Study: MBA pays off in higher IT salary

May 31, 2005 10:46 AM EDT
Technical experience is good, but having an MBA earns an even fatter paycheck for IT professionals, according to a new study from the University of Michigan business school. Some excerpts:
[T]he labor market values IT professionals with an MBA degree much more than IT professionals without an MBA. Two extra years of IT experience yields a salary advantage of 2.8% (1.4% annually), but a two-year MBA degree provides a salary advantage nearly three times greater -- 8.2%. "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," said M.S. Krishnan, professor of business information technology at U-M's Stephen M. Ross School of Business. "Ever-increasing competitive intensity is fueling the demand for executives with a good grounding in managerial competencies for applying technology in a given business context."
Krishnan and Ross School colleague Sunil Mithas examined total annual compensation for more than 55,000 IT professionals, including senior and middle-level executives, in the U.S. for the period 1999-2002. The study didn't factor in the costs of actually getting the MBA. And for all of the angst over offshoring and other morale-busters, the study confirmed that IT is still a good career field -- except for women.
Across industries, Krishnan and Mithas found that IT firms pay 9.4% higher wages than non-IT companies, while dot-com firms pay 9.6% more to their employees compared to traditional brick-and-mortar companies. Their findings also indicate that female IT professionals earn about 7.8% less than men even after age, job level, education, work experience and other factors are considered. "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."