| What Crisis? |
14 July 2003
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The Strange Death of the MBA
A report in the Financial Times last week bemoaned the "crisis" among business schools. It used to be that an MBA was a great way to ride out a recession and return to the labor market with shiny new credentials that could enhance one's paycheck. With three years' of economic difficulty, there are many new MBAs who are unable to find work than ever before. The result is a decline in B-school applications, and many who would not have been admitted before are finding that they are welcome to pay $30,000 a year after all.
The educational value of an MBA is dubious at best. President Bush has one, and he managed to fail at most of the businesses he tried. Fortunately, in America if one fails big enough, it counts as a promotable accomplishment. As H. Ross Perot once said to a B-school graduating class, "You'd 'a learned more if you'da took the money you spent here, started a business and failed in it."
But supposing that the degree is worth something in practical terms, the quality of candidates is dropping, if the admissions people are telling the truth. Lower standards in admissions does not necessarily mean lower standards among graduates -- so long as the rate of failure increases, one can safely say that standards weren't dropped.
From a business standpoint, though, that makes precious little sense. To admit an unqualified, or what would have been an unqualified candidate under prior circumstances, cash the tuition check and then fail the student borders on fraud. What can one expect other than a decline in the quality of business education all round? In two or three years, when those admitted under more lenient policies reach the work force, the results will be visible to all -- unless that MBA wasn't worth much to begin with.