Is getting an MBA worthwhile?

MBA topics

If you want to learn Excel, keep reading or Get 10 days of free unlimited access to Lynda.com. for professional help and Excel Tutorials
***************

I met an engineer at a party recently who was dissatisfied with his job. He mentioned he’d thought about getting an MBA, but as we talked, it seemed he had a lot of misconceptions about what an MBA involved, and what he could expect afterward. I’ve received similar questions in the past from engineers (probably because many of my friends fall into this category), so I thought I’d sum up my answers to some popular questions I’ve often received. Let me preface this by saying that I attended the , and while I think top MBA programs are largely the same, there are a few differences in methodology and, perhaps, prestige (see below).

1. Except in a few cases, an MBA is probably a more pragmatic degree than what you studied in your undergrad years. Unless you chose business or a specific trade as a major in undergrad, you’ll probably find that an MBA degree is more about getting a job and building a career than anything else. As such, almost everything in an MBA program, from clubs to classroom discussion, is more about getting results and less about wide-open what-ifs as in other types of graduate programs, or even a PhD in Business Administration. This can come as a shock to people (like me) who have been in academia more than they care to admit, but in the end it’s a useful and worthy skill to have, and one you’ll especially appreciate during the interminable business meetings you’ll have once you’re in your new job.


2. If you’ve got an engineering or other science degree, you’ll probably find the coursework at an MBA a breeze. An MBA program will teach you many things, but most of it isn’t going to be focused on getting As in school or taking tests. To put it bluntly, in the end, most companies (save maybe in I-Banking or Consulting) won’t even care about what your GPA is in bschool. The coursework at an MBA program is not as difficult as getting a medical or law degree, nor does it take as much time. But the skills you pick up — again, practical ones like how to interview, network, and land a job — are also ones you don’t typically learn in another degree. The benefit of a good MBA program is in the networks and relationship skills you build. I find that the biggest conflict that scientists and engineers have with themselves in regards to getting an MBA is in this area. We’ve been geared toward problem-solving and taught to focus on measurement, and less on communication and “soft” skills, so the idea of paying to get a degree that focuses on the latter and not the former is disconcerting. But ideally, if you can combine the two, you’d be that asset that many corporations seek.

3. Where you go for your MBA probably matters. Because business schools are all about accessing alumni networks, the better the school you can attend, the better your chances are later on. And like it or not, an MBA from , Stanford, or means “more” in most situations than one from other programs (though you can debate endlessly on which schools comprise the “top” programs). The general consensus, if you believe and most literature out there, is that you should go to as good a school as possible, and probably one within the top 20. (I don’t advise spending too much time on the Businessweek forum as it can make you OCD about going to the “right” school). And it’s not just alumni networks. My previous employer, a Fortune 50 company, calculated base salaries and job grades for entering MBAs almost entirely based off of the prestige of the school.

4. An MBA is a time-compressed career experience. Most MBA programs use case-studies to teach in their programs. Some may use them 100% (as I understand Darden does), and others less. But the idea is the same: cram or get as much out of 2 years of school as you could have gotten from experience. This works remarkably well, and I’d swear to anyone that a high schooler could learn the academic content in an MBA program with no problem at all. But a high schooler may not have the skills and maturity to communicate, lead, and build relationships that are also necessary to be successful as a business person. Michigan’s program is a general one, where the first year is spent taking core classes. Personally, I really liked this because it exposes everyone to all the different fields available — marketing, operations management, finance, strategy, organizational behavior, etc. — but then again, I’ve always been a generalist at heart. I will say, though, that anecdotally, I think I learned more than some friends who went to Wharton and who for whatever reason did not get exposure into as many facets of business.

5. An MBA isn’t going to teach you everything. Business schools (including my alma mater) are going to hate that I say this, but there are things that you just can’t learn in school. An MBA will not teach you to be an entrepreneur. In fact, I’d say that much of the analysis taught in bschools focus on risk aversion rather than risk taking. I attended a discussion with a panel of local entrepreneurs in Ann Arbor, among them, the CEO of Zingerman’s (who told us he’s an anarchist and majored in Soviet studies in school), Border’s Books, and a few others. I believe only one of them came from a business background, and all said that if they had been reasonable and logical, they’d never have started their businesses to begin with. (I think it was the Border’s CEO who said he and his friends launched the company during the 80s when interest rates were at 20% or something ridiculous). This is not to say that an MBA is useless when it comes to running your own business, only that it’s not going to teach or give you entrepreneurial attributes that you didn’t already have.

An MBA will also not teach you leadership or sales skills.
Most business schools will have leadership programs set up that attempt to focus on leadership, but I have yet to see someone who can teach leadership as a skill. I believe leadership is something you might be able to build through experience, but certainly not one you can learn from classrooms. As for sales, it’s unfortunate, but not only was there no focus on the importance of sales to a business, but anyone with a sales background was automatically respected much less than someone who was a consultant or banker before. Again, salesmanship is something that I’d be hard pressed to think is teachable via classrooms and books, but I was still surprised that there wasn’t any importance placed on this skill or role. Think about it. Sales drive revenue generation in an organization and is key to its success. But reality is that almost no one who graduates from an MBA program will go into sales, but perhaps similarly, being in sales doesn’t require an MBA.

6. An MBA will probably give you more job opportunities, but it won’t solve everything. Many people leave an MBA program thinking they’re ready to become venture capitalists or CXO of the next company. Or if not, certainly be promoted to such a level within a few years’ time. Reality check says this is an unlikely outcome. If you ran your own company, would you hire someone straight out of school to take major responsibility in your operations? Probably not. But an MBA does give you some job security. For whatever reason, in many companies, you can’t advance any more beyond a certain level before getting this three-letter degree. Similarly, if you do a simple search on Monster for “MBA”, you’ll find this waives or meets some of the requirements listed in the job description. No, it won’t guarantee you the job, but it will waive you past some of the initial hurdles (and then, presumably, your interviewing skills can push you through to the next round).

7. An MBA is expensive, but might be worth it.
This program is certainly not cheap. Take a look at any brochure from a bschool and you’ll likely see figures above $30K per year for tuition. Scholarships, except through the Consortium, which serves underrepresented minorities, are also difficult to come by. Nevertheless, if you’re sure you want to continue in mainstream corporate America, an MBA is often the only way to continue up and onward. Most MBA programs also publish the median salaries and signing bonuses for recent classes, and you can quickly calculate whether an MBA is worth pursuing or not for someone in your situation.

8. A full-time MBA is not the only alternative. The benefit of a full-time MBA is presumably that you develop more camaraderie and therefore relationships and networks than if you were only attending part-time. However, for some people, part-time may make more sense. Michigan offered an evening program where many engineers and employees from local auto makers attended. In my program, I didn’t find much of a difference between day and myself. In both groups were people who excelled, and if anything, the part-time MBAs not only had to manage a full-time job but be organized enough with their time to plan out group meetings, classrooms, and their jobs ahead of time. If you’re interested in pursuing a part-time degree, be sure to ask the schools you’re interested in about whether such a program exists, and try to find people who are doing their MBA this way to get a feel for what they advise and how they manage it.

So in summary, I think an MBA is worthwhile, provided you go in with the right expectations. In the end, it’s a practical degree in almost every way. I’ll write more on the topic if I can think of or hear more questions about it!

***************************************************

Look Good at Work and Become Indispensable Become an Excel Pro and Impress Your Boss


***************************************************

8 Feedbacks on "Is getting an MBA worthwhile?"

AllFinancialMatters » Blog Archive » Weekly Roundup Time!

[…] Ricemutt over at Experiments in Finance wonders if getting an MBA is worth it. […]



More thoughts on the value of an MBA »

[…] Personal finance, Corporate finance Earlier this week, the NY Times published an article entitled “Was Earning that Harvard MBA Worth It?” which summarizes some studies and the content of a yet-to-be-completed documentary that will follow a handful of Harvard MBA graduates from 1996-2026, with interviews every 5 years. I’m happy to say that most of their findings are consistent with my own recent thoughts about having an MBA degree, though I went to Michigan and not Harvard for mine. […]



» Carnival of Personal Finance #53 » Consumerism Commentary: A Blog About Personal Finance

[…] Experiments in FinanceIs getting an MBA worthwhile? (1,678 words) Ricemutt bets her MBA reputation on some points to consider before getting that advanced degree.Favorite: The pitfalls and dangers of target retirement funds […]



Jason

I was looking for an objective essay on their MBA experience for sometime now, so thank you.

Also, I see you went to UMich for your MBA, which is where I am considering. I received my BA in Business from Michigan State about a year ago, and am looking forward to going back to get my MBA within 3 or 4 years.

If you could provide your feedback on specifically UMich’s MBA program (don’t have to post, you can just send an email if you like!) I would GREATLY appreciated it.

Thanks pal!

Jason
zirotti@gmail.com
zirotti.com



elizabeth

thank u so much. thats all that i needed i suppose. please keep me informed, i just started the program 4 weeks ago, as a partimer evenings . i was even thinking of writing my dessitation with the topic ‘is this degree worth it?’. but was wondering if i will get enough to make a dessitation.

Liz



Banking Business Plan

Ebay Business – Longer Bidding Time The Bigger The Bank Balance…

Is this your first business venture – if so you must be excited just at the fact of being your own boss with no 9 to 5 job – that is if your Ebay business is going to demand your full time attention to keep the pennies coming in? No doubt you will have…



Matt

This article is to prevent potential MBA candidates from choosing GISMA Full-Time MBA program.

GISMA misleads potential MBA candidates by doing clever marketing. It sells its MBA as a top notch program with Purdue University. Truth is, GISMA has multiple shortcomings. The program is extremely quantitative but scores very poorly when it comes to soft skills and networking which are extremely important in an MBA. Furthermore, GISMA lacks true MBA ambience. The school is very small; networking non existent. If it were not enough, it’s not easy to find a more boring place than Hannover.

However, the most serious aspect about GISMA is the way it recruits MBAs. It has a deliberate policy of recruiting students who lack leadership, ideas, and entrepreneurial desire; who will be contented with low level positions in German multinational companies. Most of the students come from underdeveloped countries / regions such as India, Africa, Latin America, Eastern Europe, etc., and it is no coincidence. GISMA selects students from these parts of the world because it is consistent with its strategy of finding low cost labor for German companies. It never chooses candidates from developed countries such as France, Italy, Spain, Japan, etc. because people from these countries expect higher salaries. The exceptions being German and American students. The latter serve the function of being the link between foreign students and the multinationals. German and American students are oftentimes in the “Dean’s List” and secretly enjoy special privileges. On a lighter note, the academic director is the best example of what a manager shouldn’t be. She is not involved and doesn’t show interest in student concerns or disposition to help. She completely lacks people skills and is not liked by the vast majority of MBA students (some will not recognize this out of fear). Ironically, she is a GISMA MBA graduate. Furthermore, GISMA is in a very bad financial situation. The Dean even bothered to travel from the States to inform the class of 2008 the possibility of GISMA closing next year. In the mean time, German companies have agreed to continue to subsidize GISMA. However, this is by no means a guarantee of its long term viability. This is bad news particularly for candidates applying to GISMA in the future without knowing the risk it implies.

In conclusion, GISMA is definitely not a good business school. It is misleading in its advertising and the Full-Time MBA program has multiple failures. But the worst part about GISMA are its students. Most lack leadership, entrepreneurship, soft skills, and even social skills. Participation is discouraged even if they deny it. Their policy of choosing students lacking leadership, vision, and all of the above qualities is pathetic. GISMA is not a business school for leaders. It is a school for low level employees.

Check GISMA at http://www.gisma.com/ and convince for yourself. Don’t be fooled!



richard wour

To Matt:

I think you may have some hatred to GISMA program, and I do not know what happened to you when you were in GISMA. Personally I am very satisfied with GISMA.

Richard



Comments

Please Leave a Comment!





Please note: Comments may be moderated. It may take a while for them to show on the page.