http://www.dallasnews.com/s/dws/bus/stories/012504dnbusmba.3a7c0.html New school of thought Having an MBA no longer ensures a prosperous journey 01:26 PM CST on Saturday, January 24, 2004 By KATHERINE YUNG / The Dallas Morning News It was the educational status symbol of the 1990s, the must-have tool for climbing the corporate ladder. For years, the MBA seemed like an automatic ticket to a six-figure salary, in many cases a pathway to a new career and a more prosperous life. But that perception appears to be changing. Demand for master's degrees in business administration is falling for the second year in a row, report several MBA admissions directors across the country. At some business schools, the number of applications has slid as much as 25 percent or more. Regard for the degree is so low that a FedEx television commercial even mocks it. "You don't understand. I have an MBA," says Tom, a new employee who's asked to ship some deliveries using FedEx.com. "Oh. You have an MBA. In that case, I'll have to show you how to do it," his supervisor replies. "FedEx.com makes shipping so fast and easy even an MBA can do it," chimes in the voice-over narrator. Three years into an economic recovery creating few jobs, the MBA no longer carries the cachet it used to. Going to business school – even the top ones – no longer leads to three or four job offers. Although corporate recruiting of MBA students has picked up, jobs are still scarce, and many recent graduates are struggling to find work. When Mark Davidson entered Duke University's Fuqua School of Business in the fall of 1998, he had high expectations about what an MBA would do for him. "I thought I would be walking with Dorothy and the Tin Man down the Yellow Brick Road," he says. "I thought people would be knocking at my door." Instead, the 31-year-old is living with his parents in San Diego and doing part-time contracting work in commercial real estate investment. He's been searching for a permanent job since being laid off 10 months ago from a property management company that didn't have enough work for him. The grim job outlook has led many potential business school applicants to either give up the idea of earning an MBA or wait until the economy shows further improvement, admissions officials say. Others opt to take night classes while working full time. As a result, business schools are working harder than ever to market their programs. "The applicants are not seeing the guaranteed job at the tail end," says Daniel Garza, director of domestic admissions at the University of Texas at Austin's McCombs School of Business. "It's making them hesitant." Fewer applying Last year, a majority of the 289 graduate business school programs reported receiving fewer applications, according to a survey released in July from the Graduate Management Admission Council, a nonprofit organization of graduate business schools. This occurred despite some of the lowest interest rates for student loans in years. The fall-off in applications appears to be continuing this year, several admissions directors report. At McCombs, the number of applications is down 26 percent. Mr. Garza noted that four other top business schools at state schools around the nation had reported an average drop of 33 percent. Elite private schools aren't immune either. Applications to the prestigious Wharton School at the University of Pennsylvania are off 20 percent. "People are understanding that it [business school] is a big investment, and your return on your investment is going to take longer now," says Rosemaria Martinelli, director of MBA admissions and financial aid at Wharton. At Harvard Business School, admissions officials noticed a different attitude among some prospective students during presentations about the school last fall. "There were a lot of people who had a lot of questions as to why they should go to business school in general," says Eileen Chang, the school's associate director of MBA admissions. "The interest is still there, but they are thinking about it a lot more than in the past." She wouldn't reveal how that caution is affecting interest in Harvard's MBA program, but last year the number of applications to the school dropped to its average level of around 8,500 after hitting an all-time high of 10,382 applications in 2002. Normally, when the economy turns sour, business schools and other educational programs benefit as people opt to sit out a tough job market by spending time in the classroom. Yet that logic works in reverse if tough times linger. The longer the economic downturn drags on, the less willing people are to give up the security of their jobs to go back to school, according to the Graduate Management Admission Council. Quality over quantity But the tight job market isn't the only factor hurting interest in business schools, admission directors say. There are fewer 25- to 34-year-olds now – the age range most likely to attend business school – which also plays a role in the dropoff. International students continue to have problems obtaining the visas they need to study in the United States, largely because of security measures put in place after Sept. 11, 2001. And prospective students are being more selective and applying to fewer business schools than they used to, reducing the total number of applications. "We are seeing a more sophisticated applicant," says Daphne Atkinson, vice president of industry relations for the Graduate Management Admission Council. But the decrease in applications has not made getting into a top business school any easier. Admissions officials and other experts say the quality of applicants is as strong as ever – there are just fewer of them. "There are still many more people who want in than there are seats available," Ms. Atkinson says. Boosting business Even so, business schools are not happy with the decline in applications. And they're experimenting with new ways to boost interest in their programs. Duke University's Fuqua business school plans to start advertising its full-time MBA program because the number of applicants this year has shrunk, says Daniel Nagy, the school's associate dean. That's a change from previous years, when all Fuqua did was hold information sessions about the school and send e-mails to people who took the Graduate Management Admission Test. At Southern Methodist University's Cox School of Business, where applications are off 10 percent so far this year, MBA students are reaching out to prospective applicants. In previous years, that type of personal contact was reserved for students who had already been admitted, said Marci Armstrong, Cox's associate dean of graduate programs. And at the Mays Business School at Texas A&M University, admissions officers are promoting their school in new venues, such as career fairs and professional conferences, rather than just at traditional MBA forums. So far, the number of applications at Mays is holding steady after dropping 16 percent last year, says Carroll Scherer, the school's director. Just before the drop in demand for MBA degrees began, Mays had increased the appeal of its program by adopting an accelerated curriculum that enables students to get their degree in 1 ½ years instead of two. Increased scrutiny All of these efforts come amid increased scrutiny of the tangible benefits of an MBA. In September 2002, Jeffrey Pfeffer, a professor of organizational behavior at Stanford University's Graduate School of Business, co-authored a report that criticized the value of graduate business education. "There is little evidence that mastery of the knowledge acquired in business schools enhances people's careers or that even attaining the MBA credential itself has much effect on graduates' salaries or career attainment," the report stated. An MBA has little effect on graduates because of the rapid growth in the number of degree holders, the lack of minimum competency standards, grade inflation and the irrelevance of schools' curriculum to what is important for succeeding in business, concluded Mr. Pfeffer and Christina Ting Fong, now a professor at the University of Washington Business School. MBAs have become so ubiquitous that even online universities are offering them. In fact, more than 116,000 master's degrees in business are handed out each year, more than double the number at the start of the 1980s, according to the National Center for Education Statistics. Business school officials and many MBA students are quick to defend the usefulness of their education. "If you look at the long term, you get to learn new skills, hone new skills, get to know what you're good at and make connections," said Peter Benyo, a 26-year-old student at SMU's Cox School. He's optimistic that he will land a job at a financial advisory firm by the time he graduates this spring. Mostly satisfied MBA graduates who entered the workforce over the last several years are largely satisfied with the benefits that their degrees have afforded them, according to surveys by the Graduate Management Admission Council. At the University of Chicago's Graduate School of Business, Don Martin, associate dean of admissions and financial aid, acknowledges that "ultimate success in life is not dependent on an educational degree." But, he says, feedback from graduates of his school reveals that the learning experience changes their lives forever. It gives them more confidence and the preparation to do what they want in life, he adds. For now, recent MBA graduates such as Mark Pruett dream of being able to say that. The 31-year-old graduated last month from the School of Management at the University of Texas at Dallas. Mr. Pruett had hoped an MBA would allow him to switch careers. Before business school, he had worked as a programming analyst at a manufacturing company. Now he's looking for a job in information technology strategy and planning. So far, he's only heard from headhunters trying to recruit him to do the type of work he did before entering business school. And at graduation, no one in his class of about 40 – not even the best students – had a job. "It's discouraging," says Mr. Pruett, who is taking evening classes at UTD to get another master's degree – in information technology management and consulting. The job market "has not been what I had hoped, but I'm not surprised by it." I'd always heard good things about the UTD MBA program, but you'd think that even the worst school could place at least ONE graduate. This sort-of ties in with our discussions about employers now wanting experience over education in many lines of work.
mrpaige, thanks very much for posting this article. I think that shows that the MBA degree still has considerable value, without a doubt. This is very true. I see the MBA degree more as a stamp of approval that shows you went through a certain training. Maybe it will help you get your foot in the door sometimes, but you still have to prove yourself on the job, degree or not. Also, the stuff they teach you in the MBA curriculum gives you a basic understanding and a set of tools, but unless you really go work in accounting or corporate finance, I doubt that you will do EXACTLY the things you learn in the program (plus, one inevitably forgets a lot of the stuff after a short time). It is more about gaining a general understanding, building a network and feeling more confident about at least knowing enough so that you know where you have to start should you really have to dig deeper in a real life situation. I was not a numbers person before I entered the program, I am not a numbers person now, but I do have a different perspective on many things and at least nobody will intimidate me with "MBA talk". However, I still believe common sense and other factors will be more important to your success after business school than most of the advanced math stuff you do there. As a sidenote, I always laugh when I hear this guy's name (the GSB is my school) because there used to be a cartoonist for MAD magazine with that name. This is also true. Headhunters are sometimes very narrow-minded. They have a certain profile and when they try to match candidates to the profile, they usually only look for people who were in a very similar function/industry before. Changing careers is not easy, at least not without taking a step back in the process. This is also caused by a weaker economy and the experience from the Internet bubble. During the boom years, a lot of people got great jobs and made big (undeserved) jumps in their careers and salary figures when they switched jobs. Then they screwed up and now firms and headhunters are more cautious. Again, thanks for posting the article, it is a topic I am interested in.
3 months of deciding what to Major in and what career to go into, I had finalized it to getting an MBA, and now this.... great
I'm sure the MBA still has value, especially one from one of the better schools, it's just not the 'write your own ticket' kind of thing it was for many, many years.
Then what is??? I mean there would be no logical reason to put the money in Grad school, esp if its not paying off, and If I am going to end up doing real estate, and other part time jobs.
They had an article about MBA's in some magazine about a year or two ago talking about the same exact issues. I think it was Business Week. I think MBA's are a case by case deal. You have to understand why you're getting one, and why it should help you. Obviously if you go to Chicago, Yale, Stanford, Harvard, or Penn it doesn't really matter though...
I don't think there's anything, other than being born into an extremely wealthy family, that's a 'write your own ticket' kind of thing anymore. That doesn't mean there aren't still very good opportunities, but there's just not the guarantees and the ability to pick-and-choose as much as there was in the past. But maybe I'm not the one to talk, I have neither an MBA nor a job.
The world will be a better place if MBA's fall into extinction. The degrees, not the people. Next stop, BBA's!
You are so mean! But it's no joke that it had gotten to the point I was wondering if anybody did not have an MBA. That Fed-Ex commercial was the clincher - talk about a slap. Yeow.
I think that if you get an MBA from a place such as Harvard or Wharton you would still "write your own ticket". Everything else would be a case by case thing like others have said. Most of the top MBA programs require work experience. You could pick a major you enjoy and go from there (keep your goal of geting the MBA)
Try to find a career that involves doing what you love, this chasing of hot careers is the wrong thing to do, IMHO. Also, say goodbye to a higher standard of living than your parents in most cases, we're competing for the same work with workers in the third world.
The article is informative, but don't make it out to more than it is. There are still a lot of doors that are very hard to open w/o an MBA. It's somewhat foolish to assume that any degree is 'the ticket'. If it's consistent with your desires, goals and abilities, it will help you. If not (i.e. you lack a vision), then yea, it's a crapshoot. Also, let's see what the admission rates are after a fews year of expansion instead of at the end of a recession. Have you ever taken MBA courses, rimbaud? I hope that's tongue-in-cheek.
Just out of curiosity, are there any posters here with MBA degrees, maybe from top schools, who could offer their perspective on this?
I think the decline of the MBA has more to do with how many universities now offer degrees and how much value there is at some of these universities. About 6-7 years ago I decided to go back to get my MBA. I already had my CPA certification and went back and scored well on my GMAT. Ohio State has a top 20-25 program but they wanted me to take 3 pre-reqs, which basically meant I would be waiting a full year to get started. I didn't like that option and instead went to a smaller college who offered a MBA (very reputable private college), where I had to take one pre-req and get started in September. Let me tell you I was never a great student, I had a 3.2 in undergrad but I am smart enough when I need to do something (many of my undergrad classmates had higher GPAs but they coudln't get thru the exam). But the MBA classes were basically a joke. The running joke was you pay the fee you get a B, and most of the students there were from Bank One or Nationwide Insurance who paid their students fees anyways. I ended up finsishing up with like a 3.91 and honestly didn't work very hard at it and more importantly didn't learn much. Granted a couple professors who were good teachers were excellent, but most were there a second job and they treated it as such. So just my $.02 but unless it's a MBA from a very good school, I would be leary. There are too many schools with MBA classes, too many students who really don't want to be inteh classes (employer is payign for them or they can't find a job and keep gettign educated) but also many professors at the schools who arte not very good.
Wouldn't that mean that I HAVE to get an MBA just to stay competitive with the other job applicants, even if it's more or less worthless? If an employer sifts through resumes and sees: MBA MBA MBA BS MBA MBA ... do you really think I'll get the job or even an interview, for that matter? For the record, I'm considering business school right now, really because I feel it'll help me when I want to start my own business (which is really the ONLY way to make money -- or lose it fast -- in this world).
I sorta agree with chuckie. I am working on my MBA at my alma mater, MTSU. Counting this semester, I have 3 left (I take 2 classes per semester at night). Basically the MBA classes I take are like this: Reading assignments Write a paper (can sometimes be a group paper) Do a presentation, either individually or as a group Oh and one other thing - don't think that going to get an MBA will give you this great salary increase if you decide to stay in your current job (like I am going to do). It is only when you leave the company to take another job that you *may* get an increase in salary, and as the article that mrpaige posted says, that is not a given (that you will get a job just because you have the MBA). I don't regret going back to get it because it has given me a business background that I didn't have before, but I never bought into all the hype that went with that degree. I do feel that if you get an MBA from Chicago, Harvard, or Stanford that you should be able to get a good job, pretty easily, but maybe I am being naive about that. I know that if a job came down between me and someone else and my MBA is from MTSU and theirs is from Chicago, there is a 99.9% probability that I won't get the job.
