Business school pedigree - how strong an asset?
In one year it might cost a young business person $9,177 in tuition, $6,300 in living and transportation costs, $750 for books and supplies, and $25,000 in lost salary to get an MBA. Is it worth it?
The 1983 crop of MBA graduates - or masters of business administration - decided the answer is ''yes.'' Not everyone agrees.
''I squarely rank myself as one of the leading enemies of the MBA as it's constituted today, and an enemy of the whole notion of professional management, '' says Thomas J. Peters, coauthor of ''In Search of Excellence'' and, oddly, a professor for MBAs at Stanford's Graduate School of Business.
On the ''pro'' side is a top-level consumer products executive, who states matter-of-factly: ''An MBA is a plus. If a person wants to get to the very top in business and can afford the education, he should go for the MBA, simply because people with more education do better than people with less.''
The debate's been on for years, but throwing fire into it now is a growing concern over the state of American industry. In an influential recent article for The Atlantic Monthly, Robert Reich, a professor at Harvard's Kennedy School of Government, writes: ''The underlying problems of the American economy will not come to an end with the next upturn in the business cycle, unless American industry undertakes some basic changes in its organization of production.''
The changes will be quite wrenching, Mr. Reich recently told the Monitor, and they'll come slowly. He says that in fact it was the extraordinary success of American management in the last 30 to 50 years that left us a ''legacy of economic inflexibility'' that is holding us to the previous industrial era.
''But now the world has shifted and we can no longer be as competitive in mass production as we were,'' Reich says.
He doesn't, however, blame the MBA schools for the problem. ''I think the MBA is a symptom, but I don't have anything against the degree,'' Mr. Reich says. ''The business schools would like to respond to the problem. They're beginning to emphasize production management, entrepreneurial skills, and they're offering courses combining engineering, business administraton, and public policy - which I think is the richest vein to tap.''
But Reich says that no matter how much they update their curricula, the business schools can't keep students from ''responding to market forces.''
He explains: ''You can have all the courses you want in production management and technique, but if the incentives in the real world are still for asset rearranging, creative accounting, and litigation, then you aren't going to accomplish very much.'' Those latter occupations represent what he calls ''paper entrepreneurialism,'' which involves ''generating profits through the clever manipulation of rules and numbers that only in theory represent real assets and products.'' That kind of management (not necessarily taught in MBA schools, but attractive to MBA grads), Mr. Reich says, is keeping American industry in its holding pattern.
Michael Brose, president of Technology Consulting Group Inc., comes out squarely against the MBA, saying it is the problem - at least in the decline of the US industrial sector. He cites three management practices taught in MBA programs that he says may be leading companies down the wrong road:
* Promoting hands-off instead of hands-on managers.
* Managing by ''portfolio analysis'' - or buying and selling businesses instead of improving them.
* Achieving business growth by acquisition at the expense of R&D (research and development).
We must change the curriculum,'' Mr. Brose says. ''We've had several decades' worth of managers educated along traditional MBA lines and those approaches no longer apply to today's international business environment. We're living off Grandpa's money.''
Stanford's Tom Peters says, ''There's so much momentum and so much cachet associated with the MBA degree that it's as much a cause as a symptom (of US industry's slowdown).'' One thing's for sure, he says, ''You can't ignore the power of the diploma. The MBA is a way to make it and it's an absolute gold mine for women.''
The negative side to it, he says, is the elitism it causes - the separation between management and worker. ''It seems we're heading down the same path as the British did. The major problem there is the class separation between the public school boys and the assembly line workers. With the MBA degree we've created a class structure like that of the British.''
Peters's solution? ''Changing the curricula is only part of it,'' he says. ''And that happens very slowly, because the MBA school faculty consists of people coming out of the old system.'' He says the best thing to do is ''to switch the attention to night school, to mid-career programs, and executive development. After 15 years of selling computers, for example, then one can go to business school. (An MBA) is terribly good stuff for a 35-, 40-, 45-year-old who has all that hands-on experience. These experienced people know what to throw out of what they learn and what to absorb.''
Emanuel Monogenis, a partner and vice-president of Korn/Ferry International, an executive-placement firm, says companies are increasingly pinpointing needs for MBAs they may hire. ''I call it a mature hesitancy among sophisticated organizations about whether or not to hire an MBA.''
What are some of the companies themselves saying?
The oil companies and firms in electronics and high and low technology generally say they're more interested in graduates holding science, computer, and engineering degrees. Their top executives, they say, were all promoted from within - out of the technical and production ranks. The exception in such companies is the financial side of the business, which continues to recruit MBAs for financial analysis and planning. Consulting and banking, it is widely acknowledged, continue to hire the bulk of MBAs.
Consumer products companies also hire MBAs and have some interesting comments on the subject. One Clorox Company officer says, ''We're trying to hire about half and half (BAs and MBAs). And we're trying to put them to work at lower levels first - for example, as plant accounting managers - so they can learn how the manufacturing process operates. The expectations of MBAs are higher, but everybody needs to learn the business.''
''I know the marketing side of our company concentrated mainly on MBAs in the past,'' he continues, ''but they're beginning more and more to look at people with BAs. The BA people are willing to work a little harder - they're hungrier. MBAs are a little too big on theory.''
According to a recent employee of Procter & Gamble who is still in consumer products, that company has come full circle on the MBA issue. ''In 1977,'' he says, ''P&G made a conscious decision to hire more undergraduate degree holders and was quite successful with them. But then a significant number of them went back to grad school, at a high cost to the company. In one year alone over half the undergrads P&G hired the previous year went back to school for their MBAs, causing a loss to the company of tens of thousands of dollars - their first-year salaries and twice that in training them. After that bad experience, the company switched back to the MBA.
On whether he'd prefer hiring an MBA, another consumer products executive comments: ''Say I had one job to fill and had one MBA and one BA to choose between. Hypothetically, if the two were exactly equivalent in every other way, I'd hire the MBA for three reasons: (1) He's had more education; (2) he's successfully made it through a tough test; (3) he'd be unlikely to leave in a year or two to get his MBA!''