How Much Does Education Matter?

Here’s a little quiz compliments of Vell Executive Search that I found interesting.  Does not have much to do with technology.  But it could help you sharpen your educational aspirations, or assist you when working to hire your next executive.

Question 1: True or False – MBAs for CEOs make little difference, whether the company is under or over $1B in revenue.

Question 2:  True or False – CEOs with technical degrees, especially advanced technical degrees, typically lag peers in performance.

Question 3:  True or False – CEOs with Ivy League degrees outperform their peers.

And the answers are…
False, False, True.

So, if you buy the research, you might conclude that you should get an MBA from an Ivy League school if you want to out-perform in the corner office.  But if you are technically minded, and the thought of an MBA in Finance sends a shiver down your spine, then no worry, go get that Doctorate in Chemical Engineering from MIT.

Below find some additional research from Vell’s survey of the characteristics of CEOs at 38 public technology companies in New England.

CEOs are highly educated
68% have advanced degrees
43% of CEOs with advanced degrees have MBAs (33% of all CEOs have MBAs)
21% of all CEOs have PhDs

CEOs in larger companies differ from those in smaller companies as follows:

  • Larger company CEOs are more likely to have an advanced degree (88% vs. 64% for companies between $100M and $1B)
  • A larger portion of big company CEOs with advanced degrees have MBAs (55% vs. 24% for companies between $100M and $1B)

CEOs with technical degrees predominate (59% of all CEOs in our study)
and these are more likely to have advanced degrees.

And another nice data point for those of us with technical degrees:  The companies with CEOs holding technical degrees outperformed companies with CEOs who didn’t (99% and 101% vs. 71% median 3-year growth rates).

MBA degrees are correlated with stronger growth, but only in companies between $100M and $1B in revenue. An MBA is a useful early indicator of business savvy – and perhaps drive, but as executives build their experience, results should be a larger factor in selecting candidates than whether they have an MBA or not.

Some search committee members favor CEO candidates with strong business backgrounds, which often blind them to excellent candidates with valuable technical backgrounds. Our experience is that technical degrees often correlate with high intelligence levels and also that CEO comfort with technical details helps in strategic issues about where the market is headed and where the best opportunities are to be found.

An Ivy League degree is an asset to performance. Perhaps the admissions process in these programs is a great filter for work ethic and smarts. Search committees tend to be biased either for or against Ivy League degrees. This data shows that an Ivy League degree is positively correlated to performance.

I welcome your comments,
Mike Brannan