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Employers Value Work Experience More Than MBA Degrees, Says Business School

Gaining a return on investment is one of MBA candidates' main considerations – but a new report suggests that employers value work experience over the business degree.

Mon Jan 5 2015

It’s one of business students’ main considerations: will an MBA degree be worth the lost earnings and time out of work? According to a new report, employers prefer work experience when selecting candidates for more senior positions.

The London School of Marketing, which teaches managers at leading companies including at oil major BP and Barclays, the financial services group, measured the value of an MBA in today’s jobs market.

It addressed four common arguments in favour of work experience: that an MBA is too general; the financial cost is too great; the return on investment has fallen; and that employers take more notice of work experience.

The report found that employers “prefer work experience” when selecting candidates for higher ranking jobs – but it also argues that an employee will find it more difficult to progress without an MBA, irrespective of their career background.

Lynn Lee, managing director of recruitment firm Atlantic Research Technologies, said that in some sectors employees will likely be kept from reaching the highest ranks without an MBA.

Lynn added: “In many large multinationals and most high-tech start-ups, very few CFOs do not have MBAs, and it is very rare to see a VP [vice president] of sales and marketing at a large multinational without an MBA.”

According to an October study by the Harvard Business Review, about a third of the world’s best performing chief executives leading publically traded companies have MBA degrees.

But MBA programs are often seen as too generalist, the LSM report suggests, focusing on a wide range of functions and industries – many of which may seem less relevant to students with specific career goals.  

LSM also says that MBA degrees can be too expensive, although there are sponsorships and flexible payment structures available. The Association to Advance Collegiate Schools of Business estimates that total MBA tuition has surged by at least a third in the US since 2007.

This is reflected in the amount of students seeking financial aid. More than $7 billion was loaned to US students in 2014, up 25% from 2011, according to loan tracker MeasureOne.

As such there has been an increase in flexible study. For MBA students, options now include weekend study, part-time study and online study.

The LSM report also assessed the argument that the return on investment of an MBA degree may not be worth the costs involved. Separate analysis of data in 2014 by The Economist found that high-priced and high-ranked MBA degrees – such as at Harvard and Wharton – often provide a lesser immediate return on investment.

The higher cash returns are from lower-ranking schools such as HEC Paris. An Aston Business School MBA degree, for instance, sees students netting nearly 65% of their tuition within a year of graduation. IESE Business School in Spain often admits candidates from poor countries who go on to bank lucrative jobs in the west, according to the study.

Yet a survey by the Graduate Management Admissions Council found that a third of MBA graduates recouped the cost of their education within a single year.

LSM’s report concludes that the return on investment of an MBA is still as strong as ever.