Researchers question usefulness of MBA degree

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You’ve finally earned it: an MBA. It’s that magic key that opens corporate doors to advancement and increased compensation. Business school officials say that the candidate with a graduate level business degree will triumph in interviews, leaving lesser mortals behind. But does that assumption hold up in today’s tight hiring market?

According to a survey published in summer 2002 by Stanford professors, Jeffrey Pfeffer and Christina Fong, a Master of Business Administration diploma may provide an edge in the hiring process, but once employed, the MBA’s effectiveness remains debatable. Pfeffer and Fong go on to say that MBA degrees being earned and awarded these days are not useful in today’s business climate; they are often too abstract, too theoretical and not applied enough to the real world to do students much good. And, according to an August 2002 Associated Press story, in the long run, they often cause students to incur tremendous debt, not offset when compared to the salary most candidates will earn as corporate managers. Pfeffer’s real question remains, “Do you learn anything at business school of real world value – or is the pursuit of an MBA more often a chance to network with other fast-track managers and future CEOs?”

In an interview with the Colorado Springs Business Journal, the Stanford Graduate School of Business professor says that the reaction he has received to date has been mostly positive (including those from the CEO of Sun Microsystem, Scott McNealy, and from colleagues at other business schools). “Initially the administrators at Stanford were a little upset, but they are over it,” he adds. When asked if the results of his research varied by region (e.g., the Front Range of Colorado), he responded, “A lot of regional variation is not so much variation by location as variation by industry,” adding that there aren’t too many investment banks in Colorado but numerous on the East Coast.

In interviews with a number of educational leaders at Pikes Peak region institutions of higher learning, responses varied regarding the researchers’ findings. Dr. Eric Goodman, dean of Management at Colorado Tech saw the Associated Press story as the basis for discussion on how MBA candidates are educated. “I think Pfeffer and Fong say the schools that are doing well focus on experienced students because they can more effectively couple classroom learning with applied knowledge. Here at Colorado Technical University, for example, our graduate students can see the impact of what they’re learning because they are literally exposed to knowledge one day in class – and try it on their job the next day. When you’ve got working adults as students,” he adds, “they are going to help ensure the connections are made between what is taught and what is needed.”

Colorado Tech’s master or doctoral degree is modeled around lifelong learning and helping students achieve specific goals, not just earning a degree that can boost their earnings, says Goodman. Most students are able to complete their master-level studies in 16 months or less. The for-profit university’s MBA program also allows specialization in the areas of project management; human resources; logistics/supply chain management; technology management; or in information technology and business transformation. Based on Pfeffer’s criticism of the lack of practical focus offered at some of the country’s most elite graduate business schools, Goodman and the Colorado Tech faculty appear to be on the right track.

Duane Goettsch, a recent graduate of Colorado Tech who went to work directing a regional human resources department for the Southland Corporation believes his education has made a difference. He earned his MBA with a human resources focus while working full-time. “Even before I graduated, I was able to use the statistical analysis I’d learned to help solve a situation in an office where we had lots of employee turnover,” he said. “The legal and accounting classes I took are useful everyday and provided me much deeper insight into running a human resources department than anything I’d learned in my Bachelor of Science in management studies at NYU.”

Another perspective on the value of an MBA comes from Dr. Joe Rallo, dean of the College of Business at the University of Colorado at Colorado Springs. With 550 students currently enrolled in the UCCS MBA program, Rallo points to the academic value and critical thinking skills his master-level courses develop in students. “Colorado Springs is a wonderful place – and most people don’t want to leave here, but for those who do,” he adds, “we provide the only Association of Advanced Collegiate Schools of Business (AACSB) credentialed MBA program between Denver and New Mexico. That will make a difference when our graduates decide to compete for jobs on the East Coast or in large metro areas where MBAs are recruited actively.” To illustrate his point, Rallo recalls that one of the University’s business school’s outstanding graduates, William Randleman, was recently hired by a high-powered Boston firm. “He wouldn’t have had the same competitive edge with an MBA from a non-AACSB-credentialed school like Regis, University of Phoenix or Colorado Tech.”

Based on an informal poll of Colorado Springs employers and human resource directors, Pikes Peak region hiring tends to focus on students with specialized training and professional certification more often than on an MBA. “In our business,” says Brenda Smith of Baird, Kurtz & Dobson Accountants, “we find a Master of Taxation degree combined with a CPA designation is most attractive in new-hires.” Marsha Bowen, an HR director in high-tech agrees. “At WorldCom we have always supported employees who want to get advanced education, but we offer a number of professional certificate courses in-house. An MBA would probably be useful here only if it is tied to a specialized degree in a technical area.”