Note to IT Professionals: Get an MBA!
Companies in the United States value IT professionals' MBAs more than IT experience alone.
ANN ARBOR, Mich. —An IT professional with an MBA degree earns 37 percent more on average than one with any other master's degree, according to a study by M.S. Krishnan, professor of business information technology at the Ross School of Business. In addition, IT professionals holding MBAs earn 46 percent more than those with just a bachelor's degree.
"The moment you complement technical skill with business knowledge, that's when you become more valuable inside an organization," says Krishnan. "As digitization permeates every aspect of business, there's going to be a premium going forward for people who understand both business and how technology can enable new business models."
Krishnan and colleague Sunil Mithas of the University of Maryland used data from four national Web surveys from 1999-2002, conducted by InformationWeek, which surveyed more than 50,000 IT professionals. The salary surveys provided data on compensation, demographics, human capital-related variables and institutional variables.
The resulting paper, "Human Capital and Institutional Effects in the Compensation of Information Technology Professionals in the United States," appears as the lead article in the March 2008 issue of the monthly journal Management Science.
For individual IT professionals, this research should set at rest any questions or doubts about the salary effect of an MBA education, Krishnan and Mithas contend. The authors also found that having both an MBA degree and substantial IT experience did not boost an employee's salary more than the MBA alone.
"The finding that firms value an MBA more than IT experience provides formal validation for the supremacy and criticality of business understanding relative to technical and IT skills alone," say the authors.
Based on their research, Krishnan and Mithas argue that IT professionals and their employers should invest in management education. Formal training can provide a more durable and versatile conceptual foundation than experiential skill, which may only be valuable for a few years until technology changes, they say.
"Firms can use our findings to assess the merits of sponsoring their IT professionals for external higher education programs such as an MBA," Krishnan and Mithas conclude. "Our results suggest that investments in MBAs are associated with productivity advantages, and if firms want to leverage these advantages, then investing in MBAs can be an important enabler to retain valuable employees."
Among their findings, Krishnan and Mithas also noted a gender gap in IT industry salaries, with female professionals earning about nine percent less than their male counterparts. In addition, they observed a culture of high turnover and job-hopping among IT professionals, which they credit to the fact that firms place greater value on IT experience at other firms than at their own firm.
Written by Leah Sipher-Mann.
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