General Electric, the American global conglomerate, is a darling of the MBA community. Its business areas from finance to energy recruit up to 100 MBA students each year. Ferdinando Beccalli-Falco, European chief executive, is a big advocate of the MBA as a tool to drive commercial operations.
He believes MBAs thrive in Europe both because of the wealth of experience they add to a business and because they can be groomed into leaders. GE has been hiring graduates from the UK to Italy. It employs 94,000 people across Europe.
GE demonstrates the way the world’s biggest companies benefit from cultivating a leadership pipeline. It is something that most large listed groups are doing, but it presents challenges for graduates who see themselves as future business leaders.
Business schools have become a cluster of leadership developers, from New York to London and from Barcelona to Bombay.
“Leadership is often mentioned as one of the key skills they [employers] are looking for from candidates with an MBA on their CV,” says Dr Claire Collins, associate professor of leadership development at Henley Business School.
Yet notions of leadership still appear to be stuck in the days of stereotypical Hollywood bosses, according to Professor Kiron Ravindran, dean of IE Business School’s Master in Management.
“Qualities of rapid decision making and maintaining a power distance are seen as marks of a stereotypical leader,” says Kiron.
This is wrong. “The leader of the future… Is better off being inclusive; a listener and nurturer of ideas, rather than a herder of followers,” he says.
Overcoming misconceptions of leadership are crucial to businesses’ success, yet they take different approaches when addressing the challenge. Many companies are confused when it comes to leadership development – whether if focusing on individual skills or creating a culture of leadership throughout an organization.
“Leadership skills are clearly in high demand but corporations seem to struggle when it comes to developing them,” says Bernard Garrette, associate dean of HEC Paris’ MBA.
Claire says that “leadership” is difficult to define, but it is a skill that is instantly recognizable in those who possess its traits.
Leadership involves creating and communicating a vision, being resilient in the face of challenges and bringing followers along with you, she says. “Leaders clearly have the will to drive change and the skill to juggle all the facets of this change.” But they also need to develop a strong team, focusing on areas of their weakness. “Leaders know when they don’t have all of the skills,” says Claire.
The answer for many business schools was to develop a unique leadership focus. HEC Paris, for example, launched a Leadership in Global Organizations specialisation, adding to focus areas such as finance and strategy.
Others say that there is no need for a specific leaders’ course because leadership should be ingrained in all modules, and that it is difficult to teach in isolation.
The topic has generated increased interest because of the number of companies which now operate specific leadership development tracks.
An increasing number of graduates start their post-MBA careers by joining these programs, such as online retailer Amazon’s Pathways, carmaker Nissan’s Rotational Development Program, or GE’s Experienced Commercial Leadership Program.
“We offer several programs focused on providing MBA hires with the operational and leadership skills to grow as a leader,” says Miriam Park, Amazon’s director of university recruiting.
She says Amazon’s leadership principles provide an outline for the kind of people who thrive at Amazon – MBAs who want to be owners and who like to take on big challenges.
Students see the appeal. Amazon hired 27 MBA graduates at Michigan Ross in 2014, double the number from last year and making the e-commerce company the school’s top recruiter. Last year at London Business School Amazon hired the most MBAs, topping both Citibank and Google.
The surge in demand for leadership training can be attributed to the increasingly globalized nature of business, according to Bernard at HEC.
“Company executives stress that the capacity to lead is more important than ever before,” he says.
Leadership is one of the so called “soft skills” that are increasingly sought after by employers.
According to a business school alumni survey by the Graduate Management Admissions Council, soft skills account for three of the five top skills MBA graduates use day-to-day in their careers.
Recruiters look for non-technical skills in addition to relevant work experience, according to Bill Driscoll, a regional president at listed human resources consultancy Robert Half International.
“Companies need staff who are leaders, excellent communicators and [are] able to align their business units’ goals with the firm’s big-picture objectives,” he says.
But Professor Carlos Losada, of the department of strategy and general management at ESADE Business School, says companies see leadership as a future potential in MBA graduates, rather than an immediate benefit.
“You often seek them [MBAs] out more for their analytical skills; their ability to solve problems,” he says.
These enhanced career prospects are pushing students into newly developed or enhanced leadership electives.
According to QS, an education research group, of 5,604 MBA applicants surveyed between February 2013 and April 2014, 37.5% planned to specialize in leadership, the fourth most popular specialization and more than the proportion of those who intended to specialize in both finance and marketing.
Delphine Lau is studying the Global MBA program at ESSEC Business School in France. She began the course to help grow her e-commerce start-up, MyCreationDesign.com, which sells furniture to French customers online and through a showroom in Paris.
“The global MBA focuses, from the first day, on improving your leadership,” says Delphine. “Working on leadership also helps me to understand entrepreneurship and how you can transmit it to your team.”
But there are concerns that leadership cannot be “taught”, and that it is best developed in the workplace and not in the classroom.
Carlos at ESADE says it is still a cliché. “Few people know how to truly define leadership or its usefulness.”
Rather than stating leadership on their CV, students need to demonstrate leadership through their actions.
Bernard says it is not the role of an MBA program to act as a “conveyor belt” of leaders. Rather, it is to create an environment in which future leaders can be groomed.
“What distinguishes the business school environment is that there is a wealth of guidance available for those who seek it,” he says.
Where business schools come up short in this department is producing more female business leaders – something which is mirrored in the corporate world. The percentage of females enrolled in top-flight MBA programs is about 32%, according to data compiled by The Economist, but this has barely changed in a decade.
MBA clubs setup for female business leaders are helping to bridge the gap, however. Many business schools have developed sizeable women’s MBA networks.
Kirsten Brito, head of the first Women in Leadership organization at the Australian Graduate School of Management, is hosting a series of networking events to empower female MBA students.
“I've found that although a lot of women agree that we need more leadership training and support programs, it is a whole other thing for women to step up and make this a priority in their careers,” she says.
The next phase of leadership development, however, may be in technology. Business schools are finding ways into the hearts and minds of managers by using medical devices and techniques to enhance leadership qualities.
Heart rate monitors and brain scanning machines are being used in executive classrooms to improve decision making.
Ashridge Business School, for example, ran a program that used heart rate monitors to try to improve executives' performances under pressure. Researchers at MIT Sloan’s Neuroeconomics Laboratory are exploring brain-scanning technology to measure brain activity in experimental subjects who are making real decisions.
Kiron at IE believes that management science has made promising advances in scientific management.
But he adds: “It is time scientific advances in leadership permeated the minds of future leaders.”
For European chief executive Ferdinando, MBAs are fitting seamlessly into GE’s ECLP leadership track. “We should continue to encourage this way of developing talent,” he says.