Your new boss has an MBA. Bad news for your salary

  • 40

In the popular proverb it says that “the habit does not make the monk”. Adapted to the times and the issue at hand, we could well say that “studies do not make a good boss”, at least in certain areas. That’s how it ensures a recent study from the US National Bureau of Economic Research, which has found that executives with an MBA tend to lower the average salary of the company up to 6% in their first five years with the company, with or without reason, but neither performance nor sales improve.

The researchers explain that to reach these conclusions they have crossed public data from different US state agencies regarding the evolution of workers’ salaries and information from the different business schools in the United States on their students and graduates. And they found that, for the most part, those executives who had achieved a title of MBA between 1980 and 2020 tend to reduce the salary of their employees. By contrast, bosses without these higher educations are more likely to share the profits.

“Our evidence suggests that executives with MBAs are not more productive than those without: they do not generate more sales, or more productivity, or more investment, nor do they manage to increase the number of employees. In addition, those who have these studies do not share the profits with their workers, while those who do not have them do, “says the study.

The authors of the research consider that this evidence responds to the change promoted by business schools since the 1970s. following the precepts of Milton Friedmanfor which the benefit of shareholders is prioritized above everything else.

The study was carried out with companies from the United States, first, and then with companies from Denmark, and the authors point out that, despite the differences in labor policy in both countries, the results are very similar. They also explain that it is necessary to extend the investigation to other countries to find out if it is a phenomenon that occurs throughout the West or even throughout the world.

“It would be valuable to investigate the effects of business education on wages and labor market outcomes in other countries, especially in those where centralized union bargaining is still prevalentin order to gain a more holistic understanding of how management practices interact with labor market institutions.

The researchers also report that they have found evidence of a downward trend in salaries, but have not been able to identify what practices executives changed or how they affected salaries.

Image | Helen Cramer

In the popular proverb it says that “the habit does not make the monk”. Adapted to the times and the…

In the popular proverb it says that “the habit does not make the monk”. Adapted to the times and the…

Leave a Reply

Your email address will not be published.