If you Google the value of an MBA you end up with many websites arguing for and against the value of doing an MBA.
Many of the top MBA programs around the world like to publish graduates’ salaries and the businesses they work in to help promote their programs. In a study conducted by Graduate Management Admissions Council (GMAC), the findings showed that graduates recouped one third of their studies within a year and the degree had paid for itself in four years. However, this is also heavily dependent on the motivations and ambitions of graduates and even the type industry the graduate works in.
Without a doubt, MBA programs are an invaluable source of revenue for Universities, with top level business schools in Australia charging around $60,000. This is a big investment for an individual or even an organisation sponsoring an employee – both in terms of time and money.
Some studies conducted in this space have gauged executives from all over the world (US, UK, France and Germany) whether they think an MBA helps to prepare managers for the real world – only some 20% thought that it would help to prepare graduates.
Even the respected Professor Henry Mintzberg who wrote a book titled “Managers, Not MBAs” argued that there was no value in completing an MBA. This is quite ironic since to this day Mintzberg’s theories are used in the MBA programs around the world. .
His argument is centred on the question of how do you teach management education to someone who has never managed. He believes that MBAs are usually taken up by the wrong type of people – people who do not have enough management experience and are impatient to get that experience. Mintzberg offers a definition of management as a blend of craft (experience), art (insight), and science (analysis). An MBA overemphasises the science, but it cannot give you the insight and experience.
There seems to be an assumption that after completing the MBA the graduate will automatically benefit from a higher salary and move into a role which requires a higher level of management. This is confirmed in a study by GMAC, where the number one reason why people choose an MBA is the belief it will provide an opportunity for quicker advancement.
One of the standard arguments made by pro-MBAs is that it exposes you to networking opportunities with a diverse range of people also studying an MBA. However, I don’t know if $60,000 and 18 months’ worth of full-time studies will get you the best business networks. A simple and often less expensive conference or using tools such as LinkedIn are likely to provide more bang for your dollar if this is one of the main reasons for studying an MBA.
What are the insights and real benefits of the subjects MBA offers? If I want to understand more about management areas, is it really that different to searching for the answer through Google, reading the textbooks that the MBA courses use, listening to podcasts on iTunes or simply asking an experienced manager(s)?
The demographics of people completing MBAs are slowly changing too. In the past, MBAs used to fit within the 30s/40s cohort who had reached a certain level of advancement within their careers. Today, people in their 20s and 30s are doing MBAs and therefore have little real world experience.
Having an MBA does not automatically make you a better manager nor does it automatically mean your salary will rise. This will take years of experience. It is similar to getting fit. There are no short cuts.