Thirty years ago, MBAs were a relatively rare degree and became a passport to the top of many organisations. The MBA’s currency has devalued somewhat since then. Teresa Russell talks with CEOs and HR professionals about the MBA’s present day value and relevance
Thirty years ago, MBAs were a relatively rare degree and became a passport to the top of many organisations. The MBA’s currency has devalued somewhat since then. Teresa Russell talks with CEOs and HR professionals about the MBA’s present day value and relevance
Australia today, there are more than 40 universities offering over 80 types of Master of Business Administration (MBA) degrees to 27,700 students. The large numbers of graduates entering the marketplace has given rise to the joke that MBA now stands for ‘Master of Bloody Anything’.
However, according to the 2004 AFR BOSS survey of MBA courses, “the qualification remains valued by alumni – although not necessarily as a way to immediately enhance their careers. What was once a mid-career course is now popular with those who have recently entered the workforce: the average age (of graduates) is 32.”
Courses range from 1–2 years in duration (2–4 years part time) and cost between $10,000 and $48,000 for full-time, domestic students. Although this is a heavy investment, when compared to the prestigious Harvard Business School’s course fees at US$67,300 for a two-year full-time degree, Australian degrees are still very affordable.
University rankings
There are a number of publications that rank Australia’s business schools, such as Asia Inc. Magazine, AFR BOSS and The Financial Times (UK). These rankings are a bit like winning an Oscar. They’re very important for those business schools that do win, but are dismissed as unimportant by those who never win or even get nominated. The universities use the rankings to differentiate their brand and to attract better quality academics and students.
Alan Piper is the Director General of WA’s Department of Justice and an early graduate (1981) of UWA’s MBA program. “It does matter which university you attend. Part of the value of an MBA is the quality of the cohort you do it through. Rankings are a good indicator, but no guarantee of the quality of the graduate. They are a bit of a self-fulfilling prophecy, because schools that are highly ranked attract a more able group of students, making it a better program,” Piper explains.
Work experience
Sam Toppenberg is Southcorp’s global manager organisational development and a graduate of the Australian Graduate School of Management’s (AGSM’s) MBA program. She says that the value of an MBA depends on what else the graduate has done. “You can’t walk straight out of uni and into the workforce and change the world. You need to have solid work experience. The theory stuff is hard wired in [during an MBA] and if you have good work experience, you can apply that theory well,”Toppenberg believes.
Brett Wright, group executive human resources for St.George Bank and 1989 graduate of Sydney University’s MBA program agrees. “It’s not the qualification per se that is important. It’s what impact it has had on your experience. I hire people for what they’ve done, not because of any degree they hold. A proven track record is what we value. If you’ve got the money these days, you can do an MBA,” Wright claims.
Alan Piper takes it a step further. “I have a firm view that any degree is about a skill-set, not about the person. An MBA gives you a good base in skills such as IR, people management and financial understanding – a broadened perspective and an ability to deal with complex situations on a day-to-day basis. It’s a good base, but other personal skills, such as leadership, help you take it somewhere,”he says. “All MBAs can’t necessarily become managers,” Piper adds.
Tim Trumper, managing director of publishing company Time Inc. South Pacific did his MBA by correspondence through UNE. “I see an MBA degree as the beginning of learning, not the end of it. When I’m hiring someone, I look at the whole package – work experience plus any formal education. People must have well developed careers first. If all else is equal, an MBA on a CV probably shows that the candidate has gumption, a strong work ethic and is open to learning,”Trumper asserts.
Networking
Many universities, especially those considered top-tier in the various rankings, actively manage networking among its alumni. There are several reasons for this. High profile graduates are great free advertising for any business school. The more successful any university’s graduates are, the higher the quality of new students they will attract. The greater the competition for enrolment, the higher price they can charge for a degree. That’s the cynical view.
It’s also true that the value of an MBA can be extracted over a lifetime and is not necessarily realised in the first three years after graduation. Jo Blackwell, manager people relations for Qantas’regional airlines, graduated with an MBA from Melbourne Business School (MBS) in 1999. One of the reasons she chose MBS was for the future networking opportunities among its graduates. She also had an opportunity to do a company MBA (through her employer at the time, Ford Motor Company), but chose MBS instead. “Although I understand the need for distance learning courses, I was clear about why I wanted to do an MBA and networking with high quality graduates was a part of that,” says Blackwell.
ROI
If there are so many more MBAs in the marketplace, is it easier these days to get good value for money when employing them? Time Inc’s Trumper thinks that most people working in organisations know their own value because industry benchmarks are readily available. People with solid work experience and an MBA therefore have a good sense of salary expectations.
Southcorp’s Toppenberg believes graduates’salary expectations depend on the size of their egos. “Some people think they are here to save the world. Others try to drive up their own value by telling everyone how hard their MBA was. Generally, however, hiring a good person still gives you good value for money,” she believes.
Some of the top-tier schools try to create an air of eliteness in their MBA graduates. They advertise salary ranges of their alumni, implying a marked (and relatively sudden) increase in value as a result of completing an MBA. Jo Blackwell advises caution when looking at these statistics. “You should always consider both the salary and the work experience people have when they begin their MBA, when looking at graduate salaries. The industry people work in along with their chosen professions also affect the salary they are paid,”she warns.
Alan Piper thinks there’s a small group of people who enter any program thinking it’s the one answer. “But you need many things to make yourself highly employable. The main reason that gaps exist between expectation and actual salaries is because personal qualities are lacking,” he observes.
Corporate partnerships
St.George Bank decided a few years ago that it “wanted to build muscle in its management ranks”, according to Wright. One way to do this, he recalls, was by partnering with an MBA provider (International Marketing Institute of Australia and Charles Sturt University) and offering an in-house MBA to its staff. The company currently has 18 people enrolled in its 12-unit MBA program that utilises both online and face-to-face learning. The first person to complete the course will graduate in a few months.
“One of the reasons we introduced the MBA was to make it easier for our staff to take the first steps with further study. We have a philosophy of lifelong learning at St.George, so it’s a good cultural fit and helps us execute our retention and talent management strategies,” Wright says. Any employee at St.George can apply to do the MBA, but the bank decides whom it will pay for. Staff can be sponsored to attend other universities, and these are evaluated on their individual merits.
When working for Ford, Jo Blackwell decided against embarking on that company’s MBA program through RMIT because she wanted exposure to other industries as well as the ability to network with a broad range of students. “The good thing about company MBA programs is that you get great exposure and networking within your organisation, but I didn’t want to be doing organisational behaviour assignments on Ford,” she says.
Future trends
Business school MBAs now compete with other styles of management and executive training. These include an increasing array of specialised Masters programs that offer traditional MBA subjects along with specific professional content. Alan Piper says it’s important to look under the MBA label these days to understand what optional content was studied.
All those interviewed for this article advocated undertaking MBA studies, as long as the student is self-disciplined enough to put in the time to get through the work. The general consensus is that MBAs are an excellent broad degree that helps you to understand all aspects of business from organisational behaviour to financial management. However, nothing beats solid work experience and, when this is combined with an MBA degree, this becomes much more attractive to an organisation.
