Are MBAs Worth Fat Paychecks? | Businesses still say yes, but complaints on the rise that MBA programs need to specialize
Having the initials “MBA” on your resume is often a golden ticket, a sure-fire path to career advancement and a fatter salary.
A Masters of Business Administration degree can bring in a paycheck as high as $167,000 — to start. On average, an MBA earns about $122,000 in the United States, according to a recent Financial Times survey.
And if that MBA was earned at a top-tier school, MBA graduates are the ones choosing their employers, not the other way around.
Although corporations continue to shell out big bucks to hire MBAs, some academics and businessmen are rumbling that they are not worth the money.
Joshua Howarth of Robert Half International, who manages Connecticut offices for the staffing industry giant, said business’ most common complaint is that many MBA graduates have a fairly surface knowledge of their subject matter. They can crunch the numbers, but they can’t explain the “why” behind the numbers — they struggle to present in-depth analysis that can explain what the numbers means on a practical level.
Still Attractive
MBA graduates are still attractive to corporations, he said, because they know more about how businesses operate, but an MBA program structured toward a more specific discipline might be an improvement over current MBA programs.
The University of Connecticut will be taking it one step further, says P. Christopher Earley, the new dean of UConn’s business school.
Instead of creating more specific, hands-on curriculum for the MBA program, Earley wants to channel students into something different altogether. Instead of getting a general MBA, students would get degrees in specialized fields such as a Masters in Real Estate Finance or a Masters in the Science of Risk Management. It would require offering more in-depth classes, but such changes could be made with the current faulty pool already in place, he said. He wants to have his plan in place by Fall 2009.
UConn’s MBA program would remain, he said, but it will be kept small and elite, ideal for senior and experienced managers to pursue after they’ve worked for eight to 10 years.
Earley believes the general MBA is on a downward path, and UConn needs to be on the cutting edge of something different. He wants to revise UConn’s program by Fall 2009.
Fresh to his UConn post from the National University of Singapore’s school of business, Earley wants to bring in changes that he says are already going on outside United States borders.
It’s time U.S. schools figured this out, he said, and he wants UConn to be ahead of the curve.
“In Europe, this is already a fairly significant movement,” he said.
More Experience Please
Earley believes that the more specialized model will become the new norm, with general MBAs all but dying out except at elite schools or in low-end, Internet-based programs.
The problem with MBAs as they are now, Earley says, is that many candidates go for the degree with only a few years’ work experience. The general MBA doesn’t sharpen them toward a particular focus, so they have a lot of shallow experience — not enough to make them expert in anything, Early said, even though such MBA graduates still expect higher salaries.
Kevin B. Taylor, MBA program director for Quinnipiac University, said it’s tough to imagine Earley’s theory that MBAs will die out. Students, universities and corporations would all have to agree that the general business degree should go away, he said and that’s not something most people are prepared to do.
Instead, many academics such as Quinnipiac have just reworked their MBA programs — in Quinnipac’s case, adding more credit hours and ramping up business knowledge emphases.
Boston’s Northeastern University made its own MBA changes two years ago, said Thomas Moore, dean of the College of Business Administration. Rather than moving away from the MBA altogether, Northeastern reworked its programs — but Moore agreed with Earley’s assessment of the MBA’s current flaws.
“The one-size-fits-all, the general MBA, has lost some of its appeal,” he said. “The notion of a broad, general MBA that’s going to create this Renaissance manager and leader, those days are probably gone.”
Northeastern has tried to incorporate more specific programs on issues such as finance, marketing or supply chains, but the college has also added an emphasis on “soft skills” — such as project management abilities, data mining, communication.
Moore said they restructured their program based on advice from corporations such as Fidelity, W.R. Grace, State Street Bank and others, gathered from a series of focus groups. The process took about 15 months.
“It was a pretty extensive change,” he said. The school has since kept in contact with many corporations to gauge how the changes have fared in terms of real-world results, and Moore said those businesses are happy to be more involved in the process. Some of those strengthened academic-corporate bonds have helped increase the number of corporate residencies — similar to internships — offered for their students.
“Companies are paying a premium for the MBA, and they expect results,” he said.
Corporate Response
Corporations such as The Hartford still have their eye on job candidates with “MBA” on their resume. Bridget Cirelli, manager of college relations teams for the company, said people with an MBA generally have sharper critical and strategic thinking skills, and can work independently — that’s attractive to the company, regardless of higher salary expectations.
But Cirelli said job candidates with a more specialized education — possibly such as a special masters or a more finely tuned MBA degree — would also catch potential employers’ eyes.
A job candidate with some kind of specialization obviously really wants to do that kind of work, she said, and is more likely to do a good job at it.
UConn’s Earley acknowledged that academia and the corporate world would likely be slow to let go of the general MBA, but he believes plans like his are better adapted to address the degree’s failings.
With UConn’s new program, it’s likely that students will go for the school’s specialized masters degrees right after getting their bachelor’s degree, so they head out into the work force with specific skills. After a few years’ work experience — likely no fewer than seven years — they can go back and get an executive MBA.
UConn has to be willing to make changes, he said, which is something that many other schools just aren’t doing.
“The MBA has become sacrosanct,” he said, “and they just don’t let go of it.”
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