MBA: gilding the lily?
| by Richard Young 22 Dec 2006 Topic: Business, Careers |
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The UK Government thinks pretty highly of the title ‘master of business administration’. Having an MBA from one of the top 50 ‘b-schools’ in the world automatically qualifies you for the Government’s Highly Skilled Migrant Programme, allowing you to work for a year in the UK whatever your status. The qualification scheme is based on a points system: you need 65 in total. To give you some idea of the power of those top MBAs, a Nobel Prize would only earn you 25. But if you fancy the idea of being an MBA – and you think it will take your career in new directions – you have to be careful about where you study. As the UK immigration rules show, you will only get the MBA kudos if you go to the right b-school. And it helps if it is in the US. Only two of the Financial Times’ top 10 business schools in 2006 were outside the US, London Business School and INSEAD, and 58 of the top 100 are American. Which begs the question: if it is so US-biased (the UK is also over-represented in the rest of the world group), is it really that worthwhile? Is a run-of-the-mill MBA actually a waste of time if you are looking to boost your career? ‘Both accountancy and MBA are extremely good courses if you want to excel in the field of finance,’ says Delhi-based MBA student and accountant, Ankit Diwan. ‘But there’s a trade-off. Getting into a top class MBA institute is tough; coping with the study of an MBA and getting the degree thereafter is not that tough. On the other hand, getting admission on an accountancy course is as easy as flipping a coin. The tough part is clearing the programme.’ True, if you do get an MBA from a top school, you have the potential to fast-track your career, while qualified accountants will have to work that bit harder. But any accountancy qualification studied anywhere certifies that you have met a required standard. So even if it takes longer to build your career, there is more certainty for future employers. And, in any case, an MBA will only take you so far: it is certainly not a passport to the top, nor a guarantee of being able to get out of the finance function. For example, earlier this year Taylor Bennett conducted research on recent placements made by investor relations recruitment specialists. They found that 20% of companies looked for an MBA at the relatively lowly IR manager level (the third most popular attribute behind financial understanding and capital markets experience). But at IR director level, that was down to 8%: the MBA was only the fifth most sought-after characteristic. Experience OK, so investor relations is a niche. Maybe the MBA has more to offer those with a broader finance background seeking to accelerate their career more generally? Not according to Sarah Hunt, who runs EquityFD, the financial director (FD) and financial controller recruitment specialist. ‘Ultimately, it’s experience that counts,’ she says. ‘An MBA is not going to be the thing that makes me pick you for a job. In six years here, there is only one instance any of us can think of where the client said they’d like to see someone with an MBA. So it’s misguided to say that it opens doors for you.’ Surely it adds something to an accountant’s CV? ‘It would never make me, as a recruitment consultant, sit up and say “Wow”,’ says Hunt. ‘It might crop up in an interview: “How very interesting, let’s have a chat about it”. And it’s OK if you’re doing it part-time. But I really can’t see how it would be worth taking two years out of your career just to get an MBA. It’s a bit of a luxury and it’s also a big financial burden.’ And, as she points out, put an FD with an MBA up against an FD with a bit of general management experience on their CV for the same CEO role, and it will be the one with front-line experience who will win out. In other words, your job is an education. Hunt stresses there is nothing wrong with doing an MBA for personal reasons – ‘as self-nourishment for your mind’ – but don’t do it because you have visions of cash and responsibilities rolling your way once you graduate. ‘Instead of understanding their true desires and strengths, many MBA students prefer to do what they think the market is demanding,’ says Diwan. ‘For example, a student won’t make an effort to be a programmer – which is his real desire – and instead he will crave to study for an MBA because he has seen graduates of IIM or Kellogg School of Management being paid hundreds of thousands of dollars.’ It is a crucial lesson: avoid the temptation to rush to business school before you have actually got to know how business works. ‘In fact, we won’t take people with less than three years’ experience,’ says Hazel Reddy, programme director for the distance learning MBA at Oxford Brookes University (OBU). ‘The average time in work for our students is closer to eight years. You need that varied experience in order to be able to relate to the theory.’ Reddy points out that an MBA ought to be about capabilities, not knowledge – it is application not abstracts that counts. ‘So if you’ve just lost your way a bit and you’re looking to try out something new, don’t do an MBA,’ she says. ‘You need to be clear about why you’re doing it. That can be as simple as building your self-confidence or explicitly changing your career direction. But it’s a big commitment of time and money, and you need to be prepared for that.’ And it is important not to downplay the benefits of a good MBA. There are too many converts out there to ignore. Take John Smith, FD and then chief operating officer of the BBC, for example. He says: ‘Your accountancy training, while important, is focused on rules and regulations and requirements, whereas the MBA training is very much focused on growth, marketing, analysis. An accountant does things right, rather than doing the right thing. And accountancy training is woefully inadequate in the area of technology, it’s just a disgrace.’ True, most of the accountancy qualifications now have a beefed up IT component and have reacted well to the challenge of the MBA in other key areas. And many business schools – and all of the accountancy institutes – have started to offer cross-over courses. ACCA is no exception. It has teamed up with OBU to offer a course which ensures they are not duplicating the finance and accountancy training, and which accepts ACCA qualification as credit against certain electives. The course costs £6,900 and requires a 12 to 15 hours a week commitment for around 21 months, reduced from 30 thanks to the accountancy training students already have. It also counts towards ACCA’s CPD requirements, meaning you are spending less time away from the coal-face where the real professional experience is building up. ‘Distance learning also means that you’re able to take aspects of the course back into the workplace as you go along,’ says Reddy. ‘We have students who do their dissertation on issues that they’ve come across in their jobs. Some even get sponsorship from their employers to research issues that the company can benefit from as a kind of cheap consultancy.’ The global reach of the MBA also means that you build a network, either in the classroom or online, which offers outstanding opportunities in terms of personal and professional development. ‘You’re interacting with a global group,’ says Reddy. ‘So you’re also getting a diverse cultural perspective.’ So far, students from 50 countries have enrolled on the programme. But the fact remains that while the MBA is undoubtedly something that can offer personal fulfilment – ‘many of our graduates say it’s opened their eyes and made them more rounded as finance professionals,’ says Reddy – there are just too many MBAs out in the job market for it to make you ‘special’ in the eyes of most employers these days. And with the growth in student numbers, there is something rather ‘dotcom’ about the MBA market. ‘The velocity with which MBA graduates are coming out of school indicates that some day the bubble of the MBA craze is going to burst,’ says Diwan. So don’t do one unless you are very clear as to why – a sentiment that even Reddy would endorse. ‘Those who are aware of their desires and focused towards their goals will be able to sustain the pressure,’ Diwan concludes. ‘And those who are doing things under the influence of their peers and ignoring their true goals are going to sink when the bubble bursts.’
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