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MBA - Hard Truths
The document summarizes 5 hard truths about getting an MBA degree: 1. Data shows that business schools are not effective at correlating with career success, as neither MBA degrees nor course grades predict higher salaries long-term. 2. While starting salaries for MBA graduates are higher, mid-career salaries show no boost from the degree when compared to non-MBA college graduates. 3. The rising costs of MBA programs make the return on investment unclear, as graduates take on large expenses and loans without certainty of higher future pay. 4. MBA programs train students in the wrong ways, focus too much on theory over practical skills, and propagate short-lived management fads
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MBA - Hard Truths
- 1. 5 Hard TruthsAbout the MBAGagan Bhalla
- 2. “What data thereare suggest that business schools are not very effective. Neither possessing an MBA degree nor grades earned in courses correlate with career success.”“Although MBA grads earned higher starting salaries than college grads, midcareer MBAs saw no salary boost after earning the degree.”“The overall cost of education has risen so much over the past 15 years that it’s become unclear whether it makes sense to overburden yourself with expenses and loans in order to secure the possibility of a greater salary in the future.”Jeffrey Pfeffer.Christina FongThe ROI isn’t what it used to be
- 3. “The MBA trainsthe wrong people in the wrong ways with the wrong consequences”Henry Mintzberg, Managers Not MBAs: A hard look at the soft practice of managing and management development, 2004“Only a handful of academic institutions — around 45 out of more than 700 — offer significant training in sales, even though success in sales is the most important determinant of a firm’s ultimate success.”Howard Stevens,CEO of the HRChally Group consulting firmThe training has become too theoretical.
- 4. Some of thepeople skills needed to be a manager today can’t be taught in the business school environment.“If you go into law or medicine or architecture, you’re expected to go into a residency or apprenticeship before you’re allowed to practice on your own, Unfortunately, business schools pretend that any student with an MBA should be a great manager right out the gate, regardless of real-world experience.”Pfeffer
- 5. “Management is justtoo complex a human behavior to be effectively taught in a classroom environment.”“You could take a class titled Managing People at Work, where you discuss different theories on behavior, motivation, etc., and do reasonably well academically. But if you don’t have some significant experience working with, above, or below other people, you will not really appreciate the full extent of the material.”Ray Tsai, M.D.an MBA candidate at the Wharton School“What’s really missing in MBA programs is a sense of purpose”- Pfeffer
- 6. All management theorytends to fall into one of two categories: Rationalist (manage by the numbers) and Humanist (inspire and empower), Even though the two approaches result in diametrically different management behaviors.Harvard Business School website reveals, a course promises to teach students how to address “cannibalization, network externalities, and globalization” and“generate superior value for customers by designing the optimum configuration of the product mix and functional activities.”MBA programs propagate management fads
- 7. The pressure tosucceed inside MBA programs has weakened safeguards against cheating.“56 percent of MBA candidates admitted to cheating”2006, Study funded by Academy of Management Learning and Education“An MBA is often seen as a ticket to more lucrative employment, so perhaps getting the degree is more important to them than the knowledge gained along the way,” “Along the same lines, it may be a ‘bottom-line’ mentality — that performance is what matters, not how you get there.”Linda Klebe TrevinoProfessor of management & organization, Penn State Smeal College of Businessco-author of the report on cheating
- 8.
Editor's Notes
- #2 A very Good morning respected Sir / Teachers and my friends, I’m here to give a presentation on Hard Truths about MBA. For recruiters and executives, MBAs have long been considered the holy grail of the candidate pool. And for employees, the degree is that traditional ticket to corporate success, promising a bigger salary, fast-track promotions, and professional prestige. Butin the eyes of more and more top management thinkers - many of them from top business schools - the value of the MBA is dropping faster than technologyprices these days.
- #3 Two business school professors wrote a research piece in 2002 for “The Academy of Management Learning and Education” -University of Washington – Christina Fong and Stanford University - Jeffrey Pfeffer.It kicked up a storm but those in business education community have cited other studies suggesting that an MBA is still a good investment. And salaries of MBA’s began to rebound in 2005.
- #4 Critics have always argued that even top business schools aren’t adequately preparing students to be effective managers. Other critics have weighed in, arguing that there’s too much emphasis on management theory and too little on developing practical skills.Some universities - Yale and Stanford implemented sweeping changes to their MBA curricula following the burden from critics.
- #5 Originally designed to teach corporate finance and the mechanics of manufacturing and supply chains, MBA programs now promise to teach students to be competent managers.Pfeffer also notes that while many MBA students have worked in business, many of them have never managed people and thus lack the perspective to apply the management theory that they learn.
- #7 In 2006, an “Atlantic Monthly” article lambasted management theory, the very heart of the MBA curriculum. Authored by Matthew Stewart, the former founder of a management consulting group,