An MBA degree scores over experience when it comes to earning fatter paychecks in the technology sector, a study by the University of Michigan has found.
A two-year MBA programme can boost a person's salary by as much as 8.2 per cent, according to research conducted by M S Krishnan and Sunil Mithas, professors at Michigan's Ross School of Business.
This held true even with comparable years of on-the-job IT experience. Two extra years of IT experience yields a salary advantage of 2.8 per cent, but a two-year MBA degree provides a salary advantage of 8.2 per cent.
"Even though we did not factor the direct costs of getting an MBA, such as tuition and other expenses, into our calculations, the substantial difference in returns on an MBA degree vis-a-vis two extra years of IT experience provides a favourable assessment of the benefits of having an MBA degree," Krishnan said.
Overall, compared to firms in other US industries, IT companies pay a significant premium to attract and retain these highly-prized professionals.
"Ever-increasing competitive intensity is fuelling the demand for executives with a good grounding in managerial competencies for applying technology in a given business context," Krishnan said in a statement.
"While both technical and managerial competencies are important in their own right for a successful performance in IT jobs, over time the relative importance of managerial competencies has increased significantly," he said.
Across industries, Krishnan and Mithas found that IT firms pay 9.4 per cent higher wages than non-IT companies, while dotcom firms pay 9.6 per cent more to their employees compared to traditional brick-and-mortar companies.
The study, which looked at more than 55,000 hi-tech workers in the US from 1999 to 2002, also showed that women make 7.8 per cent less than men with similar jobs, education and work experience.
"There is a need for senior managers to take a critical look at their human resource policies and to assess the reasons for such wage inequalities," Krishnan said.
"Left unchecked, these inequalities not only vitiate the workplace environment but also expose corporations to avoidable lawsuits, bad publicity and punitive damages.
"While our study does not establish that wage differentials among male and female IT professionals are on account of systematic gender discrimination by employers, persistent gaps in salaries attributable to gender should serve as a wake-up call for understanding the determinants of the salary gulf between males and females," he added.
The study comes at a time when business schools have been under fire for ethical lapses and the value of MBA degrees has been questioned.
