The Value of an M.B.A. Bill Woodson November 15, 2008 Those of us born before 1980 – in some cases long before – have seen the world in which we felt comfortable shaken, stirred and stretched in ways we could not have conceived.As recently as 20 years ago, young college graduates entering the workforce were confident of their abilities to compete for and secure jobs offering both attractive starting wages and long-term prospects for advancement. Expectations that the previous generation might have held regarding lifetime employment were but a memory, even in the 1980s. Nonetheless, this generation of young adults was confident that the combination of their newly acquired undergraduate degree, combined with their good fortune to have been born in the world’s most dominant superpower – not only militarily and politically, but also economically and intellectually – put them on the fast track to a secure and potentially prosperous future.The notion of a global marketplace was already in play, but in the 1980s that notion was founded on American superiority and uncontested American leadership. The United States was the world’s economic engine and its prime mover, the most prolific and savviest producer as well as the most voracious consumer on the planet. Many successful American businesses and businessmen never ventured outside of America’s borders; but if an American or a U.S. corporate entity found the playground of the American marketplace too confining, they could, if they so chose, expand their view to a global stage. Those days are over.Today we live and work in a fiercely competitive global market where new players have emerged, and long-entrenched advantages have narrowed, if not disappeared. Although the notion of a “level playing field” remains an ideal rather than a reality, the slant of that playing field has shifted in dramatic and often unanticipated ways. Factory workers, telephone support staff and CEOs all find themselves confronted by competitors based beyond U.S. borders.Companies of all sizes are responding to this changing landscape by seeking additional credentials, deeper skill sets and specific qualitative attributes as they source talent. Companies are seeking to reduce hiring risk. Sophisticated talent managers at highly visible enterprises sift through hundreds of résumés.What do they look for? A greater than ever premium is placed on talent who can quickly acclimatize themselves and make contributions in the short term. At the same time, companies are recognizing that leadership talent is a more precious and scarce resource than is energy, real estate or raw materials. So the documented potential for even entry-level professionals to develop into midlevel and senior leaders has never been more highly prized.Something about this new, global landscape seems to be linked to the increasing value that employers in the private, public and not-for-profit sectors alike place in the management education credential best known by its three letter acronym – the M.B.A. So, what is it about the current climate that makes this particular degree so highly prized by employers, and, therefore, for would-be job seekers? And what are the key characteristics of an exceptional M.B.A. degree-granting program?What is the value of a good education?For anyone entering the world of business today, the value of a great M.B.A. program can be estimated in a few substantive ways. The first and most obvious is its impact on potential earnings. According to mba.com, the typical 2006 M.B.A. alumnus made $61,302 before receiving degrees, and expects a post-M.B.A. salary of $86,350, approximately 35 percent more than non-degree holders.Yet the value of an M.B.A. lies not only in the potential for increased earnings but also in its effect on an individual’s job satisfaction and quality of life; moreover, the best M.B.A. programs provide students with skills, knowledge and confidence that not only support their success in that first, post-graduate job but also position them to contribute more broadly to the success of their companies and their communities. “The best M.B.A. curriculums are distinguished by careful integration of academic theory and practical application while offering experiences that help degree candidates identify, assess and develop their potential as leaders.” A comprehensive curriculumM.B.A. programs in the United States offer a core curriculum that is becoming increasingly standardized. Organizations evaluating M.B.A. holders for positions of responsibility can be confident that the individual received training in key functional areas such as organizational management, marketing, financial and managerial accounting, statistics, corporate finance, business law and IT management. Yet the best M.B.A. curriculums are distinguished by careful integration of academic theory and practical application while offering experiences that help degree candidates identify, assess and develop their potential as leaders.How does this look in practice? The best business school programs use learning paradigms that extend far beyond the traditional model of “teacher lectures, student listens.” One of the key courses in the University of St. Thomas Full-time MBA Program, for example, assigns students to teams that work as consultants for local businesses where they have an opportunity to apply classroom concepts to a real-world research project. Both the professor and the clients evaluate the quality of the research, analysis and recommendation provided by the team, that delivers its results in a formal presentation. Far more than a mere class assignment, this is a real consulting project on which clients depend to make critical decisions regarding an aspect of their business.This real-world-oriented approach to learning is finding its way into premier M.B.A. programs across the country, from Harvard to Stanford. When M.B.A. students graduate from programs like these, they already have a solid portfolio of successful initiatives.Building collaboration and leadership skillsThe goal of the best M.B.A. programs is not simply to train managers, but to guide students into becoming leaders by developing their abilities to make choices that will benefit their organizations and their communities. A graduate business education helps students understand the connections between their seemingly isolated actions and the greater community by integrating the knowledge they have attained and utilized in core courses to assess and develop strategies at the business unit or firm level. Students work in small teams with colleagues with a cross section of specialized interests (e.g., financial analysis, consumer marketing, system development) analyzing cases and running business simulations.This integrated and relevant approach builds collaboration and leadership skills. In the process of learning to anticipate and respond to the actions of virtual competitors in a marketing simulation, M.B.A. candidates also are learning how to manage and draw the best performance from a cross-functional team, a challenge similar to the one that awaits them in “the real world.”The adaptability fostered by a cutting edge M.B.A. curriculum is an excellent preparation for students who seek to become managers. What’s more, it’s a preparation that serves the innovator and the entrepreneur equally well. Fred Smith, chairman and founder of Federal Express, developed his business concept for a project at the Harvard Business School. The company now has more than 200,000 employees and revenues of more than $38 billion. His innovative use of the “hub and spoke” delivery method has become commonplace in organizations from airlines to computer manufacturers – despite the “C” he is rumored to have received on the project.An ethical foundationOne of the most significant enhancements to M.B.A. education in the United States has been the introduction of the concepts of corporate social responsibility and ethical considerations. Business ethics is founded on an engagement of values, but goes beyond philosophy to create a framework upon which to make critical business decisions. A well-designed curriculum that engages ethical perspective exposes its students to a wide array of business situations, engaging individual, organizational and societal perspectives with a focus on ethical aspects and incorporation of legal parameters as well.By reviewing and applying moral philosophy, important legal principles and human decision-making psychology to case studies, future leaders are better equipped to recognize and successfully engage the ethical issues faced by their organizations. The absence of such perspectives became famously visible in the business scandals that marked the start of the millennium, including Enron, Global Crossing and Tyco. The University of St. Thomas was one of the first M.B.A. programs to integrate ethics into its core curriculum when the program began in the 1970s.So clearly there are financial benefits: benefits in “hard skills” and “soft skills” to the M.B.A. But is there anything more to this highly prized credential?St. Thomas M.B.A.s working for Minnesota-based Fortune 500 companies 3M370Medtronic134U.S. Bancorp124Ameriprise109Target97General Mills73Northwest Airlines59Best Buy58Xcel Energy45Land O’Lakes32Ecolab29Supervalue23Thrivent16Travelers9UnitedHealth Group9C.H. Robinson5Hormel5CHS4Making connectionsSince the first business school was established at the University of Pennsylvania in 1881, organizations have been attempting to standardize an approach to management that will better allow them to quantify success and performance. As M.B.A. programs have spread, students in these programs also have attempted to quantify their successes through a number of criteria, salary usually top amongst these. Yet as I stated previously, the true value of an M.B.A. education includes more than earnings potential.During my tenure as a business student at the University of Michigan, I was exposed to a rich learning experience that deepened my understanding of business principles and challenged my expectations. Yet the rewards of this experience went far beyond the classroom, providing me with a multitude of life-changing and opportunity-creating connections. Career tips; personal insights from faculty, staff and colleagues; mentoring; coaching; and life-long friendships were all part of the package. I had many job interviews and received a multitude of job offers at the end of the program, but that satisfying outcome was not the end of my experience. The connections I made in Ann Arbor led to additional career and consulting opportunities many years after graduation.In the 20 years since I graduated, I’ve had the opportunity to stay connected and to continue to be mentored even as I’ve moved into roles where I was providing mentorship, internships, job interviews and job offers to current students. If anything, those relationships have grown richer and more productive.The fact that these benefits continue to accrue is a testament to their value. Not a month goes by that I don’t receive advice from a colleague, am referred to a resource or potential hire, or compare experiences with someone whose relationship is rooted in that graduate school experience. My M.B.A. program taught me that learning goes beyond the classroom and that relationships can open doors that textbooks alone cannot. The program taught me that lesson and then reinforced it inside and outside the classroom.Great M.B.A. programs teach that lesson, then do something more. They foster an environment that encourages their M.B.A. students to apply that lesson and craft mutually beneficial, durable relationships with faculty, staff and fellow students. These connections are so critical to the success of an M.B.A. program and its alumni that they are the focus of the Opus College of Business 2008-09 “Get Connected” awareness campaign. Our goal in this campaign, and in all we do, is to draw attention to the tangible value of an M.B.A., a vital combination of education, experience, leadership development and lifelong connections.An M.B.A. program must do more than create managers and business professionals. To be of value in the world today, an M.B.A. program must guide today’s generation of intelligent, curious and entrepreneurial students in their quest to become visionary leaders helping to shape the next generation.Bill Woodson is assistant dean and director of the UST MBA programs. He has worked extensively in product management and international marketing for such industry-leading companies as Johnson & Johnson and Hewlett-Packard. Woodson received a B.A. from Brown University, an M.A. from Harvard and an M.B.A. from the University of Michigan.