energy companies like Halliburton and Exxon, as well as Houston’s major medical centers. And with generous average starting salaries, it’s clear that CBA grads are valued by employers as much as their peers at more prestigious schools are. You might even say that they’re on Target.