Raising the stakes with an MBA

In those long-gone, heady days before the dot-com core went critical, gaining a Master of Business Administration degree meant one thing above all else - a mighty big annuity. The newly qualified MBAs of the mid and late 1990s could realistically expect hikes of up to 40%, 60% or even 80% of their pre-MBA earning levels. Investment banks, large consultancies and international blue-chip organisations regularly offered substantial 'golden hellos' to what they perceived to be the brightest and best of the newly emerging management talent - the all-knowing, all-seeing MBA.

That is all now a thing of the past. In a recent article co-authored by management academic Jeffrey Pfeffer of the Stanford Graduate Business School, the whole rationale of the MBA qualification was brought under close critical scrutiny. Surveying decades of research, Pfeffer and his co-author, Christina Fong, argued that, with the possible exception of the most elite programmes, MBAs taught little about the real uses in the business world.

This begs the question of where does that leave the MBA today and is an MBA really worth the cost and effort involved? There is no straightforward answer to these questions, with the outcome being dependent on several factors.

For those whose aim is to instantly double their salary simply because they have acquired an MBA, unfortunately they are too late. If an individual's motivation is to stretch him or herself academically then the majority of reputable programmes will certainly do that. The key question is whether an MBA will make you a more effective (and therefore more valuable and consequently more marketable) manager. A number of businesses of all sizes sponsor - or at least contribute to the costs of - employees undertaking an MBA, so they obviously believe there is some chance of a return on their investment.

The core benefit of an effective MBA programme lies in its ability to broaden the knowledge and skill base of its participants. Most managers have a tendency towards specialisation or generalisation. Manager A, for example, may have an encyclopaedic knowledge of risk management and the vagaries of the insurance market yet be functionally illiterate when it comes to managing people. Manager B, on the other hand, may be an outstanding motivator and leader but totally lacking in knowledge of interpreting a financial balance sheet. Manager C may know a considerable amount about business but possess little in-depth knowledge about anything at all.

An effective MBA will aim to reduce the breadth of these knowledge and skills gaps and develop a more rounded, effective manager.

What is on offer

From the top-drawer full-time programmes costing in excess of £30,000 (not including living expenses) to the 'no attendance required' web-based varieties coming in somewhere around the £7000 mark, quite a lot is on offer. Like most things in life, however, what you pay for is generally what you get, and this is very true of MBAs.

As far as the open job market goes, where an MBA is studied is equally as important, if not more so, than what is actually covered. The number of MBA programmes on offer in the UK has surged in the past 20 years with the concomitant devaluation that market flooding inevitably creates.

Nowadays, it is the awarding body - rather than the qualification itself - that achieves the desired results. An MBA from the London Business School or the European Institute of Business Administration will readily open doors and increase earning potential. But, being accepted into either of these will require substantial effort and expenditure.

MBA programmes can provide most value not in the stratosphere of the multinational corporate elite, but in the professional development of those practical and realistic managers who run the small and medium-sized businesses that are the real powerhouse of the UK economy. These managers usually know a good business proposition when they see it, work extremely hard, act instinctively and are generally good at what they do. Yet, many suffer from a psychological malaise - qualification deficiency disorder - in that they lament the fact that they do not have the piece of paper that officially declares them as a bona fide, qualified business manager.

Ludicrous though it may seem, there are some extremely effective managers in the insurance and broking world who are seriously self-limited by the conviction that they do not have any proper business management credentials.

To them, the fact that they have, in the past, and continue to run successful and profitable brokerages is of no consequence.

Perfectly competent managers have put their success down to luck and have admitted to really not knowing what they are doing. The lack of self-confidence this belief engenders has serious, negative consequences for both the individuals concerned and the businesses they manage.

MBA content and structure

Although every provider will have their own 'brand' of MBA, the underlying content and structure is virtually common across the board. Most require students to complete mandatory units covering the fundamentals of strategic, operational and financial management. Following this, a range of electives are available on topics such as marketing, e-commerce, human resources management, financial planning, project management, globalisation, and so on. There is usually an adequate variety of electives on offer to provide something of real interest and direct relevance to all participants. Assessment varies between providers and can include multiple-choice question papers, project-based reports, case-study analyses and almost always a mandatory end-of-programme dissertation varying in length between 8000 and 30,000 words.

For most people, undertaking a full-time MBA (usually one academic year in the UK and two in the US) is not a viable option. Unless they have a very understanding employer (or happen to be one), it is going to cost a serious amount of money (fees and living expenses, lost earnings, lost opportunity costs, and so on). And the days of when an MBA meant instant re-employment and a huge salary hike, are mainly over, rendering a full-time MBA a risky option.

That leaves part-time programmes as the only realistic option for most working managers. Fortunately there are quite a number of these available and, although they vary in quality, many are excellent. One benchmark to look for when considering an MBA provider is to check whether or not it is accredited by the Association of MBAs. This body is well respected and monitors course content and quality. Currently, around one-third of UK business schools run courses accredited by Amba.

Part-time MBA courses come in a variety of forms, with the average time taken to complete the degree being around 30 months. Entrance criteria vary between providers; some require a first degree or completion of a pre-MBA management qualification while others will take practical experience into account when assessing applicants.

It is well worth considering the learning demands of an MBA before committing to a programme. Even part-time courses are academically challenging and require an appropriate level of study, research and essay-writing skills to be in place. If these skills are a little out of practice, it may be worthwhile taking a short pre-MBA management or technical qualification first in order to prepare for the course.

Real benefits

No management development programme can turn a congenitally ineffective manager into an effective one and the MBA is no exception. A great deal of successful management boils down to personal and psychological factors that are notoriously difficult to inculcate or change. Nevertheless, what an MBA can do is instil in participants the confidence that they have acquired the necessary skills and knowledge to understand and manage a business. Many are seduced by the idea that chief executives of multinationals or the ubiquitous management consultants are privy to arcane business knowledge of which the remainder of the population has no inkling. This, in the experience of some, is a fallacy.

A worrying number of MBA-qualified high-flying executives and consultants are little more than egotistical chancers. What they always did have in abundance was self-confidence, with the strong belief they took many others with them, sometimes to tremendous success but at other times to dismal disaster. Although there are notable examples to the contrary, in the past, a little too much automatic respect has been accorded people simply because they had an MBA. It is dangerous to blindly equate a qualification with an ability, the truth is they do not always match up, especially when the qualification is not combined with solid business experience.

However, what an MBA programme can certainly do for the experienced, competent manager is dispel the myth that successful executive management is something mysterious and terribly complex. An effective MBA will undoubtedly stretch an individual intellectually and personally, providing the depth of knowledge and, most importantly, the self-confidence to rightly believe they can indeed lead and manage a complex business.

LEADING MBA PROGRAMME PROVIDERS

Some of the leading providers of part-time and distance learning MBA programmes are:

- The Open University Business School - the largest provider of distance learning MBAs. Flexible entry requirements, excellent distance learning materials and a wide array of electives. Well respected. www3.open.ac.uk/oubs

- Bradford University School of Management - one of the longest established providers in the UK. An MBA from Bradford is a respected and well-recognised qualification. www.bradford.ac.uk/acad/management/external

- Leicester Business School, De Montfort University - one of only a few of the newer universities accredited by Amba. Excellent teaching reputation and, at around £11,000, one of the less expensive options available. www.dmu.ac.uk

- Nottingham University Business School, MBA in Risk and Insurance Management - an innovative programme designed specifically for managers working in the risk and insurance sectors. One year full-time or a part-time option of one-week blocks spread over two to four years. www.nottingham.ac.uk/business

These represent only a fraction of the MBA programmes on offer. On average, fees can be expected in the region of £15,000 and most providers keep up-to-date information on their websites.