The High Cost of the MBA’s High Costby
A guest post from Matt Symonds, chief editor of MBA50.com, a website dedicated to the world’s outstanding business schools. He is also founder and former director of the QS World MBA Tour and co-author of ABC of Getting the MBA Admissions Edge.
According to pop singer Jessie J, in her 2011 hit Price Tag, life shouldn’t be about the pursuit of money. The aim, apparently, should be to make the world dance. (You might want to consult a young person for a more in-depth explanation of this.) Statistics recently released by Harvard Business School, however, suggest that its graduates might differ from Miss J on this philosophy.
According to the school, the new MBAs of 2012 are now enjoying median base salaries of $125,000, and three-quarters have also received signing bonuses of $20,000. A fifth of the class also benefits from what is guardedly referred to as “other guaranteed compensation” of more than $25,000. And some new graduates are doing substantially better. One joining a private equity firm, for example, had nailed a base starting salary of $200,000, and all this in a class where the average length of work experience was less than four years.
Nice work if you can get it and, of course, I wish the new batch of Harvard MBAs all the best in their new careers. But in sustaining this idea of top business schools producing a very highly paid elite with relatively little real-world experience, are we not perhaps storing up trouble for the future and an almost inevitable repeat of the economic armageddon of 2009?
The leading academic who is seen as the bête noire of business education in some circles, professor Henry Mintzberg at McGill’s Desautels Faculty of Management, certainly seems to think so. Famous (or infamous) for his assertion in the 2004 book Managers Not MBAs that the proliferation of B-school-trained MBAs is “a menace to society,” one of the professor’s main tenets appears to be that Harvard graduates and many of their counterparts from other top schools are simply too short on front-line experience to genuinely benefit from the type of studies they undertake.
Mintzberg has therefore been instrumental in creating what commentator Don Guttenplan, writing in the New York Times, has described as “the anti-MBA.” Instituted in 1996, the International Masters Program in Practical Management, or IMPM, is a 16-month course which runs modules in Canada, Brazil, China, India, and the U.K., and one of its key differentiators from a classic MBA program is its student body. Instead of recruiting candidates in their 20s or early 30s, the IMPM stipulates that you should already have at least a decade’s worth of management experience. The approach is to eschew a focus on the functions of business, such as accounting and marketing, as well as the traditional case study. Instead the program aims to draw on what participants have learned during their decade-plus in the corporate trenches to develop a more reflective and effective management mind-set. Business school, Mintzberg maintains, should be seen as much more than a route to the biggest pay check. “It’s not about getting a better job,” Mintzberg told me. “It’s about doing a better job.”
Creating a generation of business leaders who are more interested in the quality of what they do than how much they are paid to do it is obviously a laudable aim. Given that a Harvard MBA, including all the bells and whistles, currently costs $168,000 (and those at Columbia or Wharton about $10,000 more), however, don’t expect any focus on financial reward to drop off the radar at such schools anytime soon. While money may not buy us happiness, Miss J, it certainly helps to pay off the stomach-churning level of debt that certain graduates will face.