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What's an MBA worth?
Rob Toth, Knowledge Level: Novice, Keywords: mba
"What’s an MBA worth?" Sound familiar? It should. It was the question on everyone’s lips in the fall of 2002 and, 12 months later, little has changed as Canada’s business schools continue to deal with the fallout from the MBA degree’s plummeting reputation. Where holding an MBA was once next to godliness, today it seems simply to invite mockery. Instant respect for MBAs is a thing of the past, as are six-figure salaries upon graduation—or the guarantee of a job at all, for that matter.
Canadian schools are especially feeling burned, as their reputations in international MBA rankings have begun to drop. Each is trying harder than ever not only to prove its program is best, but also to be as accommodating as possible to the widest variety of students. The real trick, however, is for schools to ensure they offer flexibility and a good education.
That is the challenge facing Carol Stephenson, the recently installed dean of the University of Western Ontario’s Richard Ivey School of Business in London. She inherited the school’s top job earlier this year from outgoing dean, Larry Tapp. Under Tapp, the school had consistently increased its enrolment figures over several years. This fall, however, Ivey, like many business schools, is falling short of its expected enrolment number: it has 231 first-year students instead of an anticipated 300. Stephenson views the decline as temporary and blames the state of the economy rather than a drop in the perceived value of an MBA. She also points out that, while more than enough students applied to Ivey this year to fill its enrolment quota, the school refused to lower its admission standards simply to fill seats. "What’s important is that we keep the quality up," Stephenson emphasizes. "Some students have decided not to take an MBA right now, but deferred until later. I think you’ll see things back to the way they were by 2005."
Gloria Saccon, associate director of the MBA program at Queen’s University
in Kingston, Ont., agrees, and says the trend is not only Canada-wide, but characteristic of business education across North America. "There are so many schools in the U.S., and I understand that they’re having a hard time of it as well," she says. While Queen’s recruits a number of students from the United States, Saccon says the university has recently shifted its focus to enticing more overseas candidates. "People are less likely to leave full-time, well-paying jobs," she notes. "There’s no guarantee that they’ll have a job when they graduate."
While numbers from such institutions as the Asper School of Business at the University of Manitoba in Winnipeg, the University of New Brunswick in Fredericton, the Schulich School of Business at York University in Toronto and Sherbrooke University in Quebec all show more than 90% of their 2002 graduating class were working three months after graduation, others, such as Queen’s, Ivey and the University of Ottawa, didn’t even reach 70%. "The 70% mark is about average in North America, so I’m not shocked or alarmed," says Stephenson. "Yes, I’d like to see it higher, and we have plans in place with recruiters to try and do that. I think it’s important to teach students early on that job-hunting is a mandatory part of their education."
The University of Ottawa is also making strides to help ensure business students get to put their new-found skills to use upon graduation through a new student-funded career centre. "There’s obviously a need to take an active approach to job placement from both the students and the schools," says Michel Kelly, dean of Ottawa’s business faculty and chair of the Canadian Federation of Business School Deans.
Reputation is possibly a university’s most powerful marketing tool. Business schools have long argued that international rankings, like those found in publications such as The Economist or the Financial Times, are very subjective: Queen’s can place No. 10 in Forbes, for example, but only No. 56 in The Economist. The only two Canadian schools that placed on The Wall Street Journal’s prestigious ranking in 2002—Ivey and the Joseph L. Rotman School of Management at the University of Toronto—fell off the paper’s Top 50 altogether this year. Again, Stephenson says she isn’t worried. "When students get serious, I think they actually do a lot of homework in looking at the schools," she says. "I don’t believe rankings should drive your strategy. One of the rankings puts a huge rate on how much money you make after graduation, for example. If you listened to that, you’d just be offering courses in the hot sectors and not anything else. It could lead to bad decisions."
Despite the tough market, some schools are braving the storm. Both Brock University in St. Catharines, Ont., and Carleton in Ottawa recently launched MBA programs. "Our experience has not necessarily been the case of what other schools are seeing," says Don Cyr, Brock’s associate dean of graduate programs. "There’s a pent-up demand in Ontario’s Niagara region. A lot of students in the area have been going across the border to Niagara University in New York state." Cyr says he feels programs at the smaller Canadian business schools are essential for students who may not want to leave their hometowns to pursue an MBA.
At the end of the day, only time will tell if the popular conception of MBAs as a ticket to success will once again return to favour. If and when it does, it’s unlikely their reputation and worth will ever be as high as they once were, a reality Kelly thinks can only be a good thing. "It seems popular to turn on MBAs right now and blame them for all the problems of the business world," he says. "But, as a result, I think the expectations of MBA students have fallen. They know they’re not going to end up with a six-figure salary and car as soon as they graduate. I think the expectations of a lot of students were too high and will be more reasonable now."
What’s an MBA worth? Not what it used to be. But in the end, that may just
be for the best."People are less likely to leave full-time, well-paying jobs to do an MBA"
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