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Get Four
|  | APRIL 7, 2005
By Jennifer Merritt MBA Applicants Are MIA [Page 2 of 2] BYPASSING B-SCHOOLS. In BusinessWeek's survey, MBAs in the Class of 2004 at the University of Pennsylvania's Wharton School said they had amassed nearly as much in loans as they were getting in base salary -- more than $73,000 in average debt vs. around $95,000 in salary. Reported a 2004 grad of New York University's Stern School of Business: "Those considering an MBA should be sure the job waiting at the other end is worth the sacrifice." Meanwhile, European schools have managed to capture some of the fall-off. Many report growing interest among U.S. applicants over the past several years. Beyond offering a diverse student body and better exposure to global business practices, European MBA programs are shorter -- about 14 to 16 months -- and tuition rates, despite the weak dollar, promise significant savings. The total cost for the whole experience tops out at around $58,000 -- less than the cost of one year at many U.S. schools. Another more subtle but no less potent trend is undermining the MBA: employers' hiring and promotion practices. No longer is it de rigueur for young corporate up-and-comers to apply to B-school after four years on the job. Now managers are promoting some superstars without the degree. "A lot of recruiters ask me if their best people need to go back to business school," says R. Glenn Hubbard, dean of Columbia Business School. "I argue that they should...but there will always be people who will be successful without it." HIRING CHANGES. Goldman Sachs Group (GS ) finds those people increasingly to be the norm rather than the exception. The investment bank is one of several companies to launch internal studies on whether MBA hires do better than undergrads who get internal training and promotions without the MBA. The kind of training Goldman and others provide is part of the growing array of management education alternatives chipping away at the traditional MBA, from hybrid, on-and-off campus degrees to online and other executive courses. Over the past five years or so, many nameplate companies that had previously heavily recruited MBAs have altered their hiring mix. Large consulting firms such as McKinsey & Co. are ratcheting down the percentage of new MBA hires and adding more undergrads and industry professionals. Goldman went from hiring about 25% undergrads and 75% MBAs for each year's group of hires to exactly the opposite since 2000. "Now we try to figure out how many analysts we can promote, and we fill in with MBAs," says Aaron Marcus, Goldman's head of campus recruiting. Concedes Chicago's Snyder: "This [shift] is fundamental, not cyclical -- hiring non-MBAs is something companies have become more comfortable with." DEALING WITH PERCEPTIONS. The full-time MBA isn't going to disappear anytime soon, of course. But the need for change is increasingly clear, and reform efforts need to go beyond the cosmetic. Schools might consider adding more depth to their offerings, even at the expense of some breadth. Alumni fund-raising for scholarships could be stepped up to help meet rising costs. Schools also need to find ways to break through recruiters' growing feeling that even top-tier MBAs are becoming a commodity. Figuring out how to combat the forces at work against them may be B-schools' most pressing assignment.
 Merritt is B-schools editor for BusinessWeek Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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