One of the key reasons people opt for an MBA degree is to ‘get higher pay packages’ or ‘double their salary’ Twitter . This notion is primarily created by the media and also in part by the inflated placement reports of some not very ethical business schools.

Many a student has worked extremely hard to get the coveted IIM admission, received the admission offer, been made a hero in his / her local community and heard statements like – ‘wow, in 2 years you will get a crore+ salary’ only to join b-school, and on the very first day after talking to seniors, realising that that all of that was completely false. Such students spend the better part of their first semester brooding over their mistake. This article attempts to strike a balance in setting perceptions about MBA placements and salaries.

Understanding MBA Placements

So, most MBA placements like everything else in the world follow what is called a normal distribution. For those who don’t didn’t study this in statistics, here’s an oversimplified view:

Roughly 5% people will be at the bottom

Another 25% people will be below average

The next 50% people will be average

The next 25% people will be above average

The final 5% people will be right at the top

Now the crore plus packages spoken about are only received by a very very small percentage of the people in the batch. Moreover, these are offshore packages based out of the US or UK. On top of that, these are not annual packages – in some cases, these contain stock grants which are spread over a 4 year vesting period, so while they are still a part of your package, you will receive them over four years.

The high domestic packages are also received by a small number, rarely exceeding the top 5% of the batch.

Another thing to note is that many companies tend to overstate CTC’s by including things like cost of free food provided, cost of transportation provided etc. etc.

The next 25% of the batch receive average to above average packages – usually in the 12-16 l.p.a. range.

The bulk 50% get average packages or below average packages 8-12 l.p.a.

The bottom 5% usually do not get any good placement and are at times (believe it or not) forced to opt out of placements to avoiding ruining the 100% placement record. This is also true of a few of the lower 25% of the batch who companies are not keen on hiring.

Also remember that high international packages tend to skew the averages. E.g. If 10 people get salaries of Rs. 12 l.p.a, then their average is 12 l.p.a, but if even one person out of those 10 gets a package of 1 cr, then the average becomes 22 l.p.a (almost double) which gives a false picture of the average.

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On the other hand, you also have candidates who join IIMs from IT services companies like Infy, TCS etc who triple their salaries after passing out from a premier MBA program.

Does this mean that MBA’s from even IIMs are not worth it? No, not at all. Remember, salary should be a very small part of the reason to do an MBA. Also, you will find the real value of an MBA in your career probably 8-10 years after passing out. The goal of this article is to make you understand that your expectations regarding post MBA salaries should not be influenced by media or placement reports of colleges, but should be based on a more stark reality.

Let us know your thoughts in the comments section below about the information presented in this article about MBA salaries and placements.

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