Business schools across the globe may have cause for concern.
A rise in companies hiring undergraduates for roles traditionally reserved for the MBA elite, a decline in program applications, an increasingly competitive MBA jobs market and a rise in distance learning are all frequently raised by commentators as a sign of the traditional schools’ decline.
For three years since 2009, applications to U.S business schools failed to increase in volume, and 59 per cent of those MBA programs reported a decline in the domestic application pool, according to the Graduate Management Admissions Council (GMAC).
World-wide, despite expected increases for MBA programs in Asia, schools have experienced sluggish or non-existent growth in applications. Programs in the Asia-Pacific region slowed in the 2013-14 year, with 33 per cent less applications compared with 2012.
Full-time one-year programs in the region also suffered, according to GMAC’s data. Despite a slight increase this year, there is still a 24 per cent drop in such applications compared with 2012.
In Korea, applications plummeted from 4,600 in spring 2009 to 2,560 in spring 2013. “At this point, some schools should seriously worry about their future,” says Kim Yong-min, Dean of the Kookmin Graduate School of Business Administration in Seoul.
In the Eurozone, things are even worse. A majority of European full-time one-year MBA programs continued to lose ground, with just 38 per cent of programs reporting increased application volume last year, on par with 2012.
Economic uncertainty has also affected distance learning, programs whose popularity was once considered unstoppable. In fact, one-quarter of part-time and online MBA programs reported receiving fewer applications for the 2013–2014 incoming class than there were seats available.
Although schools expect more financial support from employers for their students, increased strain on employees’ time results in less part-time programs being taken, says GMAC’s report. “An increasing number of alternative program types may [also] have contributed to declines in applications for professional MBA programs,” the report says.
Reasons cited also include increased competition for jobs. Last month, BusinessBecause reported that initiatives were being launched by business schools in the UK and the U.S to develop closer ties with businesses.
And although most schools have healthy employment statistics, demand for top jobs is no doubt increasing. “Businesses have been less willing to take a chance on MBA recruits with potential, looking instead for those who have the practical skills and experience they are sure can deliver value from day one,” says Mark Davies, Employer Relations Manager at Imperial College Business School.
In leading functions like consulting, demand among MBAs continues to increase. Competition at top firms like McKinsey & Company is fierce. “It is ridiculously competitive and ridiculously hard to get to get into the firm. And I got a very lucky break,” says Imperial MBA Nick Strange, who now consults at the firm.
Although, increases in recruitment can be seen in other sectors such as technology. At Harvard Business School, 18 per cent of job-seeking students landed tech-sector jobs in 2013, up from 12 per cent in 2012.
Infosys plans to hire about 200 MBA graduates in the U.S, Europe and Asia-Pacific region by June this year alone. “Our global MBA hire goes a long way to complement the great technical skills that Infosys already boasts,” said Srikantan Moorthy, the company's Senior Vice President and Group Head of Human Resource Development, at a recent careers fair in London.
“In the long run, this MBA hiring drive will not only increase customer engagement, but will also increase high-end consulting which in-turn will bring in more revenue. Hiring quality individuals will better the Infosys brand and offering.”
But there is also evidence in the States that the value of an MBA degree is declining. While MBAs degrees are still required for certain jobs, some companies have begun to hire undergraduates who are willing to work for considerably less than business school grads.
Though banks still hire plenty of MBAs, the numbers are shrinking in investment banking. The University of Chicago Booth School of Business, a top-ranking U.S school, sent just 35 per cent of its class into finance, down from 43.2 per cent last year.
The Wall Street Journal also reports that there has recently been a significant increase in job opportunities for undergraduates in financial services, the traditional bastion of finance-focused MBAs.
According to the latest recruiting trends report from Michigan State University's Collegiate Employment Research Institute, employers forecast a 7 per cent increase in undergraduate hiring for the class graduating in 2014, buoyed by gains in professional services and manufacturing.
Financial services respondents also said they expect to cut jobs for graduate business students by a shocking 58 per cent this year.
To cope with these challenges, business schools have started a number of innovative approaches. Rotman School of Management in Canada, for example, launched an innovative course – Foundations of Integrative Thinking – which they say will enable leaders to tackle the most complicated problems, and make better decisions.
The three-day program will take place in April and cost about $5,000.
Other experiential learning opportunities have cropped up at U.S. schools. The Fuqua School of Business, for example, offers Daytime MBA students the chance to take part in the Global Academic Travel Experience (GATE).
Duke MBAs study the business, culture, economy and politics of a region for six weeks, before traveling to the area for two weeks to visit multinational corporations, local enterprises, government agencies, partner schools and alumni in the region.
Ross Business School in Michigan has run a Multidisciplinary Action Project, an experiential learning course that places teams of first-year MBAs in a company, to learn how to integrate various business disciplines and bring theory and experience together into action.
In response to criticism that MBA programs are too long on theory and sometimes short on practical experience, many schools have invented or expanded specialized Master’s programs in a particular management function.
According to GMAC, Master in Management programs continued to show evidence of strong cumulative growth in 2013, with 61 per cent of schools surveyed reporting increased application volume.
These specializations vary greatly from traditional business functions such as finance or accounting, to areas focusing on a particular industry such as healthcare.
Rotman, for example, established a Centre for Health Sector Strategy and offer an MBA specialization in Health Sector Management. Stern School of Business at New York University runs a one-year, part-time Master of Science in business analytics.
These specialist programs are, perhaps, the answer for prospective MBAs whom have eyes for just one industry or function. “It’s not like other schools’ programs. It was a huge consideration when I chose Rotman and I knew I was more likely to be exposed to bigger brands,” says Leslie Wong, an alumnus of the healthcare program at Rotman.
She landed a job at an arm of Johnson and Johnson, the pharmaceuticals giant, after graduation, and credits the healthcare specialisation for giving her the tool-kit to make it in the sector.
Specialist programs and experiential learning are not, of course, job-guarantees. MBAs will still have to fight tooth and nail to secure management careers.
But business schools too have started to respond to a very real decline in applications.