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German Business School Market Begins To Boom

Germany's business schools are on the rise. Domestic and international candidates are enrolling in record numbers, thanks to tasty MBA job prospects.

Sat Jul 26 2014

Ralf Bürkle’s job has not gotten any easier. As director of marketing at Mannheim Business School, he has begun competing with Europe’s finest business schools, selling Germany’s MBA programs across the Continent.

“In the past five years, we have seen a significant increase in prospect and applicant numbers,” he enthuses. “For the full-time MBA, we are now competing with the top European institutions,” Ralf adds.

The business school market in Germany is beginning to boom, buoyed by strong job prospects and a mighty economy. International candidates have begun flocking to Berlin, Frankfurt and Munich in search of academic rigor and post-program careers.

But it is not just outsiders who are banking on Germany’s business schools. Overseas companies are warming to the country’s executive courses and EMBA programs.

Domestic employers also face skill shortages and need international managers who can sure-up their products and services, and expand into new markets.

Yet this is a far cry from times past. For decades, Germany was a successful exporter of management talent – students sought business schools in the established European education markets such as France, Spain and the UK, rather than in their home cities.

“German business degrees are yet to receive recognition. Many German employers still don’t know what an MBA is,” says Mithun Sridharan, an MBA graduate of the Berlin-based European School of Management and Technology (ESMT).

This perception is reflected in the lack of German business schools featured in most MBA rankings. In 2014, only ESMT and Mannheim Business School made the cut.

But Germany is on the cusp of a revolution. The MBA market is set to bloom into a German giant. The established schools are rolling out a cadre of new programs to cater for increased demand.

ESMT is developing a Master in Management program to complement its MBA and Executive MBA courses. HHL Leipzig Graduate School of Management is crafting a beefed-up, fast-track version of its part-time MBA program with electives in healthcare and regulation management. The Frankfurt School of Finance & Management will launch a full-time MBA program in September.

Schools from outside Germany are hungry for a slice of the market. Spain’s IESE Business School is opening an executive education campus in Munich in October, while US-based Kellogg School of Management teaches an Executive MBA in Vallendar, outside of Frankfurt.

The trend is compounded by an increasing number of GMAT test-takers who send their scores to German business schools. Numbers have almost tripled in the past five years. Figures increased from about 5,800 in 2012 to around 6,500 last year.

It is thought that international MBA candidates are attracted by Germany’s strong economy which is underpinned by an SME market which promises much job opportunity, and lower tuition fees.

Domestic students also share the enthusiasm. Germany has overtaken the US as the top country which German’s send their GMAT scores to, according to Graduate Management Admissions Council data.

Ten years ago you might go to a recruitment fair in Germany and a German student wouldn’t even have heard of the GMAT,” says Ben Glover, GMAC director for Europe.

German business schools are reporting unprecedented growth in enrolment for their post-graduate degree programs.

Since launching a full-time MBA program in 2006, enrolment at ESMT has doubled, says Nick Barniville, director of degree programs. “And application numbers continue to rise,” he says.

The school’s current cohort of 63 students is made up of 34 different nationalities. Over 90% of the students come from outside of Germany, adds Nick, and 50% of their Executive MBA students are international.

The legion of internationals lured to Germany is buoyed by the Bologna Process, a European Commission initiative designed to increase compatibility between Europe’s education systems, and student mobility.

However the figures, while promising, are modest compared to Europe’s traditional business school providers. Some commentators argue that Germany has not done enough to amplify demand.

This is a particularly problematic claim for the country, as small and medium-size enterprises, which struggle to attract management talent, account for about 52% of Germany’s economic output.

According to data from Germany’s Institute for Employment Research, roughly a million SME jobs were vacant in the fourth quarter of 2013 – 400,000 of which were advertised by companies with less than ten employees.

According to the latest SME Barometer report by EY, the consultancy, a shortage of qualified employees is costing those companies €31 billion in lost revenue each year.

“Successful SMEs, which are often considered to be the backbone of the German economy, are looking for highly skilled specialists and executives,” says Ralf.

Up to 250,000 new jobs will be created in the SME sector this year, according to the Federal Ministry for Economic Affairs and Energy.

One obstacle to international graduates being hired is language. Most German MBA programs are taught in English – but a good command of the German language will be needed at an executive level, says Ralf.

It has not deterred foreign students branching out to the region’s schools, however. At Mannheim, 70% to 80% of full-time MBA students are from outside Germany, he says, and 70% of the last three graduating classes sought careers there.

Its MBA, which costs €33,000, made it into the FT’s full-time MBA ranking in 2013.

“Companies have started many initiatives to attract talent from all over the world,” says Ralf. “Germany has a very healthy job market at the moment.”

At Germany’s European Business School (EBS), an MBA costs up to €32,500. About 80% of the school’s MBA students are international, and demand has increased due to a new focus on internationalization, says Silke Herzog, a press officer.

She adds that the percentage of students with a foreign passport at EBS has increased from 25.37% to 28.75%.

About 90% of their MBA students seek work in Germany after graduating.  

“The competition for the best specialists and managers is, today, the decisive challenge of the future for organizations… And our MBA and EMBA graduates are therefore in high demand,” says Silke.

Last year ESMT was granted the right to award PhDs, and its new Master’s program will offer students an internship of up to six months.

Its MBA program, which costs €38,000 in tuition and fees, became one of the top-100-ranked programs globally earlier this year.

On average, about 70% of their full-time MBA graduates work in Germany after the program, says Nick. A further 10% work within German corporations abroad.

“We have seen an increase in employer demand, not only caused by the strong economy but also by demographic change within the country. It has become difficult for German companies to fill vacancies,” he says.

Germany has also loosened its visa and employment laws, he adds.

“Making it much easier for non-EU nationals to take up employment within the country.”

Mannheim Business School takes issue with the rise of Germany’s universities of applied sciences, which are designed with a focus on teaching professional skills.

Many of them have started offering MBA degrees, threatening to steal some of the business schools’ thunder.

There are thought to be more than 400 MBA programs offered in Germany – but many of them are considered second-rate, suggests Ralf.

“Only a few of them meet the international top standards,” he says.

Ralf adds: “They are rather specialized Master’s programs, as they often focus on bachelor graduates without job experience, or as they are sometimes completely or at least partially taught in German.”

Their lack of English language options will deter some MBA candidates – although many will seek to develop German language skills in preparation for a career there.

Nick from ESMT, however, remains unconvinced: “The MBAs offered by most colleges of applied sciences have a regional focus or are very specialized, so it is much like comparing apples and oranges.”

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