Is the MBA Really Better Than a Degree or Diploma?

Is a MBA better then a degree or diploma?

One of the most prestigious things a person can have on their business card is the letters MBA. The MBA (Master of Business Administration) is seen by many as a badge of honour and a ticket to the highest rungs of the corporate ladder.

At least that’s the perception among students, employers, and the general public. But is the MBA really worth the time, effort, and money it takes to acquire it? Does it prepare students to survive in a competitive, ever-changing, unpredictable, and sometimes cut-throat world of business?

The MBA originated in the United States and arose during the 19th century, when first-world countries became industrialized and saw the need for a scientific approach to management. Like the social sciences and hard sciences, the MBA came to be viewed as a designation for those specializing in the “business sciences”.

Research has shown that people with an MBA make more than those without. According to Forbes magazine, the average graduate tripled his or her pre-MBA salary five years after they graduated. Elsewhere, The Financial Times reported that within three years of graduation, the average MBA student was earning double his or her pre-MBA pay.

Other studies show that individuals who possess an MBA also have a much greater chance of moving into managerial and executive roles.

In recent years, however, MBA programs have been bombarded with heavy criticism. Critics say that these programs are out of touch with reality and spend a disproportionate amount of time teaching students profit-maximizing models, in lieu of teaching leadership and ethics.

Matthew Stewart, a noted management consultant, says the so-called “scientific approach” to business is based on a flawed model that assumes that there is a secret formula for creating successful managers. He also argues that there is no credible evidence that suggests MBA graduates are more competent and better educated than their non-MBA counterparts.

Furthermore, he claims that MBA programs don’t place enough emphasis on increasingly important topics such as integrity, ethics, and social responsibility– using the 2008 financial crisis as an example. Stewart questions whether MBA programs adequately prepare students to deal with the chaos of the free market, where a crisis can strike at any moment and the line between what is legal and ethical is thin.

Doug Casey, an investor and Chairman of Casey Research, concurs with Sweet, saying, “an MBA is useless”, and “a gross misallocation of time and money.” He maintains that MBA programs are built on false and fallacy-ridden theoretical frameworks that are not reflective of the real world. He also added that that the instructors who teach MBA courses have little or no business experience themselves.

Critics like Sweet and Casey are not the only ones shining a light on the shortcomings of the MBA. Henry Mintzberg of McGill University, argues that “students are taught mainly pre-packed solutions and do not learn enough about real world experiences.”

Like all professional designations and degrees, the MBA will have to stay relevant to have any value. The good news is schools are making changes in their curriculums. According to a 2009 New York Times article, MBA programs now increasingly offer more coursework in ethics, corporate social responsibility, corporate governance, leadership, etc. They also focus on more dynamic, realistic scenarios rather than static and questionable theories that may only work on paper.

So is an MBA worth obtaining? The evidence seems to say yes. MBA graduates do command high salaries and work in top-level positions. If business schools continue to update their programs to reflect real world situations, the degree will continue to be a great investment.