Ask Away: Do MBAs Really Matter?
Welcome to Ask Away, Recruiter.com’s new weekly column! Every Monday, we’ll pose an employment-related question to a group of experts and share their answers. Have a question you’d like to ask the experts? Leave it in the comments, and you might just see it in next week’s Ask Away!
This Week’s Question: Do MBAs (and similar business-oriented degrees) really matter?
“Running several business, I can honestly tell you in the entrepreneurial realm, MBAs and other affiliated business degrees only matter if you plan on working for someone else. Even then, their earning basis is only marginally different. The biggest asset you can bring to an employer is your rolodex and how you can interact with people.
“As a young entrepreneur, I would highly recommend taking the $100,000 you would spend on an MBA and investing it in yourself, sharpening your speaking skills, writing skills, and interpersonal relationships, and finding out ways you can make your employer money and make their job easier.
“However, there is a caveat to this: if you get into a top 25 MBA program where the name carries weight (e.g., a Stanford, Harvard, UPenn, Berkeley, UCLA), then it does behoove you take to take the risk, assume the debt, and further your degree. Other than those circumstances, take it from a young entrepreneur that is always looking for talent: don’t get into debt and waste your time with an MBA program that no one has ever heard of.”
Real Estate and Internet Entrepreneur
RMB Luxury Real Estate
“An MBA definitely matters. However, an MBA is not always looked on in a positive light. In fact, one very successful company for which I worked had a no-MBA rule. While the enforcement of the rule was not absolute, there was a definite bias against hiring people who had those three letters on their resume. Why? In general, we found that MBAs tended to be arrogant, spoke a language of their own, and were difficult to train. Several companies that I have encountered have a bias against MBAs. What explains this bias? The company for which I worked was founded and run by people who didn’t have MBAs. They valued real-world experience over theory and standardized best practices.
“On the other hand, companies that have a high concentration of MBAs in leadership and management roles tend to highly value an MBA. As the expression goes, birds of feather flock together. By hiring MBAs, they validate the importance of their own education. Bottom line: if you want to work for a company that already employs a lot of MBAs, its important to have an MBA.”
Cofounder and Managing Partner
“Post-secondary education of any kind is important because it demonstrates a level of commitment to reaching personal goals. There is also a correlation between a university-level education and the understanding and practical use of technology, specifically that [technology] found in an office environment. Having said all this, the MBA degree in particular isn’t the be-all, end-all.
“Don’t hire an MBA unless the position actually demands it; otherwise, you’ll be overpaying and risking the employee not sticking around because they can’t see how to apply their MBA-related skills. We experienced this recently with an MBA graduate who didn’t have the patience to learn about the company or understand our products and processes before deciding to resign within their first 30 days.”
Cofounder and CEO
“I believe that the MBA degree is as important as ever – though the price for getting one is prohibitive.
“Prohibitive in terms of both real costs — nearing $80,000 for tuition +
$40,000 for books, room, and board + $20,000 for incidentals = $140,000 — and opportunity costs of lost salary — at an annualized rate of $75,000 = $150,000 over two years. Total costs incurred: about $300,000.
“Average post-MBA pay is up ~50 percent over pre-MBA pay. So, in the example above, post-MBA pay would be $112,500. Break-even costs for digging out of that hole, assuming a 2.5 percent cost-of-living increase yearly, would come in year 11 (assuming years one and two were [spent] either inschool or working straight through). So you basically have a lost decade, if everything moved linearly (as it does in a spreadsheet).
“In my case, my MBA was back in the mid-2000s and my path hasn’t been linear, thankfully. I credit my MBA with immersion in many significant leadership theories, plus practical business skills — many of which are relevant today and used frequently.
“As far as hiring, I do look for MBA degrees in certain roles, and I view them as a strategic asset to the candidate.”
“I work at Tidemark in Redwood Shores, California. We’re 158-people strong and growing. Being so small, every single new hire has a huge impact on the company, especially when considering that the department they are joining is likely less than 10 people in total. So the question of qualifications is an important one. MBAs and similar degrees are extremely useful, though not a requirement for us. We don’t make hiring decisions based on the degree, but based on experience, intellect, and potential contribution … If someone is to make an MBA really matter, though, they will get the best results by working in their desired industry for 2-3+ years before going back for that extra level of education. The students who get the most out of those programs are the ones who can contribute and relate to in-class discussions by recalling their own professional experiences. That way, it’s not just talk of theory, but of practical examples, issues, and resolutions.
“In short, MBAs really do matter, but not everyone should get one. As an organization, we want and need a diverse workforce, and that includes level of education. My advice to anyone considering one? If you want an MBA to matter, spend a few years in the workforce before going back and getting one. The value you will get from the program will increase immensely. A good employer will hire you on your ability to contribute, not on a degree alone. Use the classes, experiences of classmates, and professors to learn
and increase what you can offer, and then the MBA will matter.”
“I’ve been in higher education since 2004, when I took on a role as director of business graduate programs overseeing an MBA program and master’s degree program in accounting.
“As a director of an MBA program, my ideal candidate was someone 5-10
years out of college, and not necessarily with a business degree. The work experience is important going into an MBA program. Conversely, the worst candidate is a 22-year-old who just got a bachelor’s degree in business. For that student, an MBA is too much too soon. They don’t get the value-added benefit as someone who has business experience.
“The MBA with business experience has a context for the classroom learning, and then can immediate go to their professional position and apply what they learn.
“The other type of person who can benefit from an MBA is someone who majored in something like engineering or law. The MBA gives them an extra dimension and gives them a better shot of moving up in the organization.
“A good MBA is not just about learning out of a book and in a classroom. There should be case studies, group projects, intentional team-building activities, international travel, visits to businesses, and real, live case projects to work on (i.e., an actual business with a real problem).”
Former Director of Business Graduate Programs at the University of Maine
“My feeling towards the degree is that the best form of practical experience is still starting/running businesses – even if [they fail]. If you fail and try again, the cause of your previous failure is unlikely to be a problem again since you can now predict it and avoid it. If you succeed, you’ve also learned a lot.
“The [MBA I received] did provide some useful experience, mainly theoretical. For
example, when studying economics, we learned about supply and demand charts. That is an interesting and useful tool that I hadn’t learned from experience alone.
“However, for [things] like importing and speaking to Chinese manufacturers, the degree barely helped. We learned about international business and cultural differences, but when it comes down to importing, there are a lot more hurdles to overcome (especially government, trust, and reliability).
“I can’t speak on behalf of employees, but as an entrepreneur, the degree is optional.”