Are MBAs becoming less important?
Interesting blog post from Fortune, which talks about how prominent PE firms such as GTCR are no longer requiring their associates to attend business school. Rather, promising associates are being promoted from within. A similar trend is happening at MBB consulting firms, which used to kick out pretty much every analyst after 2-3 years. Now, a lot of them are staying rather than going to b-school. Pretty interesting trend.
I think the huge costs (tuition keeps going up while median compensation has barely budged) is definitely playing a major role here. In addition, I think the movement towards one-year MBAs, executive MBAs, and specialized masters programs such as mfin/mfe is a real one.
I wonder if this will bolster the power of the CFA given that is costs all-in the same as 3-4 MBA classes from say Wharton, Chicago, NYU etc and doesn't require one leaving his/her position, and is on par with an MFin.
Not sure about that. The CFA is great for the knowledge acquired, but it lacks the one critical component of mba/mfin/mfe: recruiting mechanism and access to companies.
This is a trend not limited to MBAs but to university degrees as a whole.
How we educate and train people for various occupations will continue to broaden beyond the university credential, with the emergence of MOOCs, a la carte training, and so forth. Even universities are offering more of these a la carte programs (including b-schools such as HBS with HBX; b-schools will likely continue to expand their offerings beyond just the plain vanilla 2-year MBA program if they want to stay relevant).
Doesn't mean that traditional bricks-and-mortar degrees will become obsolete, but that they won't have the near-monopoly as the sole gatekeepers to high skilled jobs. And this goes for MBAs as well - even in the past, an MBA was not absolutely essential (an option and a potentially valuable one at that), but that it will only become more of a luxury in the future.
I think the focus is shifting back to hard sciences/skills... Most people I know agree that the MBA is basically a glorified placement program anyway (not to say that the MBA is useless but i feel the skill enhancement provided by a quant/engineering/research program is much more)
I agree with this. The financial industry is certainly not immune to technology, globalization, and specialization. I think a lot of finance jobs will either be automated or done by quants/programmers. The exception would be roles that require both market knowledge and client interaction as well as bottom-up security research since the latter is so much more than just modeling.
In terms of knowledge, I learned 3 key things during my time in b-school:
I think these are all valuable things (especially #3, which is critical to long-term professional success), but I don't think they alone justify the insane cost of an MBA. The way I see it, the primary short-term professional benefit of an MBA is access to OCR. The advantage of OCR is twofold: it allows people access to companies and jobs that they otherwise may not have been able to get and it limits the competition to just MBA students. However, the downside is that OCR is mostly limited to banking, consulting, and F500 roles. For those who want non-OCR jobs, they're pretty much on their own, for career services is extremely unhelpful (don't get me started on how useless career service is). A lot of my classmates got their jobs by reaching out to the network they already had BEFORE b-school.
The long-term benefit of an MBA is ostensibly the network, or at least that's what the school will trumpet in their marketing. I don't quite buy that. Yes, you make friends you stay in touch with over the years, but I have talked to a lot of older MBA alums, and I have yet to see the MBA network having a meaningful impact on one's career trajectory years down the road. The other potential long-term benefit is that an MBA serves essentially as an out of the money put option; it protects you from economic volatility by helping to ensure that you have a comfortable white-collar six-figure job. I think the argument here is a bit more persuasive, although it's hard to predict what the job market will be like years down the road.
I certainly don't regret going to b-school and thoroughly enjoyed my experience. However, my view on the MBA has changed radically. Before I started, my view on b-school was naive, overly optimistic, and borderline delusional. After having gone through the gauntlet, my perspective on not just b-school but life and people, is much deeper, mature, nuanced, and realistic. When younger people ask me now whether they should get an MBA, I ask them a bunch of questions and even tell a good number of them to NOT get an MBA. Ultimately, I think schools have done an ingenious job of marketing themselves to potential applicants burned out from the corporate grind, looking for some sort of salvation.
@kyc I am 90% sure you're talking to him:
@Brady so in other words a Harvard MBA isn't as awesome as you used to think.
Good. I like this new and improved Brady.
MBA degrees serve as a screening mechanism. I think that given the greater proliferation of access to jobs such screens will if anything become more important not less.
Also, people that hire MBAs have MBAs and in part do so the justify their own degree. If managers stopped placing this emphasis on such degrees they would be devaluing themselves.
The signaling theory is incorrect in many industries. Employers often care about tangible, hard skills and relevant experience. Anyone that acts on the assumption that the signaling theory is correct (i.e., doesn't bother to learn hard skills) will be severely limited in their job prospects (confined essentially to management/consulting/IB roles).
It is true that a large portion of MBA candidates look for/are satisfied with management/consulting/IB work, but there are many that are interested in work beyond these traditional fields, especially in finance. As markets become more liquid and therefore more efficient, and as technology continues to develop, these roles are becoming increasingly quantitative.
The soft skills provided in the standard MBA curriculum are becoming increasingly obsolete and this is reflective in placement trends. Beyond this, and in general, there is simply greater specialization among all fields which increases the opportunity cost, both for employers and for employees, to abandon training in favor of developing soft skills (which can be learned on the job) from an MBA program.
The signaling effect is probably still strong when it comes to getting an interview (but less so now that the labor market is very strong) but based on my own experience, it seems nonexistent when it comes to actually getting a job.
My two cents.
"The soft skills provided in the standard MBA curriculum are becoming increasingly obsolete and this is reflective in placement trends."
Have you ever actually worked for a real company outside of the buy-side? Soft skills are the ONLY important thing in almost every industry. I don't mean that you don't need the technical skills, but above a certain level (generally middle management) soft skills are the only thing that's going to get you the promotion to upper management. No one in consulting or IB makes MD/Partner without soft skills, given that the vast majority of their job is sales. Even in tech, those who do the best are great programmers who also have management skills. Milton Waddams wouldn't make it to CEO of Google.
The only reason the buy-side (and I mostly mean HFs/AM) is an exception is it's one of the few industries you can do well in by sitting by yourself in a corner and crunching numbers. Frankly it's the only industry of that kind I can think of. If you don't believe me, look at every single survey that asks employers what they look for in new hires. Here's one:
http://www.forbes.com/sites/susanadams/2014/11/12/the-10-skills-employe…
You have some sort of complex, everything in the world you don't have is put on a pedestal or is a greener pasture... everything you do have you marginalize ad nauseam.
i don't have an mba, but i'm close with several people who attended and graduated from top programs...i think the better question is whether the value is still there. is it better to have the mba vs. not. i would think in most cases, yes. but, when you factor in all of the costs and other hurdles to getting an mba, the value might not be there for most people. if you are a career changer, a military person, or are trying to get access to a career that is predominantly secured through an mba, then i think the value is there. if you are already working in a business field, doing well, getting good experience, moving up, etc...i would then question if it's worth it. this is basically the consensus i've gleaned from the friends i have who have gone through it. i agree with many of the comments above...the mba is more and more becoming a ticket/access to certain careers. will you learn new things and benefit from the education? certainly, but again, especially if you are coming form a business background or have a business undergrad, is that knowledge worth all the cost and hurdles. the other big question is where the employment market is headed...as the price of education continues to increase, less and less people will pursue these programs. there is a reason why the % of foreign students is increasing throughout all of the US higher education institutions. there simply is not enough talented domestic demand to fill these seats. so, that could potentially increase the value of an mba if you are one of the few to have the degree, or it could make it more and more irrelevant. i'm not sure which way it's going to end up. i do know that work experience and your career track record and accomplishments are and will always be king. i don't care if you have the best degrees from the best schools, with the specialization and niche focus of jobs these days, the person with the best experience and already-obtained-know-how is going to get the job. so, if you can get great work experience without pursuing higher education, i say skip it. if you aren't getting good experience and need higher education to get access to a better work experience, you should go for the mba.
is your shift key broken?
The Diminishing Value of B-School (Originally Posted: 03/07/2013)
I was pretty surprised to find the following article in the Wall Street Journal. Kiplinger's Personal Finance? Sure. But the Journal? Wow. It's a pretty dark day for B-schools when the Journal starts publishing stories about how they're a waste of money.
The article goes on to point out that the education you receive in B-school can be found for free on YouTube, and that the real value of B-school is in the network you develop. So is there a more cost effective way to develop your network than throwing $175,000 at a school? The author seems to think so. Some of the advice the author gives is pretty much unassailable. Like find the area of the country where your passion lies (Silicon Valley for tech, Hollywood for movies, Nashville for music, etc.) and then move there and live cheaply while building your network. The author also points out that any B-school which isn't in the Top 10 is no longer worth attending on a cost/benefit basis. You can hit Dev Bootcamp for $12,000 and almost double* the starting salary of a freshly-minted MBA after just nine weeks (*2012 statistics).
I realize this is blasphemy for many on this site. But figures don't lie and liars don't figure. The opportunity cost of B-school is staggering, and when you factor in the actual cost of B-school you probably have to stretch your ROI out over decades to break even.
Or is this way off base? Is the author wrong about Top 10 or Go Home? Do you think this only applies to those fresh out of undergrad, or is it becoming more universal? I realize the MBA is still de rigeuer for the upper echelons of banking, but at some point do you sit down and calculate the odds of reaching those upper echelons? I'm just curious to hear what you guys think.
I read this article in the WSJ and I honestly was pretty frustrated with the author. My thoughts on the value of an MBA are pretty well known as I outlined them in another thread. He seems to be just another individual that has taken a polarizing stance on the entire degree.
My primary issue with the article is that the author fails to understand the types of people at HBS and similar schools. He recommends reading books and taking online courses to fill the "education" component of school. But HBS grads aren't looking for software development jobs, they are looking for PE/HF/Consulting/Managerial jobs that can not be obtained through online coursework. He then recommends "building trust" through networking. Sure, if you network for many years and remain in close contact, you might build trust with key relationships. However, when a business owner goes to sell his business, he rarely hires the guy he trusts; he hires an army of b-school grads that he thinks will get him the highest price. I've seen it dozens of times -- at best the business owner retains his friend in a side role in order to throw him a bone, but he still picks up the phone and calls Goldman.
The reality is that whether or not the degree is useful depends on each individual's circumstances. A military professional may have no other way of breaking into certain private sector jobs (for example, value investing) without obtaining an MBA. For him, going to Columbia would be a dream come true and worth its weight in gold. For others such as myself, the decision to obtain an MBA is not an ROI calculation but based on the intangible factors. When a person is comparing job offers, they don't simply take the one that offers the highest pay. They consider all other factors: lifestyle, career development, promotion potential, etc. These same factors come into play when evaluating MBA vs. no MBA.
P.S.: One of the five employees of the author's Uncollege company has an MBA and runs his marketing.
Regarding the Brady post on that other forum: if you notice he attempted to make a contraction out of "who" and "are" and ended up writing "who're." Kinda comical...