How important is having an MBA in the business world today? The question is sure to spark debate. For every MBA holder and business school that staunchly defends the degree, critics question the expense and the relevancy in today's swiftly changing business world.
Below we hear some of the pros and cons.
An MBA Provides 5 Basic Benefits
“An MBA provides five potential sources of value: specific functional skills, a top management perspective, access to recruiters, relationships and signaling value,” said Will Bachman, an MBA graduate of the Columbia Business School and co-founder and managing partner of Umbrex.
Motivated students, accessing free online resources, can teach themselves the functional skills one learns in a top MBA program, including accounting, finance, decision science and organizational design, Bachman explained. What's more difficult to develop on one’s own is a top management perspective. This mindset shift emerges from hundreds of conversations with study partners and case discussions in class. Employers find it valuable for managers to have this perspective, because when serving in mid-management roles, they consider the impact of their actions on the entire enterprise.
"Many of my classmates believe that now, over 15 years after graduation, the relationships they developed in business school are the most lasting source of value they gained from the program. We may have forgotten some of the technical items, like how to estimate the value of an option with certain pricing models, but we continue to reach out to our classmates for advice, support, and business opportunities," he continued.
“Certain firms — such as top consulting firms and investment banks — recruit for certain roles only at a set of top graduate schools,” Bachman said. “For individuals who want to shift careers and have access to one of these positions, an MBA is one of the few realistic options.”
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Cost vs. Benefit of MBA
However, the price of the MBA can be prohibitive, particularly for someone who isn’t able to maximize the benefits. For example, the top-ranked school in The Economist's 2019 MBA ranking, The University of Chicago Booth School of Business, estimated the cost of attendance for the 2019-2020 school year at $108,822. Yet the compensation for an MBA can be outstanding, with some 2019 graduates getting base salaries of well over $200,000 annually, according to a survey by the Kellogg School of Management at Northwestern University.
Those base salaries can also dip as low as $60,000, according to the same survey — it depends on the industry.
“Education is such an essential in today's world, but it's also very expensive and competitive,” said Morgan Taylor, CMO for LetMeBank. “For some people, it may end up being a waste of time and money.”
Taylor added: “While a degree in business can be a useful endeavor today, I would honestly say that it's more useful to have an AA or a bachelor's. These degrees are going to be significantly cheaper, but they're also going to provide useful information on running a successful business. An MBA is going to be excessive in today's environment. Employers want experience as well as degrees and if you've spent the time to get the MBA, you likely don't have the kind of experience they're looking for. And you're in debt. As far as usefulness compared to the cost, for most people an MBA isn't going to be worthwhile.”
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MBA Meets STEM to Regain Relevance
Yet Anurag Gupta, vice dean of the Weatherhead School of Management at Case Western Reserve University countered the MBA is regaining its relevance in the workplace — in large part due to the massive infusion of technology and data in all aspects of business and society. While a STEM MBA offers some additional benefits to international students, at its core the focus on STEM has realigned the MBA curriculum more closely with the skills and competencies needed to succeed today, making it more attractive for all students.
“An MBA used to largely be a ‘breadth’ product,” Gupta added. “It is now morphing into a ‘breadth plus depth’ product. This renewed focus on delivering depth will better equip the business leaders of tomorrow to manage complex organizations where data analytics and artificial intelligence affect every single element of what they do. Programs that do this well will deliver the best value to their students.”
Reporter Michelle Cheng suggested the move to reclassify MBAs to STEM studies serves two purposes: counteracting the dwindling numbers of foreign applicants to MBA programs and reflecting the growing demand for business analytics skills.
Real-World Experience vs. Book Smarts
“Several years ago, I was the CMO of a company where the CEO had a ‘No-MBA’ rule,” said Marc Prosser, CEO and co-founder of Choosing Therapy. “The company was very successful and eventually went public on the New York Stock Exchange, at which point, the company had in fact hired a few MBAs. The genesis of the no-MBA rule was the recently graduated MBAs that we encountered tended to be arrogant and believed their knowledge, which they had gained from school, was superior to what had been learned through real-world experience.”
"Effectively, many newly minted MBAs had an attitude which would need to be altered after being hired. I think it is important to note that the CEO and founders of the company did not have MBAs and were all 'self-made,'” Prosser added. “They put a premium on real world experience. I would guess there are number of founder lead companies that may have a bias against those with MBAs.”