By Sharon Reed Abboud
The Master of Business Administration (the MBA) has long been seen as the “magic ticket” for career advancement, but should you consider an MBA despite the lengthy time commitment and potentially high cost?
“There is no doubt that the knowledge and skills acquired in a good MBA program gives the graduate a boost into leadership positions,” said Paul Danos, Dean of Tuck School of Business, Dartmouth University. “We did a survey of Tuck graduates and found that nearly 70 percent of Tuck alumni were in positions of leadership in the organization, that is, CEO, Chairman, Partner, Owner, CFO, etc.” According to Danos, Tuck students often more than double their salaries.
Bill Brady, director of Graduate Career Management, the Marriott School of Management, Brigham Young University, agrees. MBA’s are “like bachelor’s degrees in the 90’s,” said Brady, and since MBAs are becoming available by so many resources, “it is more common to expect managers to have the degree.”
MBA benefits abound. Mindy Storrie, president, MBA Career Services Council and director of MBA Career Services at Kenan-Flagler Business School, the University of North Carolina, adds, “The rewards are immense for a mid-career MBA student. An MBA can be one of the best ways to increase your business knowledge base.”
According to Brady, there are two reasons for obtaining an MBA: first, to obtain advanced skills to “provide a power boost to an individual’s career” and second, to change careers, for example, from retail sales to finance.
According to a 2004 survey by the Graduate Management Admission Council (GMAC), the majority of the MBA class that graduated in 2004 (54 percent) were using their MBA as a way of changing career tracks. The survey showed that that the average graduate made roughly $56,500 before earning the degree and about $76,000 afterward. GMAC surveyed 6,223 MBA graduates from 128 business schools in 16 countries. Twenty-one percent of the respondents were from outside the United States.
“We have long referred to the MBA as a global currency – a degree that symbolizes value all over the world. To many people, that value comes in the form of career mobility,” said David A. Wilson, president of GMAC.
Daniel R. Nagy, Associate Dean of the Fuqua School of Business, Duke University, said that an MBA can aid in a person’s career advancement because “if you start at a higher level post MBA in a career path with clear promotional levels (e.g. brand management, consulting, I-banking, etc.) than you will certainly move quickly through the first several levels of management.” But, “after that careers move at one’s competency level,” Nagy added.
Brady agrees. “Simply getting an MBA is not sufficient to make me successful,” he said, “It gives a knowledge advantage only if that advantage can be effectively applied.”
Job Experience Needed First
The key to success, according to experts, is getting relevant job experience before beginning your MBA. According to Storrie, “An MBA can always be valuable, but I believe at least a few years of experience is best, and five or more is even better.” Storrie explained that students can relate more effectively if they have already “been exposed to similar situations and can identify first-hand with the situations being discussed.”
Brady said he uses an analogy of a carpenter when advising students to get experience before getting their MBA: “If I give you a hammer, nails and wood, and tell you to nail the wood together, even though you have never done this in your life, you will probably find a way to accomplish the instructions. If instead I give you the instructions and have you go watch a journey carpenter, you will see the carpenter reach in the tool box, pull out a staple gun and nail the wood together.
“An MBA is roughly a box of business tools. If I give you the tools after you have some experience, you will probably see practical applications and use more of the tools,” explained Brady.
MBA Applications Dipped
Nagy said that the overwhelming reason that people went back to business schools for an MBA in the 1990s through early 2000 was to obtain the “magic ticket” to help those “stuck in business careers they did not like move into more attractive careers.”
But “the color faded from this bloom after the dot-com bust and post 911 and applications started to dip,” Nagy said, yet “there was still an attractiveness to the MBA, especially from a top school, that it could help career changers.” Nagy predicts that the MBA will regain some of the attraction lost in recent years because of the market rebound. Also, consulting firms and I-banks are returning to his campus (the Fuqua School of Business) in “big numbers” to recruit students. Typically half of the hires in the late nineties came from those two industries, Nagy explained.
According to the 2004 GMAC survey, improvement in the economy has allowed more companies to hire new MBAs. The number of recruiters unable to hire recent MBA graduates dropped by half this year – from 23 percent in 2003 to 12 percent in 2004. Top jobs for hiring by recruiters were finance, marketing and accounting – a continuing trend from the previous year. A total of 1,300 recruiters representing 1,004 companies participated in the GMAC survey.
In another recent survey, the MBA Career Services Council also concluded that the job market is improving for MBA graduates. On-campus recruiting has increased by 81 percent and a higher percentage of 2004 graduates received at least one job offer within 3 months of graduation. Ninety-three percent of the 57 schools surveyed predicted that the 2004-5 job market would be even better than this past year. Top industries for recruitment included finance and consulting.
Options for obtaining an MBA include full time and part time traditional programs, evening programs, weekend “executive” programs, and online programs. Costs vary widely and some companies will reimburse their employee’s tuition for MBA study.
According to the GMAC survey, the average starting annual base salary for MBA graduates vary by program type, with full-time MBA graduates averaging $80,000, part-time: $75,000 and Executive: $92,500.
Expert opinions vary on which mode of delivery – traditional versus online – is preferable. Proponents of traditional MBA program emphasize the importance of “total immersion.” In this type of program, students have continuous in-person access to teachers and other students. They have the opportunity to a network of business contacts.
“I believe…the full time format at top MBA programs is the best learning and leadership experience in all of higher education,” Danos said.
Leslie E. Vance, Ph.d, and Mentor in Information Technology at Western Governors University (an online university), said that regionally-accredited MBA programs have to meet the same academic requirement regardless of the mode of delivery.
“In an online MBA program, the student works in an educational environment which more closely mirrors today’s business reality…a world-class executive must be able to collaborate with colleagues who are separated by thousands of miles and several time zones in order to achieve business goals,” Vance said. “A prospective student who is thinking ahead in their career will want to be sure that the MBA program they choose enables them to study in an environment which more closely mirrors today’s business reality.”
Online programs can be conducted purely online or in a combined online/traditional format. An example of this program is the Duke Global Executive MBA, which includes lengthy periods of residency with intense instruction followed by extended periods of distance learning.
At the University of North Carolina, students can enroll in a variety of program options, including the “OneMBA” program. In this program, executives meet one weekend per month near Washington, DC and have four weeklong residencies with partner schools in the US, Europe, Latin America and Asia.
And while full time program options may seem costly for a mid-career changer, many students finance full time programs with loans and scholarships.
According to Dean Paul Danos at Tuck School of Business, “Finances alone need not deter the applicant. Most students at top schools invest in their futures and borrowing is usually a part of the financing of their two years in the program. However, the upgrade in career options, the amounts earned in paid summer internships and the salaries upon graduation more than offset the initial costs.”
Is the MBA for You?
Storrie advises potential MBA students to consider why they want an MBA, how it fits into their long-term career interests, and then match their interests to the right program. Prospective students should explore career options and find out what skills are important for the positions they
desire. It is important to research what different MBA programs have to offer by reviewing their literature and talking to MBA grads of those programs about their experiences.
“In this scenario,” said Storrie, “the MBA graduate has the best chance of feeling they received a great education and it took them a step closer to achieving their career goals.”
But, according to Brady, “Regardless of the school or even emphasis of the program, the degree means very little three to five years after graduation; the focus moves entirely away from credential to performance…if the degree will help improve their performance, go for it!”
Sharon Reed Abboud is a Northern Virginia-based freelance writer.