Leon Gettler: Is an MBA worth it?

 

An MBA is an investment in your future where you trade financial hardship and time for increased career status and earning power down the road. What’s the return on investment?

According to mbaguide.com.au, an MBA could cost you anything from $14,400 at places like the University of Ballarat to $50,000 at the University of Melbourne. And a full time course means 18 months without income. Do it part time, and you can forget about getting early nights or spending weekends chilling out for several years.

Of course, the question is whether it will actually get you a better and higher paying job. I maintain in my piece here that it allows managers to market themselves to recruiters, and in any case, many companies regard it as essential for career progression. But then, as Louis Lavelle at BusinessWeek says, the jury is still out and the numbers don’t quite add up.  “Doubling your money after 10 years is a bit less than you can expect from any halfway-decent investment earning 8 per cent a year–and unlike most other investments, an MBA is highly illiquid. Once you pay for it, you’re stuck with it.”

Interviewed by Forbes, noted entrepreneur and commentator Guy Kawasaki is scathing when asked about the value of his MBA. “Probably about a negative $250,000. (I have an MBA, and I was once a young college graduate.) I don’t think an MBA matters very much for starting a company. A much better educational background is an engineering degree. You can always hire MBAs, but if you don’t have the ability to conceptualisze and deliver a product, you’ve got nothing.”

Writing in Fast Company, renowned academic Henry Mintzberg says the problem with the MBA process is that it’s too removed from the real world. “Nothing personal, but full-time MBA programs by their nature attract many of the wrong people – too impatient and analytical, with little experience in management itself. These may be fine traits for students, but they can be tragically ill-suited for managers. Conventional MBA programs then compound the error by giving the wrong impression of management: that managers are important people disconnected from the daily work of making products and producing services; that managing is largely about decision making through analysis; that managers pronounce deliberate strategies for everyone else to implement; and worst of all, that by sitting still in a classroom for a couple of years, you are now ready to manage anything … The truth is, no one can become a manager in a classroom. Management is not a profession, nor is it science. It is a practice that depends mostly on craft and significantly on art. Craft is learned by experience.”

But then, Adam Janikowski writes in the Globe and Mail studying for an MBA rounded out his education, taught him soft management skills and, most importantly, built his network. That is an enormous return on investment.

What do you think? Is an MBA worth it?

One thought on “Leon Gettler: Is an MBA worth it?

  1. Hi Leon,

    The value of the MBA can only really be judged through the prism of the student’s intentions: some do it to upskill, some to reposition their career, some to meet internal promotion requirements. Others believe it will catapult them into the BRW rich list.
    The more pertinent question, especially in Australia, is the extent to which employers value the MBA, and MBA graduates as potential hires after graduation.
    Most programs position the course as an entrée to elite suite, a ticket to wealth and influence. However, my own experiences are that is case of over-promising and under delivering, and ROI was not clear.
    I did my MBA at Melbourne Uni and found the academic side of the program truly excellent. My undergrad was in business, yet the skills I learnt in the program, the ability to assess and understand in detail the perspectives of organisational disciplines/functions has been invaluable.
    However the admin and post study support provided to students after their $50K investment was woeful. Despite relatively small graduating classes, only the top 10-20% of students were sought by management consultants, and the rest of the full-time student had to scramble for a post MBA-job, and would have likely been better to have stayed in their roles and studied part-time.
    Compounding this problem at MBS was that a large number of foreign students in the program had relocated hoping for a new life in Australia, and despite being very talented found their qualifications undervalued and struggled to find employment using the MBA as a proxy for professional competence, other than in burn and churn environments.
    This left many people who had invested heavily into the program jaded and negatively disposed to the qualification.
    I would endorse people undertaking the program, but advise them to be very clear about their reasons. The financial and emotional cost is significant, and without a clear vision you will likely be disappointed.

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