D.C. Councilmember Charles Allen joins us to discuss his "sneaker subsidy" for those who dont drive to work. And At-Large Montgomery County Councilmember Marc Elrich will be in studio to talk about the fate of the Purple Line, the county budget, and his candidacy for County Executive.
In the high-rolling ’80s and early ’90s, a master’s degree in business administration was seen as the ticket to a lucrative career. In the recession-strapped economic landscape of today, it’s less clear what an MBA gets you. With skyrocketing tuition and student debt, growing competition for international students and technology reshaping higher education, many business schools are rethinking their mission. Kojo explores the value of an MBA and how business schools are adapting to a changing world.
- Alexander Triantis Dean, Robert H. Smith School of Business, University of Maryland
- Brooks Holtom Professor, McDonough School of Business, Georgetown University; co-editor, "Disrupt or Be Disrupted: A Blueprint for Change in Management Education" (Wiley, 2013)
- Melissa Korn Business Education Reporter, The Wall Street Journal
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. In the go-go 80's and 90's, a newly minted MBA seemed like a ticket to the top. Jobs were abundant and salaries were high, but as the economy shifted and the financial crisis hit, the outlook for business school graduates shifted. Big firms are snapping up fewer MBA's today and starting them farther down the pay scale.
MR. KOJO NNAMDIA new report says business school applications nationwide are stagnant, even as tuition continues to rise. That means business schools are being forced to adapt to a new economy, along with growing pressure from technology and international competition. The result is both innovation and introspection at business schools across the country, including those in our region. Joining me in studio to discuss this is Alex Triantis. He is Dean of The Robert H. Smith School of Business at the University of Maryland. Alex, thank you for joining us.
MR. ALEXANDER TRIANTISThank you, Kojo. Pleasure to be here.
NNAMDIGive us a snapshot of the Robert H. Smith School. This is your first year as Dean after 17 years on the faculty teaching Finance. What do your application and enrollment numbers look like, and how have they changed in recent years?
TRIANTISWell, first off, we have both undergraduate and graduate programs. We have about 3,000 undergraduate students, about 1,000 MBA students and about another 1,000 Masters of Science students, as well as PHD students. And our admissions are still very strong in all of these programs. We've particularly seen a big increase in applications for a Master's of Science programs, whereas the MBA applications have gone down a little bit. Now we see them going back up again.
TRIANTISIn particular, in certain areas, such as our Executive MBA program.
NNAMDIWhy do you think that's happening?
TRIANTISI think that many companies are finding that they hire out of the undergraduate program. First of all, the salaries that they're paying are a little bit lower than the MBA's. And yet, the education at the Master's level is still very important. Leadership skills and skills that an undergrad may not fully be able to appreciate without working. So we find that we do a lot of executive education as well as training Executive MBA's who have been out for maybe 10 to 20 years, and are coming back to sort of go to the next level in management.
NNAMDIJoining us from studios at The Wall Street Journal in New York is Melissa Korn, Business Education Reporter at The Wall Street Journal. Melissa, thank you for joining us.
MS. MELISSA KORNThanks for having me.
NNAMDIMelissa, right after the financial crisis, business school applications went up for a couple of years, but then they started to drop off. You reported that last year, applications to elite business schools declined sharply. What's the nationwide trend today?
KORNSo, there are a few different trends, as Alex mentioned. It depends on whether you're talking about undergraduate MBA, specialized Masters programs. Within the MBA degree, specifically, full time programs have struggled. Full time two year programs have struggled recently. There are a lot of factors involved, including cost, time away from work. And another issue is the return on investment. You know, will I get a better salary, a better job if I go and do this? So, that's keeping some people away from the two year programs.
KORNPart time and Executive and online programs have a little more flexibility. You can continue working while going to school, so those haven't suffered quite as much as the full time two year programs.
NNAMDIIf you'd like to join the conversation, call us at 800-433-8850. Do you have an MBA? How has it helped you in your career? 800-433-8850. You can send email to email@example.com or send us a tweet at kojoshow. Melissa, earlier this month, the Director of Admissions at the highly regarded Wharton Business School at The University of Pennsylvania resigned abruptly, apparently amid concerns about a decline in applications. What happened there, and what are the lessons, if any, for other Admissions Directors?
KORNThe MBA programs at the very, very top level had rebounded after a couple years of decline, but Wharton was not among those seeing the positive numbers. The last four or five years, they've seen steady declines in applications, in part, because they're so closely aligned with Wall Street. And financial firms are not hiring, or haven't been hiring at the same levels, among MBA's, that they were, you know, in peak times, in the mid, early to mid 2000's. So, the, as the, kind of, job market shifts, the interests of perspective students shift, making a place like Wharton, which does have great entrepreneurship and innovation and management programs.
KORNIt -- because it's so closely aligned with Wall Street, students aren't necessarily as eager to go there.
NNAMDIJoining us now by phone is Brooks Holtom, Professor at the McDonough School of Business at Georgetown University, and co-editor of the book, "Disrupt or Be Disrupted: A Blueprint for Change in Management Education." Brooks Holtom, thank you for joining us.
MR. BROOKS HOLTOMThank you. It's a pleasure.
NNAMDIBrooks, some writers have boldly proclaimed that the MBA is dead. In your new book, you've said it's clearly still kicking, but needs to adapt to a changing world. Can you give us a quick overview of the business school landscape? How many schools are there, and which ones are feeling the squeeze the most?
HOLTOMWell, there's clearly been a growth in the number of schools that are providing business education, and particularly if you look to Asia, where we've now got 2,000 schools in India. And there are a growing number in China, more than 250, but growing rapidly. The schools are moving to where there is demand. And that, to some degree, is also effecting demand in the United States, right? So, in the past, we sought students from Asia to populate our classes, and to some degree, some of them are staying home now.
NNAMDIBrooks, one of the biggest disrupters in higher education is technology. How are business schools reacting, both in starting their own online programs and in competing against the free and open online courses that are disrupting all of higher education?
HOLTOMYou know, that's a fantastic question in the sense that we ought to know, as well as anyone, how to look at strategy, and think about how to harness new technology. Business schools, to some degree, are struggling with this. To say, wow, we've got some early adopters who are disseminating their materials for free. How are we gonna survive if we're giving away this material? If we look to a couple of concrete examples, Wharton has recently put a proportion of its first year curriculum online.
HOLTOMWe look to Harvard where the students there are getting first year accounting online before they come on campus, right? So, how is this model going to work? How can business schools adapt, and frankly, they've been slow.
NNAMDIAlex, the Smith School at Maryland is starting an online MBA degree in January. Who is the audience? How will it work?
TRIANTISThat's right. The audience will be very similar to our part-time MBA audience that we have, in terms of having a few years of experience. Some of them will be local, and some of them will be, you know, more on the national scene. The real difference here is the fact that many of the folks out there in the business world simply don't have the flexibility to commit to being able to come one or two nights a week. And even those who are local, and so we are putting together a program which has some residency component up front.
TRIANTISBut mostly is done via technology. Some of it is what we call synchronous, where it is a real time class. It's just that everybody is virtual and looking at each other on the screen. And some of it asynchronous, where some of the material can be done via videos that they would watch ahead of time and so on. So, it still retains what I feel is really a critical component of business education, which is that interaction. It is the doing, real time exercises. Negotiating, having conversations and debates about business issues. So, even though it's online, we hope to retain all of those elements.
NNAMDI800-433-8850. How important do you think an MBA is in the business world today? Give us a call. 800-433-8850 or send email to firstname.lastname@example.org. Here's Tess in Washington, D.C. Tess, you're on the air. Go ahead, please.
TESSHello. I just wanted to make a clarification that one of your guests made mention that the Executive MBA versus a full-time MBA. And I'd like to say that I don't know about all MBA programs, but my Executive MBA was a full-time program, and I worked full-time. So I think it's an important distinction to make, and I think it's one of the reasons why the executive programs are, perhaps, remaining, excuse me, remaining stable or even growing.
NNAMDIHow important is that distinction, Alex?
TRIANTISWell, I'll give you an example. At The Smith School, we have an 18, 19 month Executive MBA Program where students come Fridays and Saturdays every other week. So, in some sense, it is, it is both full-time, in terms of getting it done within two years at the same time that they're working full-time. It is a very intense program, but it works very well for those who are willing to commit that kind of time.
NNAMDIBrooks? Same question to you.
HOLTOMWe have kind of three flavors of that at Georgetown. And one is just as Alex describes. But we have one that's a Global Executive MBA. And it's a little bit different in its orchestration. So, we'll spend two weeks on campus, full-time. Students are completely in residence. But then, they're back at work for two months. And then we go for two weeks to Latin America. Then, they go back to work for two months. Then we go to Bangla or India, then back to work for two months. Then two weeks in Russia.
HOLTOMThen back to work, and then we end up in New York. And that is a different rhythm that is gaining a lot of traction because of the experience they get globally.
NNAMDIHere is Keith in Arlington, Virginia. Tess, thank you for your call. Keith, your turn.
KEITHGood afternoon. My own experience isn't that recent. However, I started in a MBA program. It is not something that can be done while working easily. But anyway, I ended up with a Technical Masters instead, but my experience has been the private sector wants overly educated individuals to do the jobs that the education is just simply unnecessary. Use the military as an example. You are undereducated for the responsibilities you get, and you are overeducated in the private sector for the responsibilities you're given. Again, that really depends on the job that you end up with.
TESSI would agree upon that, but those one in 100, or one in 1,000 jobs, you simply can get by having the right mentor or having the company escort you through the process.
NNAMDIMelissa Korn, how widespread is that perception, that it's really on the job training that gets you ahead in the business world today?
KORNI think it's a little bit of both. We are seeing a number of companies tap undergraduate talent and stick with those undergraduates. Mentor them, train them, have them move up the ranks to the point where they don't necessarily need to go to business school in order to get that next promotion. They might end up going 15, 20 years later to get an Executive MBA, because they just want the personal fulfillment, or now they're managing a much bigger team.
KORNSo, I think you don't need that formal education for the first few years out of undergraduate, out of college. But, as you want to move up the ranks, the MBA is still a very valuable degree to have, not just as a piece of paper, but the lessons learned in managing a team, in negotiating, and just the fundamental finance and accounting skills.
NNAMDIBrooks Holtom, let's look at the price of a Graduate Business Degree. I've read that full-time MBA programs in the US raise tuition and fees by an average of 33% from 2007 through 2012. Can that trend continue?
HOLTOMNo, sir. There's absolutely, at some point, asymptote, where the market says, that's too much, and people are doing the calculus. They're saying, what's the return on this investment? The costs are large. And one of the trends that we're definitely seeing is the move towards programs, for example, the part time MBAs that don't require someone to leave the workforce so that they can reduce that component of the cost, the opportunity cost.
NNAMDII understand, Brooks, that Georgetown's Business School is looking at cutting costs by 5 percent next year?
NNAMDIAnd I guess I'll ask a silly question, why?
HOLTOMWell, the question is, if revenues can't continue to increase indefinitely, how can we build a more sustainable long term for the programs? One of the biggest growth areas across the country is in specialty masters. So those are masters in HR, masters in accounting, masters of finance. And one of the things we're doing on the revenue side is to start a new master of finance program, which incidentally is also online.
NNAMDIAlex, according to your website, annual tuition and fees for this year's fulltime MBA program at Maryland are $40,000 for in-state students, $47,000 for out-of-state students. You have frozen tuition for three years now. Will that continue and what is it that drives the pressure on tuition?
TRIANTISRight. We have held it constant and I imagine that it will continue going up at a fairly low grade, certainly not where we've seen it in past years. There's a cost side and there's a value side. And I think our position is really that we're just going to try to create more and more value over time in terms of what an MBA can really provide for an individual. As Melissa said, there's sort of the personal fulfillment side that a business degree provides not only the training for one's work life but also one's personal life in many ways. And that's why I think it still has a lot of value.
TRIANTISSo to that point we are increasing the amount of coaching we're doing, the amount of mentoring. And a lot more of the face-to-face sort of simulated business environments that provide, I think, a greater value, not only to the individual but also to corporations that hire these students, many of whom are still paying for students to go get their MBA.
NNAMDIWe'll continue this conversation on the future of business school after a short break. But you can call during the course of that break at 800-433-8850. Did you attend a part time or executive MBA program? What was your experience, 800-433-8850? You can go to our website kojoshow.org, ask a question or make a comment there or simply send us an email to email@example.com. I'm Kojo Nnamdi.
NNAMDIWelcome back. We're having a conversation on the future of business school. We're talking with Melissa Korn, business education reporter at the Wall Street Journal. She joins us from studios at the Wall Street Journal in New York. Alex Triantis joins us in our Washington studio. He is dean of the Robert H. Smith School of Business at the University of Maryland. And Brooks Holtom joins us by telephone. He's a professor at the McDonald School of Business at Georgetown University and co-editor of the book "Disrupt or Be Disrupted: A Blueprint For Change in Management Education."
NNAMDIWe're taking your calls at 800-433-8850. You can send email to firstname.lastname@example.org. Alex Triantis, one way business schools are adapting to changing times is by offering different types of programs to meet the needs of different people. Explain how your part time and executive MBA programs work and who they appeal to.
TRIANTISOur part time program appeals to those who are full employed, typically four or five years out. And they're either looking to get deeper into their particular career path or potentially the change within their organization or to change their careers. Our executive MBAs are sometimes looking to move up to those highest levels of organizations. Oftentimes we have found some who wish to start a new business and find that, though they've been working in the business world for many years, that there are certain elements that are missing.
TRIANTISAnd being in an incubator type of environment of a business school allows them to learn not only the skills but to have mentoring, sometimes access to funding through our networks and even putting together a team with fellow students. And so we've seen a number of new companies start out of our executive MBA program.
NNAMDIBrooks, how does the Georgetown Global Executive MBA Program exemplify the wave of the future?
HOLTOMOne of the advantages of the program is that we draw students from all over the world. Because the classes are located in six different geographies, it doesn't really matter if you're in Japan or if you're in Singapore or South Africa. Everyone is coming in to the program at Georgetown the first module and going to, you know, another geography for the subsequent modules. So the experience in the class is enriched by the different perspectives that the students bring with them.
NNAMDIOn to Morteza in Vienna, Va. Morteza -- or is it Morteza, you're on the air. Go ahead, please.
MORTEZAHi. My name is Morteza. I understand it's a little hard to spell but -- pronounce but...
NNAMDIWell, thanks for calling, Morteza.
MORTEZAThank you very much. I'm a recent MBA graduate of (unintelligible) business. And my comment goes toward the online program and the potential downside of it given my experience. The value you really could see that all of my peers were getting out of MBA programs was, first of all, presentation skills for MBA program networking and leadership skills that you get given that it requires a big deal in your personal communication skills.
MORTEZAAnd I'm not sure if online MBA is a program that can go online. It can't -- I think engineering programs can go very well online because you don't need a lot of communication skills. But I think -- and I'm pretty sure for most of my peers, networking that we did, it was a little hard to be done in one or two online courses I took. And I'm not sure how much of those real values that the MBAs will offer can be offered online. So I'll take my answer on the air -- on the show and thank you very much.
NNAMDIThank you very much for your call. Alex Triantis, the personal contact aspect of being involved with a business.
TRIANTISAbsolutely. Well, first of all it's great to hear from one our lums. And I would readily admit that the full power of what a business school can give in terms of the face-to-face opportunities will not be there for the online program. However, I want to emphasize again that a good part of our program involves synchronous education where effectively it is face to face. A lot of the educational experiences that we offer in person are also going to be there in terms of working together with teams presenting, negotiating, working with companies on consulting projects and so-on.
TRIANTISIt is a new way of communicating that some of us are maybe less used to than others. But I think that it's becoming commonplace in business. And I think that for many students, what they may lose by not being there with the personal contact, they gain through flexibility. And that's why we're seeing online programs have been around for many years now. But now the new generation of program are emerging because technology is so much better than it was in the past, to enable this kind of communication to work well.
NNAMDIMelissa Korn, American business schools have long attracted international students from around the world. In fact, last year more than 30 percent of the business school entrance exams, the GMATs were taken by Asians. But many international students are now applying to schools in other countries. How is global competition affecting American business schools?
KORNIt's a huge factor, especially because American business schools over the past few years have begun to rely increasingly on international students to offset declining demand among domestic students. So you've got the schools very eager to attract international students right at the same time that international students have other options Schools in Asia, in Latin America and throughout Europe are growing, have more and more of an international appeal. They're poaching incredible faculty from U.S. schools. So they are viable alternatives now.
KORNAnd in many cases they're cheaper than the U.S. two-year MBA programs. And as we see the center of gravity shift for business from the U.S. to China, to Latin America, to other parts of the world, students are deciding, well I might as well go and study in that hub rather than go study in the U.S.
NNAMDIBrooks Holtom, same question to you.
HOLTOMYeah, so one of the elements that's important to consider here is the difference not only in costs, but in time. So one example is (word?) program where you've got a 12-month intensive program all curriculum, very little time for internships or career development activities. But at $60,000 it's a bargain compared to the U.S. at two years at $100,000 plus. And you've only got one year of opportunity costs. So these alternative models are also an influence, besides the geographies.
NNAMDIHere's Gary in Arlington, Va. Hi, Gary.
NNAMDIYou're on the air, Gary. Go ahead.
GARYThanks so much. I just wanted to respond to the comments about Wharton. As a Wharton alum, I got to stick up for my school. There was a Business Week blog post about the same set of data that said, what's right with Wharton and what's wrong with how we think about business school admissions The Wall Street Journal article about this, yes, gross admissions are down. Wharton only got 6,000 plus applications for the slots that they have, which is still 50 percent more than Booth, the number one school in the Business Week rankings, not that I think they matter either.
GARYI think the thing you mentioned in the intro to the show that 98 percent of Wharton grads had jobs three months after graduation was pretty impressive. And I think some of the other stats that were talked about in the Business Week article, the highest GMAT scores in school history, which most of the places that give people advice about going to business school say, you know, you don't want to apply to a school where your GMATs are too far below the class average. So as Wharton improves its scores, the applicant pool's going to shrink.
GARYThe other thing Wharton did, I was in one of the earlier classes where they implemented a more learning-team approach to attract more people who work well together in teams. And they've actually implemented a team interview which might discourage some people from applying as well. So anyway, I think what Wharton's doing is making a lot of sense. People shouldn't focus on gross applicant numbers. They should focus on are people who are getting that MBA getting jobs in the sector in the markets that they want to get jobs in.
GARYAnd anyone going to business school really needs to know that before they apply because the job search for the summer jobs starts as soon as you get there. And how well you do on that summer job has a lot of impact on what your job out of business school will be and what that return on investment will be. But some of the other schools that were seen as having better applicant trends in that article, if you go look at them, they don't have anywhere near as many applicants. Nor do they have as good a placement rate as Wharton does at getting people jobs right after graduation.
NNAMDIGary I'm glad you brought that up because, Melissa Korn, if everything that Gary says is true, should Wharton or is Wharton nevertheless concerned about a declining rate of applications?
KORNI think every top business school has to be at least concerned about the prospect of declining applications. And the fact that other elite business schools have seen applications rise this year or the last few years while Wharton has declined is something to consider. Whether it's because of changes in what Wharton is doing with its application process or because of the reputation of the school. It is a point to consider.
KORNAnd I agree that gross application volume is an imperfect measure of a school's success and a school's strength. But just as we look at undergraduate schools, you know, the top -- the cream of the crop are the ones that have the lowest acceptance rates generally. That's how we, as the public, view them. Same goes for MBA programs. Those that are the most exclusive are the ones that we consider best and that perpetuates. So if a school is on the rise, is becoming more and more exclusive, that will build on itself. In the same way, if a school is starting to lose its luster, it's very hard to stop that trend.
NNAMDIGary, thank you very much for your call. You too can call the broadcast and join the conversation at 800-433-8850. Are you considering business school to help you advance at work? What questions do you have about whether to enroll, 800-433-8850? And I think I have tapped into Dawn in Arlington, Va.'s question. Dawn, you're on the air. Go ahead, please.
DAWNHi. Thanks for taking my call. I've been an entrepreneur for over 15 years and I'm interested in going back into -- I guess, into the real world and getting an actual job. And I was just wondering, I've heard everywhere that the MBA's the way to go. And I'm finding it is more difficult for me to, I guess, get my resume to the point where people understand that I pretty much can do most everything in a business. I manage people, do payroll, you know, (unintelligible) . So I'm just wondering if an MBA is a good avenue so people -- it's more I guess, interpreted more readily by people.
NNAMDII don't think we have any guest here who is going to say no. But I do know that we have guests who can offer you some expert advice. So I'll start with Alex Triantis.
TRIANTISWell, thanks, Kojo. The -- clearly many entrepreneurs have been highly successful without even a college degree. So there's no question that some people are able to pull together the skills and have the personalities to make it happen. I think that the MBA provides a rounding of various disciplines that is pretty unique. And has not only development of personal skills, which I think of soft skills as we call them, which I think are vital, but also increasingly being able to analyze data as decisions become more data-driven.
TRIANTISSo I continue to feel that an MBA is a critical tool to be able to move along in particular organizations. And, you know, depending on the organization, you may or may not find -- speaking now to Dawn -- that this is critical.
NNAMDIStay on the line, Dawn, because we're recruiting Brooks Holtom to talk to you next. Brooks, your turn.
HOLTOMYou know, this collides nicely with one of the earlier topics, which is some of this material that Alex references, things like statistics and accounting, things that are more about declarative knowledge can come relatively easily and effectively online. But as we've talked about the soft skills, the ability to read another person, the interpersonal communications, negotiations, teamwork, that's where a lot of the MBA differentiation takes place.
NNAMDIStay on the line, Dawn, there's more. Here's an email we got from Mike in Baltimore. "A few years ago I thought I might get an MBA in an area that I'm interested in and was already working in for many years. So I applied and got into a top private university program. But then as I learned more about it, I realized I did not need an MBA at all. Indeed, getting an MBA would do nothing to help me as an entrepreneur or expert in my business. So I saved $80,000. I urge people who already have a graduate degree, and even undergrad, to think about what they love to do. If you are not into finance or marketing or business or investing, an MBA is not going to help you."
NNAMDIAnd here, Melissa Korn, is my question for you. Traditional business schools are also seeing competition from for-profit schools. We talked on this show yesterday about the success of local tech entrepreneurs. But there's some debate, as you just heard, about whether an entrepreneur needs an MBA. Can you talk about the competition from for-profit schools that just teach students how to start a business?
KORNThere's a really interesting relationship right now between traditional business schools and some of these kind of start-up programs, bootstrapping programs where you learn maybe some of the basics about finance, but a lot of the basics about how to start a company. And one of the big debates is whether that's enough to have you run a company. Yes, they can teach you how to get one up and running but what happens when now you have to manage that large team? Now you have to deal with large budgets and actually do some accounting work and things like that?
KORNI think there is competition from some of these other schools. And, if nothing else, it's making some of the more traditional business schools add to their own offerings. So you'll see most business schools now have some sort of venture, accelerator or incubator to allow students to try their hand in a safe space at new companies. You have a lot more entrepreneurship classes. You have even partnerships between traditional business schools and some of these start-up programs to give students access to the hot start-up skills often in the tech field, while still grounding them in a lot of the basic fundamental skills.
NNAMDIMaryland Smith School of Business for instance has the Dingman Center for entrepreneurship. Any similar at Georgetown, Brooks Holtom?
HOLTOMYou know, we have two initiatives and one is social entrepreneurship which is taking a lot of traction. It's how do we go out and do well, but also do good in the world, and that's where we see a lot of energy flowing into the organization.
NNAMDIWell, Dawn, hopefully all of that can help you make the appropriate decision. Thank you so much for your call and good luck to you.
NNAMDIWe're going to take a short break. When we come back, we'll be continuing this conversation on the future of business school. Still taking your calls at 800-433-8850. What advice would you give someone who is thinking about going to business school? 800-433-8850. You can send email to email@example.com. I'm Kojo Nnamdi.
NNAMDIWe're talking about the future of business school with Brooks Holtom. He's a professor at the McDonough School of Business at Georgetown University, co-editor of the book "Disrupt or Be Disrupted: A Blueprint for Change in Management Education." Melissa Korn is business education reporter at the Wall Street Journal, and Alex Triantis is dean of the Robert H. Smith School of Business at the University of Maryland. You mentioned social entrepreneurship before we went to the break, Alex. Can you talk a little bit more about that?
TRIANTISSure. As you mentioned we have the Dingman Center for Entrepreneurship that we've had for over 25 years now, but a relatively more recent center that we've started is the center for social value creation about five years ago. And one of the -- the set of tools that students learn at business schools can be applied not only for startups or for working with larger companies, but also in trying to succeed at new social ventures, and -- some of which may be startups or helping nonprofits grow and succeed in their mission.
TRIANTISParticularly here in the DC area where we have so many associations and nonprofits, there appears a much greater need for a sense for pure business principles and how they can help to achieve a mission of a nonprofit. And so I think that's a real growth area and a real value for an MBA program. Many folks, in fact, who have had very successful careers, and later in life decide to go and work on boards and so on, are looking for these kind of opportunities to round out their business education.
NNAMDIWhat industries still place a high value on an MBA, and which industries employ the most business school graduates, Melissa Korn?
KORNI'm not sure exactly which industry employs the most business school graduates, but they are still very much valued in finance, and that includes, you know, traditional investment banking, traders, as well as asset management, private equity firms. It's a pretty broad range of financing, and consulting, an MBA is still very much valued. A lot of major consulting firms get a huge portion of their employees from MBAs programs. That doesn't mean they get everyone from MBA programs, and you're seeing more and more finance and consulting firms actually go toward students with PhDs in very technical data driven subjects.
KORNYou see this in marketing as well. So people who have very deep skills in a particular subject, but the MBA is still certainly valued in finance, consulting, and marketing.
NNAMDIOnto Jo in Annapolis, Md. Jo, you're on the air. Go ahead, please.
JOOh, hi. Thanks for taking my call. I'm so glad that you guys are talking about MBAs and all the different things that are happening as the economy kind of still is a little stagnant. I just graduated from an MBA program in May, and it was actually a sustainable MBA program. It was based online from a brick and mortar college. And it's interesting you mention social entrepreneurship. Sustainability is kind of one of those trends that, you know, is -- it has some staying power, and it's becoming more integrated in the MBA programs.
JOSo instead of getting a traditional one, a lot of people are opting for a sustainable one, and what that basically means is that you're integrating sustainable practices and environmental ideals in every course, or at least that's hope it was in my program. But my issue is that the entire time I was in the program, I was trying to find work, and I'm still trying to find work. And actually I applied for a position awhile back, and one of the questions they asked me at the interview was what's the biggest risk you ever took and how did it pay off?
JOAnd I said, going back to school and, who knows, maybe it will pay off some day. But I'm wondering if your guests could kind of speak to if there's any differences between, you know, how much in demand people are with these newer sustainable MBA programs.
NNAMDIYou raise a fascinating question. I admit to being the head of a nonprofit known as the Public Access Corporation of the District of Columbia, and that's one of the issues that we're confronting right now. The issue of sustainability and getting advice from people who work for corporations and would have MBAs on this issue. But I defer to Alex Triantis.
TRIANTISSustainability is certainly an important issue that we've try to integrate into many of our classes. We have some classes for, for instance, a class on investing in sustainable businesses taught by a practitioner who is doing this and trying to help investment funds select companies that are most progressive in this area. So in, I think, every area -- every functional area that we teach within the business school, we try to focus on the new business practices, and we are finding that many corporations are looking for individuals who have that kind of multidisciplinary training where they have good functional training, but they also understand the sustainable elements that are necessary for the modern corporation.
NNAMDIJo, thank you very much for your call. Business school students often graduate with tens of thousands of dollars in debt. I hope you don't have too much Jo. What do their salaries look like at their first job out of school, and how does an MBA improve lifetime earning potential, Brooks Holtom?
HOLTOMWell, there are two things I think to consider here. First is how do people do in aggregate, so overall, and there the evidence is clear that the MBA still provides a positive return on the investment. In general, the more highly ranked the school, the higher that return, but it's somewhat moderated by the cost of those programs. But the second part is really an individual focus and there you have to remember where do I want to be in ten years and what is the path that will increase my odds of success. Because Kojo, the market is not your mama, all right?
HOLTOMIt's unforgiving. We absolutely have to learn how to avoid errors and make better decisions, and part of what you get from an MBA is learning from cases and examples of those who have gone before, and you can identify pitfalls and things that you absolutely need to avoid, and ways to increase your odds of success.
NNAMDISame question to you, Alex.
TRIANTISWell, I think that -- going back to the issue of the risk, certainly there is a lot of risks that are involved making the kind of investment, but I have seen, at least for our grads, and I know that there are publications that focus on this return on investment issue, that typically it may take a few years, but it's typically not a problem to get a return, even on as high of an investment as an MBA is these days.
TRIANTISPartly, as I mentioned before, and I think Melissa first brought up this point that there's what you're getting in terms of your salary, but I think there's also sort of the attaining your -- the goals in life, and I think one of the areas in which the MBA really pushes is this career coaching idea of understanding work/life balance, not only your professional work but also work that you're doing on the side with nonprofits and so on. And again, I've seen the MBA very valuable for many people who are trying to sort of succeed in multiple dimensions in their life.
NNAMDIMelissa, salaries first job out of school and lifetime earning potential improvement.
KORNWhen I talk to graduates of the elite MBA programs and talk to them about what they're doing now and how much they're making now, it does make me think I'm in the wrong profession, at least financially. Graduates of these top programs are doing very well, often starting with six figure salaries. But as you see more and more students veer away from the traditional Wall Street or consulting jobs and look at startups, look into going into social ventures, nonprofits, their salaries are not as high, and a lot of publications -- we don't do rankings right now, but a lot of publications do factor in graduate salaries into kind of how good a business school is.
KORNAnd as more students go to these jobs that might not start with six figure salaries, you're seeing schools grapple with wanting to encourage that behavior, but also not wanting to get kind of penalized for it on the other end.
NNAMDIHere is Shaun in Washington DC. Shaun, you're on the air. Go ahead, please.
SHAUNThank you very much, Kojo. I'm the regional director for Webster University, a St. Louis-based not for profit, and we have four campuses here in the Washington area, and our average cost for our MBA or business school student is about $15,000 for a total degree. Now, our population of student is a mix of military, civilian, and a fair number of international students. They're part time, they're evening students, they're taught by adjuncts, and the program that's delivered at our main campus in St. Louis is the same program that's delivered here.
SHAUNYou know, we're fully accredited. I have over 700 students in class in our fall term, and our online programs ranked in the top hundred in the nation. So your guests are talking about elite schools, but there are a lot of schools like Webster here in the Washington area where someone can get an MBA or another type of degree without the price tag at a hundred thousand dollars.
NNAMDIWell, I'm glad you chose the broadcast and share that information. Shaun, thank you very much for your call. We got an email from Allison in Washington who says, "I'm a part-time MBA student at Georgetown. I chose part time so as not to lose valuable work experience and get promoted while still earning an MBA. It also helps me pay some of my tuition which is very high. Georgetown's McDonough School of Business wants to expand to Tyson's Corner.
NNAMDI"A lot of students are worried this will dilute their degree, but with the increasing availability of MBA online programs, I feel like this is the next wave in higher education. How will the value of the MBA change given this trend? Also, how will tuition costs change with increasing competition?" Melissa Korn?
KORNJust as it does in any industry. Price does change based on competition. If there is more supply than demand, then we will see prices decline, or at least not grow quite as quickly as they have been in the past couple of decades. I think the competition does play a big role in how company -- sorry, in how schools can price their products and they really have to be able to sell the product as something distinctive, as something with real value.
KORNIn terms of the dilution, and, you know, putting the brand at risk, I think it really depends on how a school is expanding. If it's expanding globally with, you know, new campuses worldwide, that's an incredibly expensive endeavor, and oftentimes a risky one. If it's opening up another location for a couple of executive education classes, that's a little bit less risky, and probably very lucrative. So it really does depend on how a school is expanding.
TRIANTISWell, I think one of the things that we're talking about disruption in business education, and what we find with disruption in any industry is typically there is this commoditization of certain products available at much lower prices, and then it pushes up those that are in the top end of the scale to try to figure out how to create a high value product which it can continue to price at a high level. So that I think is where many of our schools are going is being very careful about preserving the brand, and trying to really add more and more value to the MBA degree to make it very unique and distinct to be able to still justify those high price points.
NNAMDII got an email from Rasheed who says, "I'm an uneducated, certificateless individual with neither an undergraduate nor graduate degree. Despite this, I have managed large teams of people, developed software used by thousands, run multiple companies, books, and developed budgets, and I've formed multiple tech companies that have been quite successful from a financial standpoint. How would someone like me with extensive experience but no undergraduate degree pursue an MBA? Is it unfair or discriminatory to deny access to an MBA program due to lack of an undergraduate degree?" To which you say what, Brooks Holtom?
HOLTOMWhy would you sign up? If you're making a lot of money, right? So if we look at, you know, the top schools, and the new salary of the new graduates is let's say, a hundred to $120,000, if this person's making a lot more than that, well, what's the incentive? If it's just personal development, maybe you can hire tutors or have experiences. There's certainly books and there are online options, but if you're making a lot more than these graduates coming out already, it's hard for me to understand the calculus.
NNAMDIMelissa Korn, starting with you, I'd like you to look into your crystal ball and predict the future of business schools. Which ones will be relatively unchanged 10 years from now, and which ones will have changed significantly?
KORNI think all of the schools will change, no matter where they fall in the rankings, where they are geographically in the U.S. or globally. I think it's a matter of which ones will still be around at all. So those that are around will have to change, will have to innovate, will have to figure out a way to get online and provide that tremendous value that you get on campus in a digital format. I think the ones that survive and will thrive. They will have a great differentiator. The value will be obvious. They will open doors that a lesser program or a free online MOOC cannot provide.
KORNSo I think it's less about which ones will or won't change, and more which ones will still be there 10 years from now.
NNAMDIAlex in about 30 seconds, you've won several teaching awards, but now you've been dean for almost two months. What keeps you up at night as you think about the long-term future of the school?
TRIANTISWell, first of all, I'd like to say Melissa captured that perfectly. And so what keeps me up at night is not so much the challenges, but really this opportunity to continue to be one of the top players, which, as Melissa put it, is going to require a lot of innovation to come up with something that is unique, provided in a resident format.
NNAMDIAlex Triantis is dean of the Robert H. Smith School of Business at the University of Maryland. Brooks Holtom is a professor at the McDonough School of Business at Georgetown University and, co-editor of "Disrupt or Be Disrupted: A Blueprint for Change in Management Education." Melissa Korn is business education reporter at the Wall Street Journal. I'd like to thank you all for joining us, and thank you all for listening. I'm Kojo Nnamdi.
Most Recent Shows
The journalist Charnice Milton was killed two years ago by crossfire from a drive-by shooting in Southeast Washington. Now community advocates in the area are opening a bookstore to honor her memory, promote literacy and address book deserts in neighborhoods East of the Anacostia River
The Civil War ended more than 150 years ago, but today's Washingtonians are still debating its causes, its heroes and what its legacy should look like in our region.
Inside an 800-square-foot shop, D.C.-based social entrepreneur Ahmad Ashkar is using his Mom's falafel recipe to raise money for refugees.