Times Of Economic Crisis Have Radically Altered The MBA Degree
The financial crisis forced managers back to school, but it has also altered business education – creating closer ties between corporations and MBA providers.
There isn’t a wrong or right time to start your MBA. Instead, there is a less or more appropriate moment in your professional and personal life.
But ever since the financial crisis hit and the turbulence of the uncertain economic environment took over, a different question emerged: do you start an MBA in times of economic stagnation, or do you wait for the storm to pass?
Postponing your MBA for a time when it is clearer the downturn has ended is no rational motive for action. The crisis is indeed persistent and many countries, regions and businesses have been affected. Spain and Italy have been hit hard, Germany and Norway – not as much.
One could select a school in a country that’s better off economically and thus has better options for professional realization. For example, if you live in Greece and have plans for career in finance, perhaps it would be a good idea to apply for an MBA in the UK, Switzerland, the US, Singapore or Hong Kong.
An MBA is also a wise way out of professional spheres in continuous decline. Print media, for example, has experienced constant challenges, even before the crisis. The situation is the same for many production and factory jobs.
With an MBA in your pocket, switching between countries, industries and professions is easier. Undeniably, the crisis has affected graduates’ prospects of employment. However, the statistics confirm that MBAs are well-paid and that the demand for them is strong.
A recent GMAC survey shows the class of 2013 has enjoyed a substantial rise in post-graduation salary levels. For the two-year full-time degree it was 79%, and for the one-year full-time MBA 70%.
So, why is the question “should I wait to get my MBA?” still relevant?
The status quo in the jobs market
When the crisis started, the employment situation was serious and hiring in the investment banking sector in particular plummeted sharply. It was a challenging time, even for some of the top business schools.
They had to take extreme measures. The managing director of MBA career and professional development at Harvard Business School at that time, Jana Kierstead, remembers it well.
“My dean pulled me aside in February [or] March of 2008 and said: ‘I’m a little worried about the market. Could you put together a plan for what you’d do if the bottom fell out?’” she told the Financial Times.
“We grew that program during the crisis – students really needed more individual support because the on-campus job search wasn’t what it was.”
HBS decided that it was academic support and “network-based” job searches that would work. And they were right.
These times have long passed now and albeit far from perfect, the jobs market has become more stable. However, the reputation of the MBA degree has been damaged. In the past five years, holders of MBA degrees have sometimes been blamed as one of the reasons for the financial meltdown.
Some of the practices that bankers on Wall Street and in the City of London used were blamed for putting the financial system on its knees in 2008. Lehman Brothers’ last CEO Richard Fuld is a proud disciple of the excellent NYU Stern. But Richard is just one in a long line of financiers with MBA degrees. Society and politicians pointed their fingers at these managers.
Learning from past mistakes
Many of the top international business institutions have realised the mistakes they made in relation to the crisis. “We failed,” admitted Mark Williams, a Boston University lecturer, in the LA Times. “We were actually, truly, part of the problem. We didn’t identify risks early enough.”
A defining question in business education for a few years has been: how could a business degree realistically contribute not only to boosting shareholders’ value but also to creating a more sustainable business environment? Numerous MBA programs globally have been adapted to new business realities.
The debate about the reasons for the crisis made many schools around the world strengthen the ethical-related content in their programs. USC’s Marshall School of Business, for example, now has a course on accounting ethics. “They’re not supposed to be helping management cook their books,” said Robert Trezevant, an accounting professor at the school, referring to the auditors studying at USC.
“They’re also gate keepers to protect against abuse,” he added.
There isn’t a consensus about how deep the changes in business education should go. Some experts remind us that leadership concepts have been shifting throughout different periods in history. This would mean that what’s happening right now is not unique at all.
“It’s in times of crisis and change that people start reflecting more on leadership,” said Alfons Sauquet, dean of ESADE Business School.
He pointed out that the leading perception of the 1920s was that leadership was actually imposing one’s will. Then, he added, this was replaced by a theory that included other elements – the group role, the organisation and its goals, and later people, situations and emotions.
Alfons also pointed out that the 21st century has rediscovered Douglas McGregor’s Theory that views employees as naturally good people that can self-direct themselves. According to this theory, the most important asset of a company is its employees. “Under this theory, leadership is based on trust, emotions and a shared vision of what is good,” said Alfons.
The more social concept of business would imply that the MBA degree is to open doors to other disciplines, and is set to become a more discursive field. It is also to concentrate more on the search for answers, rather than to maintain the ones it already has.
The reform of the MBA
There have been speculations about the relationship between the most popular business degree in the world and the economic downturn. But the MBA and all its characteristics and educational tools cannot possibly be directly linked to the crisis.
Economic hiccups have happened for centuries, long before the business education industry had started gaining momentum. The fact is that many of the people who were in the spotlight for playing major roles in the recent financial crisis do hold respectable business degrees.
However, an MBA is simply a tool at the disposal of a holder. The degree is an enormous professional advantage, both in terms of the skills and knowledge it certifies, and in terms of the networking opportunities granted to business graduates. But the way a person uses his or her MBA is a personal choice.
Business schools and the business world have been in constant touch ever since the crisis hit, synchronizing their tracks. Corporations communicate to schools the various issues and gaps in the knowledge and skills their graduates have, helping them realise how their programs can be improved. Schools use the tips to adapt their programs and keep them up to date with the demands of the contemporary, turbulent reality.
“They [business schools] will also have to re-think the type of research in which they are engaging, and commit to innovative pedagogies that help rebalance analytical problem solving skills with attention to social responsibility and accountability,” Professor Bodo Schlegelmilch, from the Vienna University of Economics and Business, once said in an article for the Moscow Times. Clearly, he got the situation right.
All in all, deciding to embark on the MBA mission is a topic with many considerations. The timing, along with the financial aspect and the particular program choice, is one of the most difficult ones.
There are various interpretations of the causes and consequences of the financial crisis, but one is undeniable: the economic downturn has contributed to a major transformation both in business and in business education.
The complications resulting from the crisis have helped business schools modify their MBA programs in a way that corresponds with the demands of an unstable economic arena.
The times of crisis are unfortunate for many businesses and for the general employment rates and salaries throughout the world, but what they also are is a truly great moment for starting your MBA journey.
Alexandra Ezhkova is an international project manager for the Access MBA Tour - the leading global organiser of one-to-one business school events, connecting qualified candidates with admissions directors around the world. To register, click here.