MBA candidates are moving against the conventional grain

THE decision to sign up to an MBA programme should not be taken lightly for a whole host of reasons. The two-year, full-time programme is expensive and, in applying, candidates are choosing to voluntarily leave the workplace, pay tuition fees, and dig into their savings to fund their living expenses.

This may in part explain the findings of a recent Graduate Management Admission Council (GMAC) survey of 744 MBA and other business programmes worldwide. It revealed a decline in the average number of applications for two year courses of 22 per cent in 2012, following a 10 per cent decline in 2011. Research from the Association of MBAs (AMBA) similarly revealed an overall 15 per cent decline in MBA applications for UK schools in 2011 compared with 2010, and the 2012 QS TopMBA.com survey showed a continued increase in potential applicants seeking programmes that last for less than 18 months. But why is this change taking place?

KEY INFLUENCES
Students on UK full-time MBAs are largely international, so the British government’s recent changes to international student visas, and the increasing quality of management education in other regions, has inevitably influenced candidates’ decision-making processes.

Indeed, AMBA’s intake and graduation study shows that there was an average 4 per cent increase in applications and a 20 per cent rise in MBA enrolments in Latin America. In China and Hong Kong there was an average 60 per cent increase in applications. Part-time MBA applications to business schools based in China and Hong Kong also increased by 85 per cent. George Murgatroyd at AMBA believes this is “emblematic of the significant growth in the MBA market in this region”.

ADDED VALUE
MBA applicants and students are also extremely conscious of their return on investment (ROI). This is especially the case during a period of prolonged economic volatility, and therefore studying for a shorter duration means “the opportunity costs are not as great, delivering a safer ROI”, says Vince Chan, founder of AlphaPowerMBA.com.

But rather than indicating that MBAs have lost some of their shine, the figures are reflective of a shift from the number of applicants applying for two-year courses to one-year or part-time courses. The GMAC report found that 68 to 82 per cent of specialty MBA programmes for 2012 admitting classes – mainly masters in management, accounting or finance – reported steady to increased application volume compared with 2011. In the UK, where the accredited full-time one year MBA is predominant, the more noteworthy shift has been from full-time to part-time and distance learning MBA programmes.

Most business schools today offer a variety of MBA options, including part-time, full-time, executive, flexible, and distance learning. Indeed, Murgatroyd says that “enrolments on part-time MBA programmes at UK business schools accredited by AMBA increased by 16 per cent in 2011”. This comes at a time when people are reluctant to leave their job for study. Where possible, they will opt to complete an MBA while continuing their full-time job.

LOW HANGING FRUIT
Fewer funding options means the one-year course is looking increasingly attractive. Shorter programmes mean students are only taking one-year out of work, thus reducing their loss of earnings and enabling them to get back into the workplace sooner. These programmes also limit the other negative effects of spending time out of employment. Richard Burns at TopMBA.com says that “although MBA programmes are often vocational in nature, for specific industries taking a prolonged period of time out of the working world could result in a greater learning curve”.

A key downside to the one-year course is that it is impossible to include the entire content of a two-year MBA course in one year, according to TopMBA.com. One year courses are usually far more intense, and therefore enrolled students are often more advanced in their careers – with a typical five years’ minimum working experience. So for those with less work experience, the two-year course could be more fitting.

GOING FOR SPECIFICS
The other fundamental cause for the decline in applications is the move away from the broader MBA to more specific courses. A 2012 survey undertaken by AMBA asked 200 leading business school deans and directors whether they predict that the MBA will increasingly specialise over the next five years: 64 per cent of respondents believed it will.

Candidates who are older and more advanced in their careers may choose one of the “many programmes that offer specialisations, electives or even core modules that enable students to focus on a specific industry while also experiencing the traditional MBA experience”, says Burns.

A more focused specialty degree, which enhances and builds upon existing skills, can “be far more efficient in opening doors to specific knowledge and networks than a general management MBA”, says Chan. “This gives it a higher or at least a safer ROI amid uncertain business environments”.

CHANGING TACK
The profile of MBA applicants also appears to be evolving. The GMAC survey found that, while men continue to represent the largest number of applicants, in 2012 a greater percentage of MBA programmes increased application volume from women compared with 2011.

In addition, a TopMBA.com survey found that globally, the average age of MBA applicants rose from 27.6 in 2011 to 28.3 in 2012. In Western Europe the rise was even more significant, with the average age increasing from 28.1 to 29.6.

Business schools are generally receptive to younger candidates, although they must have a “solid track record of leadership experience and outstanding personal qualities”, says Chan.

COUNTING THE COST
The cost of an MBA can be over £50,000 per year, plus living expenses, plus the loss of salary from taking time out of work. The combination of funding channels (like bank loans) drying up and high competition for scholarships may deter potential candidates.

There is a pecking order of business schools, and students will often find themselves paying a premium to attend one of the more highly regarded courses. Tuition fees at London Business School, for example, are £57,500. But its alumni will, on average, see a 134 per cent salary increase. Smaller and less globally renowned schools, such as Birmingham Business School, have lower tuition fees – £19,000 – but a slightly less impressive 87 per cent salary increase.

TOPLINE DELIVERABLES
That is why potential MBA applicants need to consider a wide variety of factors before taking the plunge. Long-term career goals, mode of study and location are all important considerations, as well as whether it will be worth the time and cost. As Burns asserts, “an MBA degree isn’t a magic ticket to success – the students and graduates will still need to work hard to achieve their career goals”. But an MBA will give students a wide breadth of invaluable knowledge, equipping them with career skills in investment, accounting, finance, strategy and marketing, among others.

THE GOLDEN TICKET?
From a recruiter’s perspective, an MBA can be invaluable to boosting your career. Nicola Linketer, managing director at Badenoch & Clark says that “an MBA will provide its students with the key commercial and strategic acumen that many top blue chips, banks, consultancies and, increasingly law firms are urgently looking for in junior to mid-level candidates. It could be the centrepiece of a candidate’s CV”.

Indeed, the GMAC Alumi Perspectives Survey found that – based on 4,135 alumni worldwide – 86 per cent of 2011 graduates were employed after graduation, with three-quarters claiming they could not have obtained their job without their MBA.

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