Globally, average salaries for graduating MBAs have increased 27% in the past eight years. In 2004, companies are reporting MBA salaries will rise by over 9% compared to 2003 to a level of over $82,000. Business School Placement Directors and MBA Recruiters are predicting further salary growth in 2005 as the service sector continues to rebound. This increase reflects a high level of optimism amongst MBA recruiters and increased competition for the top talent. The only cloud on the horizon is the potential impact of further shocks to the global economic system from  rising oil prices and/or global terrorism.

Current trends in MBA Salaries

As the graph below demonstrates, the average salary for MBA hires fell in 2002 from its 2001 high down to a level similar to 1999. However, in 2003, there was a slight pick up and 2004 has seen a strong overall gain of 9% to an average MBA salary of $82,000.

Salaries vary in different regions

The US and Western Europe reported very similar average salaries, while Latin America and Eastern Europe lag behind. These salaries are not surprising given the differing costs of living across the regions below. Looking at MBA salaries over the last ten years, there is a convergence of salaries across Asia, Europe, and the US due to the increasing globalisation of major MBA recruiting companies which has encouraged standardisation of recruiting practices. Global companie co-ordinate their recruitment on a global level and do not want to drive top candidates away from key geographies because of a salary differential. This standardisation of MBA salaries is particularly true amongst pharmaceutical companies, consulting firms and investment banks.

Average salaries in more developed parts of Asia – Singapore, Hong Kong, Malaysia – are over $75,000. However, with more and more technology companies hiring MBAs into India and China at salaries between $20-40,000 this is pulling down the average for Asia as a whole.

Latin American salaries, at $48,500 a year, are roughly 40% lower than US or European counterparts. However, the cost of living in almost all Latin American cities is 50-60% lower than London or New York. So in many instances, MBAs working in Latin America will be better off. In fact, MBA graduates in Latin America attain a higher social prestige than perhaps in the US where the MBA is more commonplace.

The MBA qualification is still new to Central Europe and there really is no established market for MBAs except in Russia, which is quite vibrant. We expect demand for MBAs in the new European Union states to pick up steadily, with resultant salary increases showing through by perhaps 2006.

Full compensation

Bonuses for 2004 have increased substantially compared to 2003. The average bonus is a sizeable $19,183. Recruiters favour bonuses tied to performance. Financial services firms are reporting a massive average bonus of $42,000. Many investment banks are reporting bonuses of $70-100,000 for first year MBAs. Other sectors will find it hard to compete with these figures, but banking bonuses are much more volatile than those in other sectors. Of the 301 responding recruiters, only 10% failed to indicate any kind of bonus on top of base salary.

The average pre-MBA salaries reported by candidates from North America and Western Europe to the topmba.com Applicant Research was $37,500. The average salary in our Recruiter survey is $82,000. This represents an uplift of 118%.

Of course, there are big variations depending on the country of  estination, the chosen sector and the school attended. At many schools average salaries are higher – for example INSEAD, LBS, Wharton and Harvard range between $95,0000 - $110,000 in their latest placement reports.