Canadian Universities Forum (discussion group)

Subject: Rotman No. 1 ---A MESSAGE FROM THE DEAN

This morning the Financial Times published its annual ranking of MBA programs, with the Rotman School coming in at 27th. While I am not pleased with the slight decline in our ranking, I am pleased that we remain firmly among the second tier of great international schools in the world along with UCLA, Michigan, Duke, Berkeley, Darden, Cornell, Kellogg, Cambridge and Oxford, in a year where several other leading schools slipped dramatically in the ranking. We continue to perform strongly in a number of categories including placing 20th in the average salary increase of our alumni; 18th in alumni recommendations; 18th for our PhD program; and 23rd for the research output of our faculty. Once again, we were also named as the 7th best school for finance in the world.

Several things have gotten clearer to me as I have watched the rankings evolve over the past several years.

First is the effect of the time lag built into the rankings. The FT rankings are split approximately 40% based on current (i.e. summer of 2006) data and 60% based on data that trail significantly. For example, in this year??s survey, there are several categories, such as weighted salary, that use data from as many as six years ago, composed of 25% on the basis of the graduating class of 2001, 25% on 2002 and 50% on 2003. In the rankings, our progress from a low third tier school to a strong second tier school has come mainly from dramatic increases in the categories that are measured with current data ?V like employed after three months, proportion of international students, faculty strength and PhD program. Our upward progress overall has stopped because at this point we are relatively highly ranked on those criteria and further upward progress there is a slow tough game ?V though we continue to make progress. On the categories with 4 to 6-year-old data, like weighted salary and salary increase (which together account for 40% of the entire ranking), we have no choice but to exercise patience. We are only just starting to hear from students who experienced a dramatically-improved international faculty and much greater investments in student services.

By the way, I don??t quibble with the FT??s approach on this front. I feel that the FT is still by far the most sensible and realistic ranking; it just forces a heck of a lot of patience on a school like Rotman that is investing in positive change.

Second, the importance of global brand name has become even clearer to me. As we have slipped from 21st to 27th, three of the six schools that have passed as have been top ten global brand name universities that have gotten their acts together with their business schools: Oxford, Cambridge and HEC (the original one in Paris), and three of them have been elite US brand names ?V Berkeley, Michigan and UCLA. It reinforces the importance of our current profile thrust which is to build the profile of the Rotman School outside Canada. To move up in the rankings we like the other Canadian schools need to raise our alumni salaries and that will come in part from having more recruiters from outside Canada. There is no substitute for high profile in the global arena and while we are making excellent progress on that front, the progress isn??t going to show up in the rankings for several years due to point one above.

Third, it is clear how hard it is to move forward when your governments aren??t behind you. This year I feel fortunate to be one of only two Canadian schools (UBC-Sauder that fell from 71st to 77th being the other one) to avoid a precipitous drop in ranking. Given the federal and Ontario indifference (at best) to business education, it has been very hard work to maintain our ranking and too hard for Canadian business schools generally, which is a crying shame for our country. As recently as 2003, Ontario had four schools ranked in the top 40 and Canada eight in the top 100. And at that point in time, the rankings momentum was positive because in 2001 Ontario had only two top 40 schools ?V neither of which was Rotman. Now we are the only top 40 school in all of Canada and Canada has only five top 100 schools, with Queen??s, Calgary and Alberta having dropped entirely out of the rankings.

Other countries like China are investing aggressively in business education ?V and its flagship CEIBS has gone from 92nd to 11th in the rankings. The UK has gone from one top 40 business school to seven as Canada has ceded territory. Over the past five years, the Canadian government has ramped up support for higher education dramatically but virtually none of the additional support has come to business schools. It has increased research funding, infrastructure funding and created the Canada Research Chair and Canada Graduate Fellowships programs. On all of these fronts, resources that have actually flowed to business education in Canada have been less than 10% of what would be business education??s fair share based on proportion of students. The implicit Federal view is that science and technology education contribute to Canadian competitiveness and prosperity while business education plays no role.

It has been worse on the Ontario government front. It chose, with no data whatsoever to support the policy, to end deregulated tuition for professional programs, freeze tuition completely for two years and then strictly regulate tuition increases going forward. The tuition freeze cost the Rotman School approximately $3 million/year in funds available to improve the program and $1.5 million/year in needs-based financial aid. Scaled to their various respective sizes, it cost Ivey, Schulich and Queen??s proportionate amounts. Partially as a result of this policy, Ontario now has one top 40 school (Rotman at 27th) rather than four, one that has fallen to 41st (Ivey), one that has plummeted almost out of the top 50 (Schulich at 49th), and one that has fallen entirely out of the top 100 (Queen??s). It is hard to figure how this is good for the province.

As I have said, I feel lucky that we have been able to withstand this government antipathy thanks to generous donors, strong executive education performance, and careful financial management, but it is beyond my comprehension why our governments think that weakening business education in Canada is in the country??s best interests. The Institute for Competitiveness and Prosperity that I chair will shortly be issuing a paper on management education in Canada that will seek to improve the funding environment for business education in Canada. A little tailwind (i.e. fair share per student from existing programs and freedom to set tuition) on that front rather than a persistent headwind would be nice for a change.

In the meantime, we are going to continue to patiently wait for the lag effect to catch up, aggressively build our international profile, and invest our resources and our energy wisely and thoroughly behind being Canada??s flagship business school on the global scene.

Complete information on the ranking, including the methodology, is available online at:

Roger Martin


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