There isn’t a wrong or right time to start your MBA; instead, there is a less or more appropriate moment in your professional and personal life. But ever since the financial crisis hit and the turbulence of the uncertain economic environment took over, a different question emerged. Do you start an MBA in times of economic stagnation, or do you wait for the storm to pass?
Postponing your MBA for a time when it is clearer the downturn has ended is no rational motive for action. The crisis is indeed persistent and global but not all countries, regions, and business have been affected by it equally. Spain and Italy have been hit hard, Germany and Norway – not. One could select a school in a country that’s better off economically and thus has better options for professional realization. For example, if you live in Greece and have plans for career in finance, perhaps it would be a good idea to apply for good schools in places like the UK, Switzerland, the US, Singapore, and Hong Kong. An MBA is also a wise way out of professional spheres in continuous decline. Print media, for example, were experiencing constant challenges even before the crisis. The situation is the same for many production and factory jobs. They were put in peril by the development of technology and the massive outsourcing eastwards. These changes have hit the middle class hard and it is now struggling to sustain the income levels it once had.
With a good MBA diploma in your hand, switching between countries, industries and professions is easier. Undeniably, the crisis has affected the prospects for employment for graduates. However, the statistics confirm that MBAs are well-paid and that the demand for them is strong. A GMAC survey shows the class of 2013 has enjoyed a substantial rise in post-graduation salary levels. For the two year full-time degree it was 79%, and for the one-year full-time MBA 70%. So, why is the question “Should I wait to get my MBA?” still relevant?
The status quo in the job market
When the crisis started, the employment situation was serious and hiring trends in the investment banking sector plummeted sharply. It was a challenging time even for some of the top business schools. They had to take measures. The managing director of MBA career and professional development at Harvard Business School at that time Jana Kierstead remembers: “My dean pulled me aside in February-March of 2008 and said, ‘I’m a little worried about the market. Could you put together a plan for what you’d do if the bottom fell out?’ We grew that programme during the crisis – students really needed more individual support because the on-campus job search wasn’t what it was”, she explained for The Financial Times. In hard times HBS decided that it was academia support and “network-based” job searches that would work. And they were right.
These times have long passed now and albeit far from perfect, the job market has been gradually becoming more stable. However, since the beginning of the crisis, the reputation of the MBA degree in general has been shaken. In the past five years the MBA was blamed as one of the reasons for the financial meltdown and its consequences. Indeed, Wall Street and the City of London accepted business degrees as a pass to the lucrative world of financial speculation. Some of the practices bankers used from the 1980s onwards were to blame for putting the whole world’s financial system on its knees in 2008. A good illustration here is Lehman Brothers’ last CEO Richard Fuld. He was a proud disciple of the excellent NYU Stern School of Business. Once amassing a fortune that according to the Business Week reached 1 billion USD, he left his bank belly up in what was to become the biggest bankruptcy in American history. It is an extreme example, but Fuld was just one in a long line of financiers with MBA diplomas, making society and politicians point their fingers at managers.
Learning from past mistakes
Many of the top international business institutions have realised the mistakes they made in relation to the crisis. “We failed,” admits Mark Williams, a Boston University lecturer, for the LA Times. “We were actually, truly part of the problem. We didn’t identify risks early enough.” A defining question in business education for a few years has been: how could a business degree realistically contribute not only to boosting shareholders’ value but also to creating a more sustainable business environment? After realizing the issues, numerous MBA programmes globally have been diligently adapted in order to respond adequately to the new business realities.
The debate about the reasons for the crisis made many schools around the world strengthen the ethical-related content in their programmes. USC’s Marshall School of Business, for example, now has a course of accounting ethics. “They’re not supposed to be helping management cook their books,” emphasised Robert Trezevant, an accounting professor in the school. “They’re also gatekeepers to protect against abuse”, he commented about the auditors studying in the school. There isn’t a consensus on how deep the changes in business education should go. Some experts remind us that leadership concepts have been shifting throughout different periods in history. This would mean that what’s happening right now is not unique at all. “It’s in times of crisis and change that people start reflecting more on leadership,” commented the Dean of ESADE Business School Alfons Sauquet. He points out that the leading perception of the 1920s was that leadership is actually imposing one’s will. Then, he says, this was replaced by a theory that included other elements – the group role, the organisation and its goals, and later people, situations and emotions. Sauquet also points out that the 21st century has rediscovered Douglas McGregor’s Theory Y that views employees as naturally good people that can self-direct themselves. According to it, the most important asset of a company are its employees. “Under this theory, leadership is based on trust, emotions and a shared vision of what is good,” he explains further. The more social concept of business would imply that MBA is to open to other disciplines and is to become more discursive field. It is also to concentrate more on the search for answers, rather than to maintain it already has them.
The reform of the MBA
There have been speculations about the relationship between the most popular business degree in the world and the economic downturn. However, the MBA per se and all its characteristics as an educational tool cannot possibly be directly linked to the crisis. Economic hiccups have happened for centuries, long before the business education industry had started gaining momentum. The fact is that many of the people who were in the spotlight for playing major roles in the recent financial crisis do hold respectable business degrees. However, an MBA is simply a tool at the disposal of a holder. The degree is an enormous professional advantage, both in terms of the skills and knowledge it certifies, and in terms of the networking opportunities granted to business graduates. However, the way a person uses his or her MBA is a personal choice and decision.
Business schools and the business world have been in constant touch ever since the crisis hit, synchronizing their tracks. On one hand, corporations communicate to B-Schools the various issues and gaps in the knowledge and skills their graduates have upon graduation, helping them realise how their programmes can be improved. On the other hand, B-Schools use the tips of real businesses to adapt their programmes and keep them up to date with the demands of contemporary turbulent reality.
“They (business schools) will also have to rethink the type of research in which they are engaging and commit to innovative pedagogies that help rebalance analytical problem solving skills with attention to social responsibility and accountability”,was the forecast years agoby Prof. Bodo B. Schlegelmilch from WUVienna, Austria in an article for the MoscowTimes, and clearly he got the situation right.
All in all, deciding to embark on the MBA mission is a topic with many considerations. The timing, along with the financial aspect and the particular programme, is one of the most difficult ones. There are various interpretations of the causes and consequences of the financial crisis, but one is undeniable. The economic downturn has contributed to a major transformation both in the business and in business education itself.
The complications resulting from the crisis have helped B-Schools modify their MBA programmes in a way that corresponds to the demands of an unstable economic arena. The times of crisis are unfortunate for many businesses and for the general employment rates and salaries throughout the world, but what they also are is a truly great moment for starting your MBA journey.