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Why More MBAs And Women Get Top Executive Jobs Than Ever Before

New research says that 40% of executives at Fortune 100 companies have MBAs. More female MBAs are in top jobs than ever before, and women climb the corporate ladder faster than men.

Mon Feb 17 2014

BusinessBecause
When it comes to the make-up of the world’s top executives, there are few surprises. And you’re average corporate high-flyer will look something like this: a white, male businessman, in his 50s’, with an MBA degree.

Business school students can take confidence, however, in new research that shows 40 per cent of leading executives are MBA degree holders. Leaders at the very top are also three times as likely to have earned an Ivy League MBA.

But there are also signs that the tide is changing: more top execs come from non-elite universities, and women actually climb the corporate ladder faster than men, according to a new study published last week in the Harvard Business Review.

BusinessBecause reported last month that of the worlds’ top 500 companies, just below a third started their careers with an MBA. But new research suggests that MBAs are even more dominant in the boardroom of Fortune 100 companies; the crème of the crop.

The research, compiled by professors from the University of Pennsylvania’s Wharton School and Spain’s IE Business School, assessed the backgrounds of the top 10 executives at each Fortune 100 company in 2011.

More than 40 per cent of executives from that index in 2011 earned MBAs from the top-20 “elite” schools. The data was taken from MBA rankings in 1988 – to reflect the time that they would have attended business school. The Fuqua School of Business, Harvard Business School, and Dartmouth Tuck are included in the list.

And there is no doubt that having an MBA can be an advantage on the corporate track, agrees Theo Camurca, a recruiter for Burger King EMEA. “Having a MBA degree can be very valuable and we have several people in key positions in the organization with MBA degrees from top schools in Europe, the U.S and around the globe,” he told BusinessBecause.

Mac Schuessler, international president of Global Payments, told us an MBA was "essential" for his rise to the top of the leading global payment processing company. "It demonstrates a level of ambition and also the ability to manage complexity," Mac, who went to  Emory University’s Goizueta Business School in the US, said. "Just the fact that you get your MBA is a testament to the ability to manage your time and priorities effectively."

The Harvard analysis provides an update to research the two professors did 10 years ago. And there are startling differences.

MBAs that come from outside these top 100 companies, for example, are more likely to be hired than those hoping to be promoted from within, the research suggests. “Leaders in top-tier positions tend to have more elite MBAs than those in other tiers, and the proportion of elite MBAs is higher among outside hires than among executives promoted from within,” the report says.

The notion that biding your time and seeking promotion in one company is the best way to develop a long-term career is, seemingly, a thing of the past.

The decline of life-long employees is steep. Despite the rise of executive MBA programs – offering execs a chance to master business skills without quitting their jobs – less than a third of the 2011 Fortune 100 leaders had started their careers with their current employers – a shocking drop from 45 per cent a decade ago, and from 50 per cent in 1980.

Yet, in the United States, this contrasts with data from the U.S. Bureau of Labor Statistics, which shows that managers in 2012 had been with their employers about 12% longer, on average, than managers a decade earlier. A CareerXroads survey also shows that, since 2008, large U.S corporations have been keener to fill vacancies from within than back in 2001.

The Harvard data varies wildly, however. In 2011, Sears executives had been with their employer only three years, on average, and Chevron executives, 33 years. And at the 20 oldest companies in the Fortune 100, almost half their senior executives were lifers, including those at UPS, Chevron and General Motors.

MBAs previously sticking with one career path is down to the economic recession, the report suggests. And since the financial crash of 2008, it has also taken business leaders longer to reach the top. The 2011 executives spent about a year longer in each role than their 2001 counterparts. Over the course of a lengthy career, that is significant.

The average that 2011 executives took to reach their position is about 26 years, averaging almost 17 years with their current employer.

MBAs and other leaders shot to the top fastest at Google, where their time from entry level to the executive suite averaged 14 years. At the other end of the spectrum, Hewlett-Packard and Conoco­Phillips leaders took about 32 years to work their way up.

It is a prerequisite at most business schools to have several years’ experience in industry before starting an MBA. And average age varies from school to school. But the more years you have in work, the more likely you are to reach the top, the research suggests.

Members of HP’s 2011 executive team – among the six oldest in the Fortune 100 – were on average over 58. Google’s head of corporate communications, Jill Hazelbaker, is the youngest at 46.

There has been debate on gender equality in business raging over the past few months. Males still dominate most MBA functions and boardrooms – and there are more men enrolled at most business schools.

Elissa Ellis Sangster, Executive Director of women’s advocacy group Forté Foundation, sums up the problem: "With more women obtaining advanced degrees and participating in the workforce and more dual-income families, the same factors and issues now affect both women and men. Yet we haven’t fully challenged old assumptions.”

But the boardroom is changing and the number of women riding atop Fortune 100 companies has increased. The Wharton/IE school professors found that almost 18 per cent of the top jobs were held by women in 2011. That’s a huge change from 1980, when there were no women among the top 1,000 corporate leaders.

Women are also “slightly more likely” to work in the financial services, health care, and retail industries than elsewhere. They are also more popular in consumer products and, perhaps surprisingly, aerospace companies. At top companies Target, Lockheed Martin and PepsiCo, women hold half the senior management jobs.

Women executives are also more likely to hold MBAs, despite significantly more men obtaining the degree.

Even in the finance sector, which is considered to be one of the most male-dominated, female MBAs are seemingly making great strides. Ying Hu, an MBA student at the Shanghai Advanced Institute of Finance, which is considered the best finance program in the world, agrees. "I am currently in the department of financial market that provides service for other banks. It was easy to get market recognition because of SAIF’s reputation," she says.

Yingzhen Hu, on the same MBA program at SAIF in Shanghai, says that an MBA is crucial for women to reach the top in finance. "The majority of our MBAs have few financial experiences, yet we are hunting jobs in financial areas and we still have obstacles. As soon as we entered SAIF, they got us lots of interviews to search our career goal and build our career planning," she says.

Yet, 17 of the Fortune 100 still have no women in their top-10 roles.

Even more surprisingly, however, was that women in the 2011 group had secured their executive positions about three years earlier in their careers than the men. Although, few of them had risen to the “very top”: only 5 per cent had made it to the highest-level positions, compared with 17 per cent of the men.

“We think the women ascended faster because they were riding a different elevator,” the report says. “Middle-tier female executives had held primarily function-specific roles. Their male colleagues had held more of the general management positions that typically feed the very top executive jobs.”

This analysis confirms that business school is perhaps the best route to a top MBA job. But it also highlights the huge differences in the way companies like to recruit their top executives – and that may suggest differences in leadership styles.

In any case, MBAs shouldn’t be daunted by their age, says Google’s Jill. Google may like their leaders young, but many more conform to the traditions of older, male MBA executives.

“Of course, you can be intimidated. But I learned to conquer fear by working harder and being relentlessly prepared. I stayed confident and when I had set-backs I learned from them and moved on,” she says.

When it comes to encouraging more female business leaders – many of whom have MBAs – role models are essential, she adds. “In every step in my career I’ve had really fantastic role models. And it’s really important for women to have other great women who you can turn to when the sea gets rough.” 

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