October 13, 2009
Posted by Ryan Graves
Signals over Qualifiers
Last month I wrote a post called ‘Qualifiers’ about the importance benefit of grad school, specifically an MBA. I was exploring the idea that having an MBA as a qualifier of your success with my friend Daniel and he shared that a more accurate name for the concept I blogged about was ‘Signalling’. In fact apparently this concept won this dude a Nobel Prize.
In economics, more precisely in contract theory, signalling is the idea that one party (termed the agent) conveys some meaningful information about itself to another party (the principal). For example, in Michael Spence’s job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring certain education credentials. The informational value of the credential comes from the fact that the employer assumes it is positively correlated with having greater ability.
I knew I was onto something :). I continue to believe that certain signals are needed in one’s career path. However, I now believe that in my career that signal does not necessarily have to be a graduate degree. That signal can and will come from many different places. I like how Wavell Watson put it in this blog comment:
“I’d say the best signals go in this order: strong references/network > specific experience > specific degrees > generic degrees > certifications > nothing .”
So, for now, I’m pulling back on my interest in an MBA program. If the situation, timing, and need presents itself in the future to prove that an MBA (or other grad degree) is the right move for me I may change my mind. But right now, I believe that specific experience, first, and specific strong references, second, will have a much better ROI for my career.
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