MBA no guarantee of success

In today's Indianapolis Star there is an article about the future of MBA's that doesn't present a very bright future.

The article is accessible online here.

 

Even an MBA can do it!

That was funny.

Of course, I don't have an MBA.

 

Interestingly, most of the schools mentioned in the article are "elite" schools. It would be more interesting (to me) to hear about the fate of the majority of students who attend more plebeian schools.

I also thought the ad very amusing. (And I too do not have an MBA.)

 

Informative article, thanks for posting it. I don't agree with all of the points mentioned. For example, declining enrollment isn't proof-positive that the job market for MBA holders is declining, the reverse could eventually be true as number of MBA holders thins out (supply vs. demand). It's good to know that the value of an MBA may be changing though, it will certainly force me to look into this further once I get to that point in my educational plan.

 

You're welcome. I cannot address the article at all because I know absolutely nothing about business.

 

I would be interested to know whether the decline in applications and increase in unemployment applies equally to "general" master's degrees in business and such professional qualifications as the Master of Accountancy or Master of Information Technology.

I don't believe that JD applications are down by much, if at all, though that's little more than an impression on my part. Certainly here in New Mexico there are entry jobs for lawyers, especially if they are willing to relocate outside of Santa Fe and Albuquerque.

Of course there are about 190 ABA law schools in the US but thousands of MBA programs, or so I've heard.

 

Unfortunately there's some truth to this. The MBA doesn't pack the punch it once had back in the 1980s-1990s. When the job market is saturated with MBA graduates, employers get to pick the best and pay the least.
The ivy league school graduates will always have first pick at the better jobs. Everyone else gets to stand in line and hope for a lucky break. The grads who get into management consulting still have a chance at making some good bucks.
I must also emphasize the fact that in some business circles, it's not what you know but who you know. Getting to the top requires political savvy, determination and squeezing the palm. The MBA only serves as a meal ticket to get in the door.

 

I think it's a little bizarre that the MBA has had such a run in the first place. The idea that two years of coursework could prepare anyone for high level management is crazy. What other discipline offers so much for such a relatively small investment?

Once upon a time, there were few MBA programs, and most of the ones that existed were from elite schools. A nice pipeline was established to higher levels of management, because MBA's from elite schools like to hire other MBA's from elite schools, thus managers validated their own degree in the process.

Then other schools cashed in. They hoped that if they duplicated the curriculum, they could duplicate the results. That dream has only partially been fulfilled.

It's pretty well documented that the knowledge and skills acquired during an MBA program don't really translate into results in the business world. In fact, some studies (both anecdotal and academic) claim that MBA coursework actually hurts (creates the tendency to view every problem like an MBA case study e.g.).

I still claim (despite much heated debate here in the past on this point) that the main benefit of an MBA is the signal that it sends. If you graduate from an elite program, you send the signal that you are smart (presumably), and willing to work very hard (since you survived), hence the obsession (no other word for it) with the prestige of programs. The curriculum/knowledge gained is totally secondary.

I'm definitely not saying the curriculum is worthless. I think much of it can be quite interesting and is well worth studying. It's just that the curriculum is not really what defines the MBA. It's not what the market really values, which is why MBA's are often referred to as "meal tickets", "golden passports" and the like.

 

Why restrict it to the business world? Don't those characteristics apply to just about every facet of life---politics, military, church, social organizations, etc etc

Bill Hurd

 

This is true. But with the thousands of MBA grads that are entering the workforce each year, the prestige is no longer there and as a result, grads now have to play the same games as politicians in order to get ahead.
We get quite a few MBA grads knocking at our door looking for work. Some of them have very impressive GPA scores. But with out political connections, they eventually get turned away.

 

It will be interesting to see what happens to the MBA value once the job market improves. Right now, I hire experience. If they have an MBA, then that's good, but experience is king. It's been so difficult to get headcount approved the last few years, that I can't take a chance on hiring potential based on education. I have to hire individuals who have proven themselves outside academia. Fortunately, people are pretty easy to find right now. If the employment rate drops, then I'll be able to hire MBA's based on their education again.

 

Encarta just put out a study that says things a bit differently.

http://encarta.msn.com/encnet/departments/grad/?article=MBAsOnTheRise

 

I wonder whta the trend is for students to go straight from the undergrad level to the MBA. I haven't seen any, but maybe there are some out there. Do you have experience with seeing a great number of resumes that have only schooling, with no work experience?

 

Please note that the Encarta article you refer to was written back in 2001; I remember reading it when it first came out. Note also that all the statistics quoted in the article are from either 2000 or 2001.

Regards,

Michael Lloyd
Mill Creek, Washington USA

 

I didn't notice that, thanks for noting that, that changes things a bit.

 

MBA saturation is everwhere. In the Montreal area in Canada, GMAT scores were increased from 550 to 600 in almost all the schools in order to reduce the amount of MBAs in the job market.

General Management MBAs are also thing of the past. Most of the New MBAs combine certifications like CMA, CGA or CFA as part of the MBA program in order to improve the chances of the graduate of getting top employment.

Others are technical MBAs like the ones in IT or manufacturing management where the student get also "technical" skills in high demand. Some MBAs in IT even teach programming and database management to their graduates.

I think the idea is to stay away from the general MBA and look for a "value" added MBA that can give a competitive advantage to the student in the workplace.

 

"I wonder whta the trend is for students to go straight from the undergrad level to the MBA. I haven't seen any, but maybe there are some out there. Do you have experience with seeing a great number of resumes that have only schooling, with no work experience?"

I haven't kept track of all of them, but it seems to me that the trend is that more students are pursing an MBA earlier in their career than they used to. My belief is that this is for two reasons. First, the job market is so soft right now, that a lot of students might be opting to stay in school Vs test the market. Secondly, there are more schools to choose from that don't require extensive work experience. It's pretty easy to get a MBA nowadays.

If I were to quantify what an MBA was worth to me as a hiring manager, I would say it was worth three years of job experience. Most of the positions I post are for and minimum of 1) an MBA + 3-5 years experience OR 2) a bachelors with 8+ years of experience.

Where the MBA degree shines, in my experience, is in helping and individual progress in a company once they are hired. MBA's should have more tools available to them than those without the education and therefore contribute more to the company of the long run which will allow them to climb the ladder a bit faster.

This goes back to the crux of my problem as a hiring manager. I would rather hire an MBA for the long term, but usually opt to hire someone who can do the job NOW rather than wait for an MBA grad with 3 years of experience to figure out which end is up. I know that it's a bit short sighted of me to hire in this manner, but it's a tough market out there and I don't have the luxury of extra time to train an MBA grad without much actual experience.

 

I think it is a good policy. The MBA might be able to contribute more in the long run but the reality is that many will leave for many opportunities in the future so you cannot rely on the MBA to stay.

 

My guess is that you would hire someone with 10 years of experience and an undergraduate degree over a freshly minted MBA. Your strategy is conservative. Yet, I agree with your philosophy. The MBA can no longer be seen as a meal ticket. The job market has too many well seasoned executives and managers out there who are far more valuable to companies than recent MBA graduates. Again, this may change with the employment rate.

 

MBA success

Interesting article. I agree wholeheartedly. I know some MBA's from from VERY good schools that have failed miserably and some from " regular " schools that have had great success.

Buti t's like everything else. You can have an MBA from Harvard but if you don't have the " practical " skills coupled with the smarts you will fail.

Perfect combination:

MBA
Years of practical experience
connections
charisma

Note that most MBA programs are requiring work experience. There's a reason for it. You can have every degree under the sun and it won't work if you can't apply it to the real world.