Are MBA’s worth it for HR pros looking to get ahead?

by HCA06 Sep 2012

The MBA has long been held as rung to climb for any HR leader wanting to prove their business know-how. While it’s also certainly true that no degree could possibly cover off the functional, technical and interpersonal skills required to be a great leader, an MBA is certainly a step in the right direction.

There are two principal motivators to do an MBA. The first reason may be to gain the knowledge of academic business principals, and secondly, to command more money. According to new research however, the average ROI on gaining an MBA is highest by far for people who go to business school fresh from studying their undergraduate degree.

Research by Andrew Hussey of the University of Memphis recently found that for people who go to business school with absolutely no work experience, the average return on an MBA program is about 20%. Yet, that number drops dramatically for people who have held jobs before getting their MBAs, and sinks to as low as 2.2% for people who have upwards of 19 years’ prior experience.

Hussey hypothesised that the reason for this is primarily because the MBA is used by jobseekers as a ‘signalling’ device that is most effective when a candidate has a skimpy CV. Hussey estimated that 89.6% of the return to the average MBA program comes from the message it sends to prospective employers, rather than from knowledge gains that would make students more productive.

Professor Chris Styles, director of the Australian Graduate School of Management at the University of NSW previously told HC that research has also suggested that the MBA has become too technical and does not include enough about how to become a good manager and leader. “Students often come out of an MBA knowing a great deal, but not necessarily being able to do much,” he said. “Many of the standard MBA programs also miss the opportunity to help students develop as people, that is, increase their self-awareness, develop vital skills, and broaden their perspectives. These are all critical qualities to be an effective manager and leader.”

Yet it’s also paramount to consider the opportunities that an MBA provides in terms of the ability to collaborate with likeminded individuals from different industries and backgrounds, and working on a major project together, in syndicate, can often result in lifelong relationships and networks. “There’s nothing like the cauldron atmosphere of an amphitheatre for throwing an idea out there,” Guys Ford, deputy dean MGSM said. Styles agreed, and feels that MBA providers need to increase their emphasis on experiential learning – learning by doing; the refinement and acquisition of managerial and leadership skill refinement; as well as personal development. “I think we’ll also see more issues or problem-based approaches to curriculum development rather than a program design dominated by siloed, discipline-based approaches. Core disciplinary knowledge is critical, but it has to be placed in the context of the issues and problems managers need to solve,” he said.

Rethinking the ROI and learning goals

Given the close ties between employers, students and business schools, it’s hardly surprising that the onus is now well and truly on tertiary education providers to ‘prove their worth’. Ford said MBA curriculums are undergoing constant review to ensure they are contemporary and fitting in with the needs of managers. He added that in the past it may have been good enough to throw an information session for prospective students and conclude by saying, ‘we produce good leaders’. Today that’s not enough. “If you say, ‘we’re turning out leaders’ the audience asks you to prove it. They want to see where this is being assessed in the program, how student learning goals are being set in that area, and how they are being tested for it.”


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