MBAs Still Make Sense Today (If Done for the Right Reasons and in the Right Way)

I write about careers so much because your career is your greatest asset. With a stellar career, you're not only happier, but you also have a huge financial advantage over those who don't have a great job.

I generally agree with Penelope Trunk, author of Brazen Careerist: The New Rules for Success, but she recently wrote about the demise of the MBA and I can't agree with much of what she said. Here are her thoughts and my corresponding comments:

The difference between the value of a top-tier MBA and all the others is very big. In fact, if you don't get into a top-tier program, the value of your MBA is so compromised that it's not worth it to stop working in order to get the degree. Go to night school instead.

It depends on what she means by "top-tier." If she literally means the top 20 business schools in the country, I disagree. I think the list is much deeper, say maybe the top 50 schools. Now don't get me wrong, someone going to Harvard does have an advantage over someone going to a decent state school ranked #30, but unless you want to get into a very specific profession that only recruits at the top, the advantage drops off as the years go on.

I recommend that instead of picking a school and hoping to get a job at graduation, you instead think of what you want to do and where you want to work -- and do this BEFORE you decide on an MBA school. Then look at the schools that have companies recruiting at them for the job/profession/industry you want. THEN decide what school to attend. This way, you can be more sure that you'll end up where you want to end up.

This is what I did (true, it was 20 years ago and things have changed since then.) But I left grad school with $5k in debt and the same job that people from Harvard, Wharton, and Stanford were getting (my school was ranked #25 at the time.) And as I've stated, getting an MBA was a very good financial move for me.

Business schools are compromised by a lack of female applicants.

Trunk argues that since less and less women are applying to MBA schools, the schools have lowered the work experience requirements to get accepted in order to allow more women to make it in. As such, this has compromised the value of MBA programs.

In one way, I agree with this. If you used to need four years work experience to get into an MBA school and now only need one, then the candidates leaving MBA schools theoretically won't be that as good as they were.

On the other hand, I never really agreed that work experience (especially two years of entry level experience) was something that was needed before a person was an acceptable grad school applicant. I went straight through from undergrad to MBA and felt I still got a great education. Sure, my education was hampered a bit by not having work experience, but those who did have work experience were hampered too -- they now had to learn to be students again and had a major reduction in pay (two issues I didn't have to worry about.)

The best thing you get out of business school is a good job afterward. But how do you know you wouldn't be able to get that job without business school?

Again I agree and disagree. For instance, I agree that "the best thing you get out of business school is a good job afterward." An MBA gets you a good/great job and from there on, your experience and success take over (mostly) and your degree becomes less and less of a factor.

Here I disagree: "But how do you know you wouldn't be able to get that job without business school?" I knew because: 1) the company, industry, and profession I wanted after undergraduate school didn't recruit at my school and 2) when I contacted them, they told me to go to grad school (in essence) as that's where they did most of their recruiting. Yeah, some people MAY be able to make it up the work ladder without an MBA, but in most cases, and especially for those who went to smaller, lesser-name undergraduate schools, an MBA can propel your career ahead by light years.

Hotshots don't go to business school anymore.

Disagreement #1: Entrepreneurial types NEVER went to MBA school before, so saying they don't now doesn't really mean much.

Disagreement #2: I don't see executives thinking that "business school might start looking like something for people who are feeling a little bit stuck in their careers and need a jumpstart, rather than just a starting gate for superstars." Maybe this will happen in the future, but I don't see any sign of it now.

People go to business school for the wrong reasons.

I do agree with this -- many people go to all sorts of post-grad schools to still "find themselves." So if this is you, I agree with Trunk that an MBA is probably a waste. However, if you know what you want and an MBA is a way to get there, it's probably a good investment of both time and money. Just don't pay a fortune for it unless you're fairly sure you'll make a fortune when you graduate. In other words, perform the same cost/benefit analysis to getting an MBA that you did when getting an undergraduate degree.

Comments

[Curtis]

I agree with you. I had some people in my MBA program that really makes an MBA seem worthless. But, you don't have to go to a "top school" to get a benefit. I didn't want to work at a big investment bank in NYC or Consulting firm in Chicago. I used my MBA to hone my own business skills and make me more marketable right here. It's definitely been a benefit.

As a matter of fact, my pay has essentially doubled in the 2 years since I finished my degree. Granted, that wasn't entirely due to having an MBA, but it sure helps get you in for that face to face interview.

[Free From Broke]

I'm currently attending college for my undergraduate degree with an eye towards an MBA. I plan to go to my local city school so I don't rack up debt. Though I want a good job after I think the great value will be in exercising my mind. This will be what keeps a good job and make it better! Thanks for the article!

[plonkee]

From what I've seen of people at work with MBAs, it certainly seems to be something that you need the polish of a few years work experience to truly benefit from. On the other hand, it's fair to say that there are other ways than actual paid employment that you can gain that polish.

Actually, I think that going to night school instead might be good advice, if you can hack the pace. Two years outside the workforce without a salary and racking up debt is a downer on your finances. If you can start applying the stuff you are learning in your day job, you could do really, really well out of the experience.

[Mike]

I think to get the full benefit from a "top" MBA school you need at least three years of experience in the real-world before applying for your MBA. There are some things that higher education simply cannot teach you, and there is some academic knowledge that you simply cannot get from the real-world! I 100% agree with your statement, "I recommend that instead of picking a school and hoping to get a job at graduation, you instead think of what you want to do and where you want to work -- and do this BEFORE you decide on an MBA school" - this is very important. Each MBA school provides a different value to your future career, and you should know what you think you want to "be" upon graduation. But if you don't know, that is ok too. Great blog and great post.

[Terrence]

I had contemplated going to a top-tier MBA program. I have the background for it and did well on the GMATs, but in the end decided it wasn't for me. I actually make more money than a lot of my friends with MBAs, but more importantly I like my job and couldn't see myself taking two years off and actually being further ahead in the end.

But in the end, getting an MBA is a very personal decision. For some it's right, for others it isn't. I already had the pedigree of going to an Ivy League school and working at big name companies, but for others who need to gain an edge or really do need the education, it can be a fantastic choice.

[Brip Blap]

I agree with Penelope 99% of the time, but the comment on top-tier versus other schools has been completely wrong in my own experience. I see people flailing in their careers with Ivy MBAs and succeeding with state university MBAs. Getting an Ivy degree only guarantees one thing: big time student debt. Other than that, it's the individual who makes it. Honestly, the fact that I achieved an MBA is all most employers have ever cared about, not which school it came from. I've done just fine with an MBA from a state university. It's just that MBAs are getting watered down in general because now it's the rule rather than the exception to get one.

[homoeconomicus.ca]

In my experience the MBA may get you the opportunities but ultimately performance keeps the pay high and keeps you employed. I've seen MBAs that just want 9 to 5 employment and don't put in much "extra" and they stagnate while type A's concentrate their efforts on delivering more value for their employers by learning more after hours and staying to get the job done. Consequently, those who deliver more value move up the ladder. This is true everywhere. You can learn how to learn, you may even be super smart, but many people haven't learned how to work or haven't found jobs that motivate them.

Also, I've seen a number of people with essentially no experience take an MBA program only to go virtually nowhere with it afterwards. Experience is very important. I've seen a number of low experience MBAs have a hard time adapting to the world of work. MBA programs should really be for people with experience.

My MBA is from a mid-ranked Australian university and I've had no troubles translating that into higher pay. The amount spent on the degree was recuperated in the first full year of work.

One other thought... Interpersonal skills and teamwork... although some MBA programs encourage teamwork, some don't. What I've seen post-MBA is that it's not the smartest person or the person with the most letters after their name that can get the job done but someone with strong interpersonal skills and the ability to work within a team to get something done. It's almost a cliche stereotype now... but it has a fair bit of validity.