The reputation of MBAs is under threat as many “unsuitable” educators around the world, realising it is a profitable business, enter the market introducing poor quality programmes.
Ernst & Young Executive Programme Faculty leader Professor Geoffrey Lewis – a former faculty member at The Darden Graduate School of Business Administration, which is regularly ranked by Business Week and Forbes, and other sources as a top business school in the world – said the spotlight on MBAs and their quality has been around for the past two decades.
“This questioning of MBAs has been going on for ever and that’s healthy.”
The discussions over the programme have gained much attention, resulting in people becoming more critical of the programme. In the flooded MBA market potential students have to learn to distinguish between high and poor quality courses.
“The MBA has been a very easy way for universities to generate additional income. They are relatively cheap to deliver and they generate a lot of income.
“The real problem is that at the bottom end of the market lots of universities repackage undergraduate degrees into an MBA programme,” according to Prof Lewis, who is attached to Melbourne Business School, The University of Melbourne.
The student market in the US and Europe – pioneers of the programme – has become very sophisticated over the decades.
The MBA originated in the US, emerging from the late 19th century as the country industrialised and companies sought out scientific approaches to management.
The Tuck School of Business – part of Dartmouth College – was the first institution to offer masters degrees in the commercial sciences, became the forebear of the modern MBA degree. The school was founded in 1900.
The Australian consumer market is closely following the US and Europe in understanding the differences between elite providers and the ones that are in the market for a quick dollar, Prof Lewis said.
“What’s happened with the MBAs in the US and Europe much earlier, starting to happen in Australia now and probably will happen in New Zealand is that people are appreciating that there’s a tremendous difference between MBAs and the quality differences are extremely large.”
The shift in the quality differences particularly accelerated in the past 10 years around the world.
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The Ernst & Young Executive Programme is a “mini MBA,” which is taught by Prof Lewis and other scholars who fly in to New Zealand for the two-week programme that is run once a year in March.
It was designed 18 years ago specifically for those who are about to assume senior positions of responsibility.
The alumni – numbering nearly 900 – includes general managers, chief executives and chief financial officers of large companies and public sector organisations.
Prof Lewis said the MBA market is now quite differentiated: while some MBAs are prestigious, others are a waste of time and money.
The MBA market in Australia is quickly maturing with some education providers beginning to regularly feature in the prestigious rankings.
Australian School of Business, AGSM, Melbourne Business and Macquarie Graduate School of Management are among some that are now globally recognised for their programmes’ quality.
While Australia is in the race for top spots in the international rankings offering the world’s top MBA programmes, New Zealand schools continue to remain off all the lists.
He said it is common for Australia and New Zealand’s best people from larger companies to travel to either the US or Europe for top programmes.
“Many of the good students [in Australia] are taking the opportunity to go to the best schools. It would be the same for New Zealand.”
NZ offers generic MBAs
The director of the Southern Cross University MBA programme at Manukau Institute of Technology, Dr Wayne Dreyer, said the majority of MBAs offered by New Zealand education providers are “generic.”
The limited resources available to local tertiary educators have resulted in a “homogeneity” of the country’s MBAs.
“I understand why New Zealand universities have gone down this road and sought economies of scale in a world of diminishing funding for universities but in my view this track has raised major issues in how we train our next generation of executives.”
The senior executive education market in New Zealand has evolved into one where there is a plethora of MBAs, which in the main replicate each other, with most having no unique point of difference, Dr Dreyer said.
“This is not good for our development as a nation. We need those who are innovative and can and do think outside the square in their approach, not a homogenised executive.”
Outdated curriculums set country back
Learning and teaching practices – that are largely predicated on practices from the 1980s and 1990s – are also outdated, dragging behind the rest of the world, he said.
“New Zealand trades in a global world and yet there is no evidence in a traditional MBA of these issues being addressed in a substantive way.
“Instead, in New Zealand, the majority of the learning is done in a traditional manner, for example – class based – with little blended delivery.
“New Zealand as a country and economy needs to break out of the shackles and thinking that resulted in business and finance leaders in western world going down the path of economic recession.”
Grim future for local providers
Dr Dreyer said as professionals around the world are increasingly becoming more critical in their approach to their own executive development, New Zealand MBA providers are facing a grim future.
“Unless there are substantial changes, I see the [New Zealand] MBA losing its popularity,” he said.
But the professor of strategic management and deputy head of Victoria Management School, Stephen Cummings, said while there are some leading universities in the world that have taken a new approach on their MBA programmes, the majority, including Harvard, remain “fairly” conventional.
“I think there is a good reason for that. In the 1980s and 1990s a lot of places tried to develop these more specialised MBAs and they didn’t work because the MBA is a generic degree.
“I wouldn’t confuse lack of quality with an old conventional curriculum. Some of the highest quality MBAs follow a very conventional curriculum.”
Still a relevant degree for business
The needs of business largely remain unchanged, requiring an understanding of accounting, marketing and operation, so there is no need for the programme to change, he said.
“The MBA is still a very relevant degree for people who are moving up in an organisation, who may have specialised in marketing or accounting but as they move in to more general management positions they need to understand various parts of the business.”
Prof Cummings, who taught at the University of Warwick in the UK, which was No 1 MBA programme in the UK at the time, said New Zealand MBAs are compatible on the international scale.
“I think what New Zealand universities perhaps lack is the brand. [But] I wouldn’t underestimate in any way the quality of the MBA programme in New Zealand. Every 10 years there are things written about how we are going to see the death of the MBA. But it doesn’t happen.
“The MBA will still be as popular in 10 years time as it is today and it’s popular today as it was 10 years ago.”
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