Does a masters mean more money?October 2012
JUDE BARBACK takes a closer look at whether postgraduate qualifications really increase students’ earning potential when they join the workforce.
I vividly remember the day I met with a Human Resources manager from McGraw-Hill, the global educational publishing powerhouse. Feeling smug about my newly acquired conjoint BA/BCom degrees from The University of Auckland and undeterred by my sizeable student loan and lack of work experience, I thought my prospects for working in the publishing industry were fairly good. In true Kiwi tradition, I intended to head to England and apply for a job in one of the publishing houses there, with my shiny new degrees as evidence that I would be an excellent employee.
But my meeting with the publishing recruitment guru brought me down to earth with a jolt. She informed me that due to such high levels of demand to get into publishing, her first step when recruiting someone for an entry-level editorial position was to separate the CVs into two piles: those with postgraduate qualifications and the rest. A Master’s degree, in her informed opinion, was “essential” for getting a job in publishing.
Such was my fear of my modest CV ending up with “the rest”, I immediately enrolled in a master’s degree programme in publishing in Oxford Brookes University in England, which seemed to be the only way to allow me to travel and gain the “essential” qualifications for my career. International student fees, a weak Kiwi dollar, and the exorbitant cost of living in Oxford meant I was financially on the back foot to begin with.
However, when it came to applying for editorial jobs in the many Oxford publishing houses, it appeared my mentor was right, to a certain extent. I gained an entry-level position in an editorial department within Blackwell Publishing and found myself surrounded by people with all number of impressive letters after their names. It quickly became apparent that while a postgrad degree might be helpful in getting a foot in the door, it had no effect on pay: my entry-level job was matched by a decidedly entry-level salary.
Despite my experience, statistics show that most postgraduates entering the job market are likely to receive better remuneration than had they not completed their qualification. David Scott’s research for Ministry of Education and Statistics New Zealand in 2009 on what students earn after their tertiary education found that the median earnings of young one-year postgraduate-qualification completers in their first year post-study were 40 per cent higher than the national median, and this increased to 60 per cent after three years. The median earnings of these students were around 16 per cent higher than for Bachelor completers in their first year post-study, and 9 per cent higher after three years.
Scott’s research also showed the median earnings of young doctorate completers were more than twice the national median after three years of work post-study. Median one-year post-study earnings for completers at this level were 16 per cent higher than for those leaving with Bachelor degrees. By the third year, this difference had increased to 46 per cent.
But those pursuing postgraduate study solely for monetary reasons should think carefully. Careers New Zealand advise that in addition to the cost of study, there is the loss of earnings to factor in. Living costs and a hangover student debt are often part of the picture, too.
Yet from my experience, in spite of the lack of initial financial gain, the knowledge and skills gained from my Master’s degree were, and still are, invaluable to my career.
After all, there are many reasons people embark upon a postgraduate qualification. Massey University’s Career and Employment Service says most people make the decision in order to enter or progress in a chosen career. Some are driven to complete a postgrad qualification because of a passion for the subject. Others, still, pursue postgrad study because they are struggling to enter the job market, or to delay even trying, or as an attempt to make up for earlier poor grades.
The Massey career service states that whatever the reason for pursuing a postgraduate qualification, it can help individuals to be more competitive in the job market, especially in career areas where this level of qualification is becoming increasingly sought, if not a necessity. The service also makes clear it will not guarantee you a job or a higher starting salary. It also states that while many employers seek academic ability, they are equally interested in skills and qualities such as flexibility, interpersonal and communication skills, and the ability to work within a team.
Recruitment agency perspective
Bay of Plenty-based recruitment agency, Personnel Resources, agrees that there is typically more involved than the postgraduate qualification on its own. Director Ian Chitty says, subject to good work performance, a postgraduate qualification can certainly help by assisting with gaining promotion within organisations and being considered for senior executive roles.
Team leader for IT and professional services, Sarah Quintal, agrees.
“A lot of time, it’s the icing on the cake that might give you the edge over a similar candidate, but you would still need to have the best experience, good track record, and the right team fit,” she says.
Quintal says that a postgraduate qualification tends to be most advantageous for an individual wanting to change direction in his or her career.
“You would probably struggle without it,” she says.
However, Quintal says it is unclear exactly what effect a postgraduate qualification has salary-wise.
The human resources department that serves publishing companies Pearson and Penguin New Zealand tells a similar story. At both Pearson and Penguin, there is generally more emphasis placed on the relevance, rather than the level, of the qualification. While a postgraduate qualification is certainly considered a “bonus”, it is not usually a pre-requisite for a job at these organisations.
Both companies hold Whitereia’s Diploma in Publishing in high regard, describing it as a qualification that is highly relevant to many of its positions, particularly within Editorial. In fact, Penguin has recruited Whitireia’s students upon completion of their Penguin-based internships.
Pearson and Penguin describe themselves as “role-based recruiters”. When deciding where to place an individual within the salary range for a certain role, post-graduate qualifications are certainly taken into consideration but are not a sure-fire route to a better salary. Other factors, such as the level of experience, fit for the position, and previous salary, are given considerable weighting when making decisions about an individual’s remuneration.
That is not to imply that Pearson and Penguin do not place importance on postgraduate study. In many cases, the company supports employees financially to achieve postgraduate qualifications that will increase their knowledge and skill base, ultimately giving them the opportunity for job expansion or promotion. As a global company, the opportunities do not have to end in New Zealand, either.
Like many industries, the strategic direction of these companies, particularly Pearson from an education perspective, is becoming increasingly focused on technology-based solutions. With this shift in focus comes a change to the skills and knowledge sought by Pearson and qualifications in information technology are perceived as desirable.
Unlike Pearson and Penguin, insurance company AMI, owned by IAG, specifically seeks graduates in its actuarial team.
“Postgraduate qualifications are definitely an advantage for candidates as the professional exams – once in employment – would be more difficult to complete without having already studied at the postgraduate level,” says Senior Manager Business HR, Steve Richardson.
“For that reason, entry-level pay rates for actuarial analysts tend to be around $5000 per year higher than for graduates in other occupations such as law or finance.
“Subject to completing professional exams, they also tend to progress in pay more quickly, often at a rate of 10 per cent per year or more for several years following commencement,” says Richardson.
AMI sets its pay rates against external market benchmarks that are typically driven by supply and demand. Therefore, it is the labour market that determines what level of pay these postgraduates receive rather than a decision by AMI in isolation to simply pay more based on tertiary qualification.
Richardson says AMI has advertised within the universities for graduates in maths and stats through liaison with relevant departments, in conjunction with normal recruitment advertising channels.
“While this has been a successful initiative, it has not necessarily been due to a particular need for entry-level graduates, but rather, due to the shortage of experienced actuarial analysts in New Zealand.”
Unsurprisingly, universities believe that qualifications matter. However, many experts refer to the research and anecdotal evidence to support their view.
Associate Professor Simon Peel, Dean of Research and Postgraduate Studies at Unitec Institute of Technology, says statistics show that completing a degree really matters. He points to the aforementioned Ministry research and that conducted overseas as evidence.
“One US study found that over a lifetime the payoff could come to more than a million dollars. However, students and employers know that the link between qualifications and earnings is a lot more complex than some statistics show. There are many other factors that mean that sometimes a person with little or no qualifications can out-earn someone who has them. For example, choice of occupation can matter more than the qualifications that one holds,” says Peel.
“What these graduates should be aware of is that research has shown that the effect of qualifications on earnings is strongest within occupational groups. That is to say that while a marketing manager might earn less than a doctor, a marketing manager with higher qualifications is likely to earn more than one with lesser qualifications, and their career prospects more generally are likely to be brighter.
“This explains why Unitec’s range of professionally-oriented postgraduate qualifications, such as the Master of Educational Leadership and Management, are sought out by students seeking qualifications – and the advanced levels of skill and knowledge that go with them – to ensure that they are best positioned to achieve their career goals.”
Peel says Unitec’s focus in surveying its graduates is on how well the qualification gained at Unitec enables them to meet the requirements of their main job. A reported 76 per cent of Unitec graduates state that their qualification enabled them to meet the requirements of the main job extremely, or very, well.
Peel makes the point that there is more to upgrading qualifications than just earning more money in the short term.
Ken Lee, Director of AUT University’s MBA Programme, agrees.
“Students are finding the MBA adds immediate value, which they can put back into their organisation,” he says.
Lee does not refer to “value” solely in terms of remuneration.
“An MBA offers you a good head start from the word ‘go’ as the MBA programme emulates the workplace in terms of the ability to work to tight deadlines, be punctual, look the part, work in multi-disciplinary teams, work unsupervised, read analytically, write clearly, and so on.”
Lee believes it is this “head start” that has helped so many students achieve career success during and upon completion of their MBA degrees.
The dizzying success spiral of MBA graduate Jacob Mathew is a case in point. Mathew worked at a bank in a quality control role. He focused on quality assurance as part of his MBA and achieved several promotions during the course of his study. Upon finishing his MBA, Mathew was recruited by another bank, but was swiftly head-hunted by a Fortune 500 company and now holds a Six Sigma Master Black Belt.
Lee refers to another former student who was working in customer services in a hotel while studying. The MBA’s emphasis of translating theory into practice allowed the student to swiftly get involved in the hotel’s marketing programme, which led to a promotion into a senior marketing role. The graduate is now a consultant working internationally.
It is evident Lee keeps in close contact with past students. He confirms that alumni play an important part in keeping the curriculum relevant. The course content for the AUT MBA is constantly reviewed by forums of past and current students as well as the 40 per cent of teaching staff members who are business practitioners. International trends are also factored in.
“AUT is fleet of foot and able to respond quicker than other institutions,” says Lee.
Lee has a realistic view of employment and echoes what the employers and recruitment agencies state: that despite the skills and knowledge gained from a degree, other factors come into play when finding employment, like a person’s ‘fit’ in an organisation.
He says young Chinese females who have completed the MBA sometimes struggle with transition into the workplace, possibly because they tend to be quieter and companies don’t perceive them to have the right cultural ‘fit’. However, Lee tells me of a former Chinese female student who, despite a quiet nature, so impressed the recruiters in an interview with the background research and SWOT analysis she had completed for the company, that she was awarded the job immediately.
No doubt students like this one would be hoping their postgraduate qualification would result in a decent job or promotion. Such qualifications are not cheap. An MBA will typically cost in excess of $35,000, and more for international students.
Yet, Lee passionately believes that it is money well spent.
“I’ve been involved in tertiary education for 35 years, and I strongly believe is the best investment you can make.”
Check list for those considering postgraduate study
- Why are you considering it? What is your goal?
- Will the study you’re considering be useful? Is it right for you?
- Are you academically and personally strong enough for the rigours of postgraduate-level study?
- Is enhancing your work experience a better option for you at this stage? In addition, would your study allow you time for part-time work and/or extracurricular activities – these can be invaluable for your personal and skills development?
- Are you passionate about the subject – this should be a hugely influential factor in your decision making?
- Will the study you’re considering allow you to develop your skills base – particularly presentation, communication, analysis, project work, and research skills?
- Have you considered all costs, including course fees, course-related costs, and all living expenses, including accommodation, transport, food, utilities, debt repayments, clothing, and entertainment?
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