Issue Report: MBA

The pros and cons of seeking an MBA.

Every year, millions of individuals around the world consider the pros and cons of getting an MBA, a Master’s in Business Administration. The debate surrounds a number of key questions: Will an MBA improve one’s career, or even jump start a new one? Is it essential to higher-level management, or at least a major asset? Does it enhance leadership skills, teamwork, and the knowledge necessary to manage organizations at scale, or are these qualities more innate than anything and/or are they better learned on the job? Is the education itself stimulating, useful, challenging, and rewarding? Or, is work work better than home work? Is going back to school and academia really a good idea, or is it better to continue to create value in society through work? Is an MBA a good investment? Or, is the debt from school a significant problem, constraining the freedom to pursue opportunities, particularly ones that may be low-paying initially? Do employers really care that prospective job candidates have an MBA? Is it better to get an MBA sooner in life, rather than later? Is it important to have a specific career goal in mind when going to get an MBA, or is it OK to go into it without such targeted goals? Is an MBA program a great networking opportunity, or can those opportunities be found elsewhere? Is an MBA important for entrepreneurship? Can an MBA be useful outside of business, in government or non-profit work for example? Overall, is getting an MBA a good idea?

Career/salary: Will an MBA improve one's career/salary?

MBA significantly improves job/career/salary prospect

Cathy Dove, Associate Dean of Johnson School of Cornell University. "Con: Many happy returns."

“No single opportunity can so dramatically alter an individual’s career path or earning potential like an MBA. In less than two years, a student can obtain the knowledge, skills, perspective, and networks that otherwise would take a lifetime to acquire.”

Hiring b/w MBA and non-MBA usually goes to MBA

If an employer has two equally qualified candidates in a business, and must promote one or the other to a open position, they will almost invariably give it to the MBA over the non-MBA. The MBA offers confidence in the choice, and allows an employer to justify their decision to their boss or to share holders.

MBA graduates are generally paid very well

"MBA pros and cons."

“, an online recruiting and education website, reports that the average M.B.A. salary went above $82,000 in 2004, up more than 9% from 2003. That will likely grow as the demand for a highly educated work force increases.”

MBA generally offers professional credibility

Thomas MacKay. "10 reasons why you should get an MBA." July 5th, 2007:

“1. It gives you credibility with your business peers. Having an MBA demonstrates your commitment to the business because you’ve invested the substantial time and energy required to obtain the degree. It shows that you value the business perspective and recognize that the technology you implement, support and develop is intended to enable business activities and is not an end in itself. An MBA also indicates that you’ve mastered a certain level of knowledge in business management, which gives you the ability and confidence to speak on equal terms with executives outside of IT.”

MBA is a good way to get into inner circle of a business

Career advancement often requires an MBA

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008:

“Could not have advanced satisfactorily in my career without the MBA – If my summer internship is any indication I’m coming away from the GSB with my dream job. And if I hate it – there are other opportunities to be had. Though recruiting was a miserable, humbling experience, employers who would have previously thrown my resume into the recycle bin, now take me seriously. Works for me.”

Corporate demand for MBA is strong

Cathy Dove, Associate Dean of Johnson School of Cornell University. "Con: Many happy returns."

“corporate demand for MBAs remains strong, and corporate recruiter data show business schools are fulfilling the needs of companies and providing the kinds of future leaders organizations require.”

MBA demonstrates high performance and key skills

Earning an MBA means that you are not only capable of completing an undergraduate degree, but that you are capable of performing at an even higher level. To prospective employers, this credibility can be very important.

MBA offers a choice of employers

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008: "

“I have my choice of employers – a little less than I expected going in, but still pretty great, as mentioned above.”

MBA opens doors to more jobs.

An MBA means that fewer jobs are “off limits.” Such greater choice is always a good thing.

MBA is not necessary to career/salary advancement

Eric Wilinski. "Who should get an MBA and who shouldn't?" MBA Jungle:

“The MBA is not essential for a leadership role in business—plenty of top executives got where they are by moving up through the ranks—but business school can be a great way station on the road to a leadership-oriented career.”

MBA is no guarantee of advancement or even a job.

Many MBAs find that they are not advancing and that, even in some circumstances, that they cannot find a job at all. This can be a very unfortunate situation, and yet it is important to acknowledge as a possibility for anyone going into an MBA program. This is particularly true in a down economy. Quiting your job to get an MBA, therefore, has risks that are important to acknowledge.

Some of the best businessmen don't have MBAs

Francesca Di Meglio. "Save your cash." Business Week. May 15th, 2007

“Some of the best businesspeople I know don’t even have an undergraduate degree, let alone an advanced one. During the Internet boom, people dropped out of the best undergraduate and MBA programs to pursue once-in-a-lifetime career opportunities. Famous MBA dropouts include Microsoft (MSFT) CEO Steve Ballmer and filmmaker Georgia Lee, who left Harvard Business School and was discovered by Martin Scorsese.”

Enrolling in MBA can break stride in career

Francesca Di Meglio. "Save your cash." Business Week. May 15th, 2007

“The average age for B-school is 28, when most people are just starting to hit their stride on the job. And those who usually enter top MBA programs already have high salaries and exceptional skill levels. If you want to get ahead, you can do so without an MBA.”

MBA may not teach needed info for higher jobs

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008:

“I’m still unconvinced that I need to attend an academic program to learn what I need for my work – honestly, while the GSB is above its peers on academics, I was hired based on my pre-MBA knowledge and could probably function just fine in my summer internship on my work experience and CFA alone. I am learning things but not as much as a career changer would.”

Employers prefer years of work experience over MBA

Some employers prefer a person with years of work experience related to the new position, than having an MBA Degree. Indeed, they mostly want to know that you can perform this specific task at hand, not whether you can perform well on tests and in an academic setting. The two can be widely different.

Some employers see MBA grads as too expensive

David Hakala. "10 Questions to Ask Before You Hire an Employee with an M.B.A." HR World. February 21, 2008

“1. Is the candidate affordable? M.B.A. degrees don’t come cheap (at least not the ones from good schools), so many M.B.A.holders price themselves high in the job market in order to cover their student loans. Your company may be paying too much for the added value that it is likely to get. Consider candidates who can do the job for less money.”

Leadership: Does an MBA enhance leadership skills?

MBA enhances teamwork, leadership skills, and confidence

Karen Kapoor. “Pros and cons of doing an MBA.” Ezine: “Gain leadership Skills and confidence to excel in life.”

Many leading managerial positions require an MBA.

Many leadership positions up the chain of command in a business effectively require an MBA. Gaining leadership experience in these positions requires, therefore, that you first have an MBA.

MBA offers knowledge/experience key to confidence/leadership

Dr. Ranee Kaur Banerjee. "Top 10 reasons to get an MBA." Bright Hub. June 8th, 2010: "#3:

‘The MBA will give me more confidence in my job’ No doubt about it, the MBA will certainly enhance your personality. Once you’ve been through the rigorous 2 year course packed with projects, group exercises, assignments, tests, presentations, internships and more, you’ll be more than capable of holding your own in most situations that may come up in your work life.”

MBA teaches how to operate/lead organizations at scale

Thomas MacKay. "10 reasons why you should get an MBA." July 5th, 2007:

“6. You’ll learn how to read and interpret business statements. The MBA curriculum teaches you to understand and interpret financial statements, marketing plans, market analyses, audit reports and business development plans. […] It’s also helpful when trying to understand your own organization’s operating environment: The better you understand the way your company is moving, the better able you’ll be to position the IT department in front as opposed to being dragged along behind. Being in front, on the leading edge of change, is more fun and will make the IT department much more valuable to the company.”

CEOs should have an MBA

Dr. Stan Stead, President and CEO of the Stead Health Group, UCLA EMBA student at age 51: “Well I was a physician who had moved through the ranks of academic medicine and had become a physician leader and then I actually moved into a Senior Leadership spot at UC Davis Health System and the CEO said the next step for you is a CEO job and these days to get that kind of position you’re going to need to get a MBA, so I’d like you to go get a MBA.”[1]

MBA will not improve X factors of leadership

Francesca Di Meglio. "Save your cash." Business Week. May 15th, 2007:

“Business school might improve your quantitative, presentation, and communication skills. It might even get you thinking about ethics and strategy. But two years of case studies aren’t going to turn you into a leader if you weren’t born one. There’s no learning charisma, persuasiveness, elegance, or gut instinct.”

MBAs get training in numbers, but not leadership

David Hakala. "10 Questions to Ask Before You Hire an Employee with an M.B.A." HR World. February 21, 2008

“9. Are people skills more important than quantitative skills? M.B.A. holders are generally trained to manage by the numbers. A job that requires a different type of leadership may not be the best place for a person with this degree.”

Actions more important than badges like MBA

"Dear MS. An MBA is BS." Feld Thoughts. April 2nd, 2006

“While many people wear their degrees as badges of honor on their chests, I prefer to let actions speak for themselves (and – rather than look at the badges people have, I look for the actions.)”

Investment: Is an MBA a good investment?

An MBA is a great investment

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008:

“I no longer have doubts about the ROI. I would have earned a perfectly good salary w/o an MBA but I now have far, far more options about when/where/how/why/what in the way of career. The intangible rewards are huge and make it all worthwhile for me. (The post-MBA earnings should be pretty good too.) However …. this is not true for all career paths/people … do your own calculations.”

MBA is valued currency in any business or organization

Dr. Ranee Kaur Banerjee. "Top 10 reasons to get an MBA." Bright Hub. June 8th, 2010:

“An MBA is like the US Dollar; it is a good legal tender because every major employer anywhere in the world knows its basic value and most HR professionals recognize what the organization is likely to get in exchange for your MBA qualification. The essential elements you will be taught in any MBA program remain more or less the same and therefore, even if you apply for a job across the globe and your prospective employer is not familiar with the school you went to, your MBA will probably go in your favor. […] It is not an accident that the MBA is the most popular post-graduate management qualification on Earth.”

MBA very valuable if outside of previous area of study.

An MBA is a particularly good investment if outside of an individual’s previous area of study. This ensures that all of the skills acquired are indeed, new (or relatively new) knowledge (or knowledge that you would be unlikely to have without an MBA). For this reason, it can be especially important in convincing employers that you know the basics of business.

Employers pay for employee MBAs because it's a good investment.

The fact that many employers are willing to pay for employees to go back to school and get their MBA demonstrates the value of the MBA. Businesses would simply not do this if they did not feel that there would be a solid return on investment.

MBA is expensive with painful monthly payments.

Depending on if you go to a state school or a private school, or if you have financial assistance or someone else paying for the degree, an MBA can vary in price. But, for most, it will cost about $20,000 – 40,000 per year. Every month during the course, and/or after, you will have to make very heavy monthly tuition/loan payments. This is real money coming out of your bank account in big chunks every month for years to come. This is no small investment. It’s a hugely expensive investment, and often a risky one.

Total cost of MBA (including opportunity costs) is high

"Why Achieving an MBA is No Longer My Goal." Cash Money Life. April 13th, 2009:

“Achieving an MBA is an expensive endeavor – both in terms of tuition and in terms of opportunity cost. A top tier MBA program will cost anywhere from $20,000 – $40,000 per year (or more) for tuition alone. And in that time you will usually have to forgo your normal salary. The total cost of a top tier MBA program can easily run into the quarter million dollar range in terms of tuition and opportunity cost, and that can take years to pay off.”

Debt from MBA can be a major burden.

There is no solution to the likelihood that you will accumulate debt from going to get an MBA degree, unless you are a one of those full-ride/merit types or flush with cash.

Making money is better than paying tuition.

Generally, making money instead of losing money is a very good thing. And, being loan free is superior to being over your head in debt.

MBA is bad investment if you have no career goals

John Baschab, executive vice president and co-founder of consulting and staffing firm Impact Innovations Group: “An MBA, like any other kind of training, is helpful, but only if the new knowledge, training, and opportunities it creates are in line with your career aspirations. The skills needed by the CIO of any sizable enterprise are definitely business-focused: budgeting, direction setting, people management, vendor management, and demand management. If your goal is senior management in IT or outside of IT, an MBA will provide the requisite point-of-view and training.”[2]

MBA is a more costly investment of time later in career

Later in your career, you will have greater earning potential no matter what. This means that the opportunity cost of going back to get your MBA is much higher than earlier in a career when you are making less money.

Education: Does an MBA provide a stimulating education?

MBA provides base knowledge expected in business management

Professor Anthony Hopwood, dean of the Said Business School, Oxford University said to the Independent in 2005: “The MBA provides content and knowledge. In the old days in the City what mattered was who you knew rather than what you knew. Now both matter. There is a knowledge base in modern management that everyone is expected to have.”[3]

MBA teaches you to think like a business person

Thomas MacKay. "10 reasons why you should get an MBA." July 5th, 2007:

“2. It teaches you to think like a business person. As technologists, we’re used to thinking in a linear and logical fashion: “If this, then that.” This logical mindset is essential to writing good software, troubleshooting technical problems and managing projects. Business people, on the other hand, tend to think in terms of strategies and value, and human (customers and investors) reactions. The business perspective, by its nature, tends to rely more on estimation and trial and error. The ability to think like a business person is critical for technology managers, especially those of us who wish to position IT strategically within the company.”

MBA helps avoid mistakes with on-job training

"Pros and cons of joining an MBA program school."

“An MBA degree equips an individual with the skills and knowledge relevant to handle huge businesses and complex business situations with perfect ease. An individual without an MBA degree could acquire these skills over time but the chances of bearing losses in the initial phases are eliminated largely in the former situation.”

MBA provides business competencies more quickly than on-job training

"Can business schools build entrepreneurs?" Technology Business bog:

“Every business does need a theoretical knowledge base of accounting, finance, marketing, and public relationships; and a business school precisely provides that through a systematic process, which otherwise would take longer time.”

MBA teaches essential business language

There is a certain language in high-level business conversations. An MBA teaches this language.

MBA can be very interesting

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008:

“Some of these classes are really interesting – the GSB has 2 years worth and more of real classes that involve real thinking and real work. It’s not a bullshit degree if done properly.”

An MBA can be a nice academic break from work

"The Pros and Cons Revisited." To MBA or not to MBA. May 6th, 2008

“Taking a break from working is pretty great – the student schedule is super hectic but I don’t miss the office environment.”

MBA offers self-satisfaction at accomplishment.

Completing an MBA offer great satisfaction at climbing the mountain successfully. The confidence that comes from this can translate into success throughout life.

On-the-job training much better than MBA

"Why Achieving an MBA is No Longer My Goal." Cash Money Life. April 13th, 2009:

“Seizing opportunity by growing my small business. Part of becoming an MBA is learning to recognize things like return on investment and opportunity cost. Right now I realize that my business is providing me the things I was seeking from an MBA program – in terms of increased income, a challenge, and learning new skills. I am the CEO of my company… and the CFO, chief marketing officer, secretary, technical writer, and everything in between. I wear a lot of hats around here, and it has been an incredible learning experience.”

Economic theories much different than actual consumer behavior

"Startups: 10 things MBA schools won't teach you."

“5. No amount of academic theories on efficient pricing will prepare you completely for what people will actually do. Finding the ‘optimal’ price is really hard. In the meantime, remember that a sub-optimal price is a lot better than no price at all.”

MBA education is very time-consuming and stressful

"Pros and cons of joining an MBA program school."

“The time-commitments required too are strenuous and demanding. The course structure is such that one is left with very little time for the self. The pressure is immense and back to back presentations, assignment submissions, discussions and project deadlines make the course duration to be a really exhaustive drill.”

Few executives believe MBA preps for real business

Francesca Di Meglio. "Save your cash." Business Week. May 15th, 2007:

“In fact, only 20% of 133 top international executives said that an MBA prepares people to deal with the real-life challenges that a manager must face, according to a recently released report from executive search firm Egon Zehnder International.”

Being graded and evaluated is not fun.

Whenever you are being graded and evaluated, it is stressful and generally an unfortunate position to be in.

Work work is more rewarding than homework.

Actually producing something of value and use in the world is of greater satisfaction than studying and working on fictional projects that go nowhere, even if they are educationally beneficial.

MBAs sometimes speak with too much elite business jargon

David Hakala. "10 Questions to Ask Before You Hire an Employee with an M.B.A." HR World. February 21, 2008:

“4. Can the candidate communicate with other employees? The M.B.A. curriculum may result in the candidate speaking in terms that the rest of the company does not understand. Communication styles are a common cause of friction within a company. Make sure that your M.B.A. candidate speaks and writes the company’s language.”

Challenge/reward can be found outside MBA

"Why Achieving an MBA is No Longer My Goal." Cash Money Life. April 13th, 2009:

“One of the personal reasons I wanted an MBA was for the challenge. I enjoy working toward goals and I enjoy difficult challenges. A top tier MBA program places you among some of the top business minds in the world and you have a chance to learn from your professors and fellow students. In the last year and a half I have gotten most of the challenge I was seeking from my small business.”

Entrepreneurs:: Does an MBA help entrepreneurs?

MBA provides key knowledge for starting/running a business

Dr. Ranee Kaur Banerjee. "Top 10 reasons to get an MBA." Bright Hub. June 8th, 2010:

“Top 10 reasons to get an MBA.”]: “MBA provide core knowledge in how to start, run, market, and grow a business from the ground up. This knowledge is not innate, and learning it while starting a business could simply mean that the business fails. #1: ‘I want to start my own enterprise and an MBA will help me do it’ I can’t think of a better reason to go get that MBA qualification. […] I firmly believe that the world needs more job makers than job seekers. Second, I know a lot of people who are entrepreneurs at heart and have really good ideas but they have to be contented working for others because they don’t know how to run a business and don’t want to risk failure. If you’re one of them, sign-up for an MBA right now, because it will give you the knowledge, the network, the basic experience and the confidence to execute your ideas into reality.”

MBAs have a statistically lower chance of failed start-ups.

This is because MBA provide core knowledge in how to start, run, market, and grow a business from the ground up. This knowledge is not innate, and learning it while starting a business could simply mean that the business fails.

MBA teaches strategic planning, not just tactics

Christopher Cummings. "Is An MBA Necessary For Product Managers?" Product Management Meets Pop Culture. January 18, 2010:

“Hindsight. Looking back, the brass tacks of my MBA experience were about the basics of management, economics, and business strategy. Could that have been picked up on the job? Maybe. […] However, the more important throughline of the experience relates to critical thinking, perspective, and learning when to lead and when to follow. […] On the job–especially as a young PM–it can be easy to lose perspective, to miss the forest for the trees. At the time, I was definitely into the plate-spinning, the go-go-go, the tactics and day-to-day. No time to think; just keep moving. […] The MBA experience forced me out of the tactical and into the strategic–made me understand, you’ve got to strike the balance between short and long term to make things work. An expensive lesson to learn, for sure, but well worth it. And that’s why I’ll pay that school loan every month with a smile on my face.”

MBA teaches analysis, when energy/creativity needed at start-ups

Simon Woodroffe, Founder Of Yo! Sushi, said to the Independent in 2005: “It’s not the person with the MBA who is running the business. MBAs think that if they do what business school teaches in terms of analysis, then they will be successful but it’s just not true. Business is not entirely logical. It requires a plan but things don’t go according to plan. I subscribe to the Alan Sugar view that business is about making things happen, about energy, drive and enthusiasm – not about analysis and theory.”[4] He says the risk with an MBA for entrepreneurs is “paralysis by analysis.”

MBA will always be there; start-up opportunity might night

"Why Achieving an MBA is No Longer My Goal." Cash Money Life. April 13th, 2009:

“I am choosing to grow my small business and see where that takes me. I know the MBA programs will always be around, but this opportunity may not. For the time being, growing my business is my choice.”

Learning finance is no substitute for learning cash flow

"Startups: 10 Things MBA Schools Won't Teach You."

“No amount of strategic planning will ever substitute for managing your cash flow. Financial statements are great. The most important one is your bank account statement.”

MBA-taught complex business models are costly|

"10 things MBA schools won't teach you."

“Price discrimination (in an economic sense) is a wonderful thing. Except that it often ignores the real costs in terms of organizational complexity. Every time you add a new product or product option a small part of your company dies.”

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