Quitting a well-paid job to study is never an easy decision – but may seem especially foolhardy during the worst recession in decades. Yet would-be senior executives are increasingly doing exactly that by signing up for MBA courses – believing that the better educated they are, the more money they will earn and the higher up the managerial ladder they will eventually go.
An MBA – Master of Business Administration – is a qualification that has gained widespread respect since the first of the European MBAs were launched in the 1960s, copying a qualification already well-established in the United States. Dismissed by many at first as just extra dressing on an insecure manager’s cv, it is now regarded not only as extremely useful – but even perhaps as essential for those seeking to get to the business top table.
“The MBA is no longer going to be an option for young executives, but will be a requirement for young executives,” predicts Luis M. Umaña Timms, academic director for the MBA programme at the Rotterdam Business School, part of Erasmus University. He believes that over the next few years this will be increasingly true across upper middle and top management in all large companies.
“A couple of years ago, people still thought this was a trend would reach a peak and would be gone,” Umaña Timms explains. “But an MBA offers not just the theoretical knowledge you get from an MSc, but additional skills – management skills, people skills. Companies are coming to realise that these skills are as important, or more important, than the theoretical knowledge.”
A similar point is made by Susan Roth, a director of business masters programmes at Cass Business School in London – ranked by the Financial Times, like Rotterdam, as one of the top business schools in Europe. “Jobs are going to go to people with MBAs and masters level degrees first,” she insists. “So people want to make sure they have those.”
Roth recognises that the MBA has its critics – but dismisses them. “I don’t know why it is so controversial,” she says. “I think MBAs are here to stay. No one says this about a law degree, or a medical degree. A criticism is that there are too many MBAs out there. But I don’t think that is true. It will raise the bar in industry and you will have better qualified people. It is the best business degree. It is the most versatile business degree. We have doctors and lawyers doing MBAs all the time. If you are a doctor and you want to run a hospital, you will need an MBA as well as your medical degree.
“I think the MBA is always a sure thing. You will never regret getting an MBA. It teaches you how business is done and that is true for any business. It is portrayed as the ‘trade degree’ of the finance industry. But that is not true. It gives you the ability to look at a financial statement and understand what the numbers mean in simple terms. It enables you to understand organisational behaviour and human resource management.” Roth – who previously worked at an American university – also believes that MBA education in Europe offers a broader dimension than that in the United States. “MBAs have a bigger emphasis in Europe than in the States on the people side,” she explains.
MBA numbers have been rising particularly strongly since the first signs of the economic downturn. Cass has had a 15% increase in applications and holds down its MBA full-time student numbers to 80 to ensure student quality remains high. Erasmus, too, found applications increased with the downturn, with full-time numbers restricted to 112 to ensure facilities are not over-stretched. Brussel’s Solvay Business School – another highly rated by the Financial Times – has had a 20% to 30% increase in applications and is also restricting numbers to focus on quality.
Yvonne Langen, MBA programme director at the University of Amsterdam, reports a 30% increase in MBA student numbers for the new academic year. She agrees this was partly driven by the recession, but it is also about location, says Langen. “We are based in Amsterdam, which is not just a nice city, but is also a good place to work after the MBA,” she explains. “We give help with students to find a job – and about 98% do. So we are very successful.”
Amsterdam University’s research shows that an MBA increases earning power by 25% or more for those who are from the Netherlands. “If they are from India or Turkey or China – from where we do have students – and then stay and work in Amsterdam, they get a much bigger increase,” says Langen. “Some get a five-fold pay increase.”
Umaña Timms says that while the economic crisis has led to an increase in student numbers, it is not the only reason. “On the full time programme we have seen an increase from abroad, especially from countries who have traditionally targeted the United States,” he explains. “Immigration authorities have tightened their requirements, so that many applicants who have been accepted by [US] universities have been rejected for visas, so many applicants have turned their eyes to Europe.”
He argues that Rotterdam has gained in particular from he calls its ‘value proposition’. “We focus on skills and complexity, more than your average business school,” claims Umaña Timms. “We do look at finance, marketing, strategy, accounting and so on, but parallel to that, with our MBA we have a personal development leadership programme, which starts on day one and is completed on the last day. It is looking at personal and interpersonal skills, the ‘EQ’ as well as IQ. It is about managing people, across cultures, across countries, across continents. These things add a dimension to the MBA programme.”
Like the other top business schools, Rotterdam is proud of the international diversity of its students. Of its full-time MBA students, there are 42 nationalities, with 94% drawn from outside the Netherlands. It is a factor that is also very attractive to the students.
“I met amazing people,” says Caroline Jarvis, a 29 year old who has just started at merchant bank Kleinwort Benson after completing her MBA at Cass Business School. “I think we had about 30 different countries represented in our course of about 80 people. And I was with a community of people who wanted to learn and who wanted to share their own experience. So I learned from my year’s colleagues and classmates.”
Jarvis, who is from Britain, had been a fundraiser for the Navy League and other US charities. “I was living in [Washington] DC for four years or so, before coming back to London,” she explains. “I had a very corporate-minded boss at the Navy League, and she really ushered me into the mentality that charities should be run like a business. I always wanted to do a business degree, so I decided to do an MBA and I wanted to come back to London where I was born. I just loved Cass – and I loved them immediately.
“Cass gave me a great feeling. Going to go to Cass was easily the best decision of my life. It was the best year of my life. The education is second to none. The breadth and depth of the MBA is incredible. Your teachers are actual practitioners. They say ‘I have done this, my colleagues have done this, and this is what what you need to learn and understand’. So it is a very practical and professional approach. And it was fun.”
The MBA course also enabled Jarvis to understand and apply in another context her existing skills as a charity fundraiser. “I was used to working with high net worth individuals,” she explains. “I wanted to put together my new skills with my old skills.” As an ‘aspirant’ (trainee) private banker, that is what she is now doing.
Maudy Keulemans remains an MBA student and is president of the MBA Student Association at Erasmus University, nearing completion of her course. Her background is also in the charity sector, having been an NGO operations manager on an HIV/AIDS programme in Tanzania. Now 30, she is considering moving into consulting – and applying to McKinsey or Bolton Consulting – or bringing together her practical experience of the health sector either by being involved in healthcare investment, or bringing together support for healthcare with microfinance projects.
Keulemans feels that her choice of the Rotterdam Business School was the right one for her, especially as she had lived in Rotterdam for much of her childhood. “It is a school that attracts people with a different history – like mine,” she says. “People who worked in Africa, or people who have started their own business, or worked in sustainability in China. People who have not taken the standard route and I like that a lot. It’s not like 80% of them will go into finance or consulting.”
Her new skills provide more than a passport to a better job – it is also empowering. “An MBA gives you lots of knowledge and skills about business,” she says. “You are really building your skills. It really opens your mind. I have the feeling now that the world is small.” Above all, she says, it gives her the skills to be flexible, to adapt and survive in a world that is going through profound and rapid change.
“I understand what is happening in the world and where I should place myself and look at all the options and decide for myself what I should do,” she says. “For me that’s most important and it gives me more freedom.”