Millennials, digitalisation, politics, and the cost of tuition are some of the major forces currently affecting business education and the business landscape as a whole. Let’s look at whether and how the MBA experience has been affected by latest trends and what evergreen advantages the degree holds.
MBA education transformed
How can Generation Y shape the business school experience?
MBA education is evolving along the lines of a changing business landscape. This entails it being viewed as a sustainable economy; the notion that stakeholders’ interests are important, as are those of shareholders; the inclusion of the “green” aspect into the curriculum; an emphasis on business ethics; and the disruption that technology brings. These trends are both a reflection of and a cause for a generational change. That’s right – millennials are in the business schools’ classrooms.
This year (2018) marks an important anniversary. It is 50 years since 1968 – the year of big hopes in the Western world, the anti-war movement, free spirits, the year of mass demonstrations, the year when the young dared to rebel against the powers that be. And they were about to change the world. Regardless of whether an analogy can be made with the current times, the world of business and business education is now experiencing its own transformation.
What impact can Generation Y have on the MBA experience?
“Millennials recognise the importance of lifelong learning and its impact on personal growth, relationships, careers, and larger social issues — leading to happiness and a fuller life,” highlights Sarah Landrum for Forbes. So, they will try to make the most of their MBA studies, but will put them in the context of continuous learning. In addition, for many today it seems that young people have never demanded more strongly a culture of openness, respect for their values, and a sense of belonging to an organisation that matters. A survey by Cone Communications found that 70% of millennials would pay more for brands that back the social and other causes they sympathise with. This suggests that Generation Y could become more selective when it comes to the business school culture, curriculum focus on social welfare, and looking beyond business school – into whether traditional MBA recruiters provide the corporate culture and the work–life balance millennials aspire to.
The digital factor and the welfare concern
All MBA programmes have a core of general management courses, but they also have to reflect the demands of the business world through specialisations. Some latest trends in terms of content focus are worth mentioning.
Not only are millennials digital natives, but the booming tech and digital developments are affecting the business environment. Companies, not only in the tech industry, need talented managers who understand these trends. Big data, business analytics, machine intelligence, and technology entrepreneurship are some of the new MBA specialisations that we are seeing more frequently. A more specialised, technological MBA training is preferred by companies in Silicon Valley. “These companies place a premium on technical expertise because, to be able to build the products which are the bedrock of their business, managers need a deep understanding [of] how technologies work,” said Tim Derdenger, associate professor at the Tepper School of Business at Carnegie Mellon University (US), in an interview for the Financial Times.
Another trend in the business school curricula is the introduction of FinTech courses. One focus of FinTech is, of course, blockchain. The significance of this revolutionary technology with a potential to disrupt otherwise conservative industries such as banking and insurance goes way beyond its most famed offshoot, bitcoin.
Sustainability is another notable focus. “Business world interest in issues such as climate change and renewable energy has soared, which has dramatically increased the importance of sustainability in every MBA curriculum,” highlights Fred Shevaca-Duwe for BusinessBecause.
The MBA survives another challenge
The MBA itself has developed a sustainable model that cannot be easily affected by social, economic, and political change. After the 2008 financial crisis, the next disturbances were the Trump immigration policy and Brexit. Their effects on business education have been much debated for a while now. Despite the temporary decline in interest of applicants to US schools, the latter are still the top international destination. There are concerns and some real hurdles around the tightening of immigration policies, but it is too early to draw any final conclusions. About 58% of candidates prefer the US as a place to study, Western Europe is in second place with 25%, followed by Canada (7%), East and Southeast Asia (5%), Australia and the Pacific Islands (3%), Latin America (1%), and the Middle East/Africa (1%).
The effects of Brexit on UK business education are negligible, emphasising the good traditions and reputation of British institutions. Chris Healy, head of MBA Marketing & Recruitment Alliance Manchester Business School, highlights an important aspect of the situation and reassures UK-bound MBA applicants about their career prospects: “It’s worth noting that the majority of international students studying in MBA programmes at the top schools in the UK are from outside of the EU and have faced changing and challenging visa regulations for the past few years. We have been able to work with our students in order for many of them to stay in the UK after graduation as per their career desires.”
The evergreen benefits of an MBA degree
Worthwhile Return on Investment (ROI)
Maybe, as millennials transform business education in the years to come, the ROI of MBA studies will be reported in terms of social impact. However, as the MBA requires a sound financial investment, the impact of an MBA on career growth and earnings is still important. Traditionally, the salaries of MBA graduates have been high. This is confirmed by the latest Graduate Management Admissions Council (GMAC) survey: based on the responses of 10,882 business school alumni from 274 institutions, their median base salary worldwide is USD 115,000. Naturally, the pay an employee receives will ultimately depend on the level of their position and where they are located geographically. For example, graduates at the executive level in the US take home USD 185,000; their peers in Europe earn USD 145,000; in Canada it is USD 135,000, and USD 130,000 is normal in the Asia–Pacific region. Figures are considerably lower for alumni in mid-level positions, but still disproportionately higher when compared to the remuneration of graduates from other disciplines. An MBA mid-level professional pockets USD 105,000 in the US, USD 85,000 in Canada, USD 75,000 in Europe, and USD 55,000 in the Asia–Pacific area.
Let’s see how this compares to the investment in some of the most expensive two-year programmes. At Stanford Graduate School of Business (US) the full course of MBA studies requires an investment of over USD 200,000. However, the Global MBA Ranking 2018 of the Financial Times reports that Stanford MBA graduates enjoy a 114% salary increase after graduation, and average earnings three years after graduation of over USD 213,000. An example from the other side of the Atlantic would be the two-year MBA at IESE Business School (Spain) that costs about USD 150,000 for tuition and living expenses, but where the salary increase is reported to be 126% and the average salary three years after graduation USD 148,000.
Although the final financial balance is positive according to GMAC, financing the MBA degree remains the predominant concern of candidates, with 52% worrying about it. For 47%, the risk of becoming indebted is an issue. The key here is a personal, viable financial plan. Scholarships are an excellent way to speed up and improve financial ROI. Many business schools have generous scholarships based on merit, focus of study, citizenship, and other criteria. The winning strategy here is choosing a programme that fits your potential and career aspirations, early preparation for admission, high test scores, and taking the time to refine your application as much as possible.
Diversifying career roadmaps
Career growth and satisfaction is another powerful driver for young executives to plunge into MBA studies. And they have a good reason to do so. MBA graduates have traditionally enjoyed a high employment rate and this was reconfirmed by the GMAC surveys. Seventy-nine percent are working for a company, and 10% are self-employed entrepreneurs. We know from data from past years that MBA degree holders look predominantly for a high level of autonomy in their career. It is logical but still interesting to note that, as the years pass after graduation, so the entrepreneur route becomes more prevalent. Just 5% of the class of 2017 are self-employed, while this figure is 17% for the class of 2001 and 23% for the class of 1991.
As a global outlook on management is one of the features of MBA programmes, it is perfectly natural that those employed are usually hired by multinational entities (61%). Joining a start-up is another quite popular option, rivalling that of entrepreneurship. Eight percent are in a start-up, enjoying the perspectives and innovations that often go hand-in-hand with working for one. The overall hiring trend remained positive for alumni in 2017, as 86% of employers said they planned to hire recent MBA graduates. This represents a rise of seven percentage points over those who actually took on alumni in 2016.
Latest data reveals little change in the industries that MBA participants prefer for postgraduate employment. Consulting leads the way with 33%; Finance and Accounting is in second place with 31%; Products and Services comes third as the favourite of a quarter (24%) of students.
Some say that the generation of 1968 became too involved in the corporate world they once wanted to change. And that instead of reforming it, they were ultimately absorbed by it. But the cultural changes that took place in the world are undeniable. They did not happen overnight, but by way of a rather long and meandering road. Only time will tell if an analogy with millennials can be made and how other disruptive forces will change business and the business education of tomorrow.
This article is original content produced by Advent Group and included in the 2018-2019 annual Access MBA, EMBA, and Masters Guide under the title “The MBA Landscape”. The latest online version of the Guide is available here.