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OCTOBER 9, 2000 B-SCHOOL NEWS The Uphill Battle Facing Canada's Business Schools As their government support declines, they're finding it hard to compete with their U.S. counterparts
Canadian b-schools are facing what may be an unprecedented drought of faculty and other resources -- making Thorn's experience all too common north of the border. As Canadian colleges break away from dependence on government funding and privatize their business schools, the country's top five b-schools are raising tuition, launching capital campaigns -- and grumbling. After so many years of feeding at the public trough, "the b-schools don't have an economic model that works," says Roger Martin, dean of the Rotman School of Management at the University of Toronto. That spells trouble if the schools want to recruit and retain top teachers, and even more if they want to attract students from across the world. Don Nightingale, associate dean at Queens School of Business in Kingston, Ont., says that his school's challenge is to keep up with the salaries U.S. schools are paying. Western Ontario's Richard Ivey School of Business has lost three of its 43 professors to U.S. competitors in the past 18 months, a higher number than usual. "They offered packages we couldn't match," says Lawrence Tapp, the school's dean. The average faculty member at Toronto's Rotman School earns $66,000, says the school's dean, Roger Martin, vs. the $140,000 or more that top faculty earns in the U.S. "Canadian salaries haven't kept pace." TOP-TIER TWOSOME. At the same time, because they now have to raise more of their own operating funds, Canadian schools are charging students more than ever. Until 1996, for instance, Queens offered an MBA that cost residents of Canada $7,300 for a two-year program. After a recent revamping of its curriculum, it now offers a one-year, full-time MBA program for 60 students that costs $23,800. It also offers a one-year MBA program for executives that runs $43,300. At the Rotman school, tuition will spike to $17,000 by 2003, up from $11,000 this year. "We rely on executive education, executive MBA, and privatized programs that aren't funded by the government so that we can do all of the things that U.S. schools do," Nightingale says. Problem is, that level of tuition puts Canadian schools into the same league as top U.S. schools, and comparisons of such things as quality of faculty, depth of curriculum, and range of recruiters inevitably follow. The effects show up in the the results of Business Week's biennial ranking of top business schools. This year, the magazine expanded its rankings to examine b-schools in Canada and Europe. Five Canadian schools were considered for a top-tier ranking, but only two made the cut. The Ivey School led the Canadian duo, ranking No. 5 among seven international schools. Students said that the school's alumni and corporate networks are solid, while corporate recruiters pointed to the school's strengths in producing tech-savvy MBAs as well as those with strengths in analyzing problems. The school's dean, Lawrence Tapp, says he's more worried about where graduates go after b-school. "It's my job to keep them in Canada," he says. "This country needs leaders." Students marked the school down, however, for providing them acces to non-traditional recruiters, such as startup companies. So keeping new MBAs in the country may be a challenge. Taking the No. 7 spot in the international survey is the Rotman School. It scored well with recruiters, who tagged its students globally-oriented. Dean Martin has work to do, however. Just two years into what he calls a five-year plan to integrate the school's curriculum -- which means students study across various disciplines, rather than just focusing on subjects such as finance or marketing -- students marked down the school on its curriculum. Recruiters gave low marks to the school for its curriculum, too. Students also complained that the administration is slow to respond to their concerns. LAGGING SALARIES. A bigger knock against Canadian b-schools is that their graduates don't command salaries as high as those of U.S. graduates. Post-MBA salaries of graduates from Queens, Ivey, Schulich, and Rotman rose 61% vs. their pre-MBA salaries, compared with the 82% hike their U.S. counterparts commanded. And Canadians rarely get the same sign-on perks. At those four schools, students averaged just $800 in signing bonuses, and $6,300 in other compensation, such as cell phones, moving costs, and cars. U.S. students earned $8,900 in starting bonuses, and more than $11,000 in other compensation. Schulich's director of career services, Joseph Palumbo, says: "I'm not telling recruiters, 'Come and get our students, they're cheaper.'" Rather, he says, "Canadian companies are asleep at the switch, and slow to react to [market changes in compensation]." He also adds that Canadian students "aren't aggressive enough" in seeking high salaries. It's true that lower salaries partially reflect lower living costs in Canada than in the U.S. But some students also fault b-school career centers for not aggressively wooing company recruiters. Luis de Terry, a graduate of the McGill program in Montreal, says that the school didn't open as many doors as he would have liked. "I always wanted to go to Asia after graduate school," he says, but he found that McGill's placement office "concentrated more on North America and Europe." THE ULTIMATE SOLUTION. Lending credence to such complaints, Schulich will open its first separate placement office for MBA students next year. Until now, MBAs have had to share the school's placement office with undergraduates. "If you're not competing for the same spots, you are for resources," says Anthony Lanni, a 25-year-old MBA graduate and analyst for The Bank of Nova Scotia. The ultimate solution for making Canadian schools more competitive is money -- and so the schools are running massive fundraising campaigns. The Rotman school is halfway to its $67 million goal. Queens has raised nearly $17 million since 1997. McGill's b-school has an endowment of nearly $12 million, while Schulich reports one of $20 million. If the schools don't raise funds, "we've got problems," says Ivey's Tapp. "How (otherwise) do you finance a world-class school in a Canadian environment?" He's hoping to raise $50 million for his school over the next year. For now, all the uncertainties are enough to make would-be faculty members think twice about heading north for a b-school position. Without enough money, after all, schools are hard-pressed to let academics do research. By comparison, U.S. or European schools ply professors with lucrative pay packages, posh offices, ample time for research, and the money to do it. Canadian schools do have strengths. Students say that if you're looking for an international atmosphere, but don't want to leave North America, go to Canada. And the young professors the schools are hiring should provide a good foundation for the future. Queens recruited seven new faculty members for the coming academic year. Ivey attracted 19, of whom 15 are junior faculty. With the value of an MBA rising outside of North America, and already astronomical in the U. S., Canadian schools could miss out on a chance to raise their profile if they don't react in time. Recruiters have to be convinced that Canadian MBAs are worth their efforts, and students may not flock even to Canada's rising stars if they can't expect a pay hike at graduation. If the current fundraising at the b-schools pays off, however, the schools still stand a chance to recruit the best teachers and students.  Mica Schneider  | | Learn about your online education options |
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