Wednesday, October 5, 2011

Ask a Businessman: Should I Get an MBA?

By Karl Sacherman

Dear Karl:

I'm thinking about applying for an MBA [Masters in Business Administration] program. Is that a good idea? I have a liberal arts undergraduate degree, and I want to make myself more attractive to employers. It's a bit of a stretch money-wise, but I think I'd be able to manage it. What do you think? --Frank P.

Dear Frank,

I'll use my own experience to answer your question.

I received my Masters degree in business in 2005, around the end of the beginning of our current long-term economic downturn. I enrolled in a "Tier 2" business school, which in hindsight was a mistake. Harvard, Yale, MIT, University of Chicago, Northwestern, and Stanford are the "Tier 1" schools in the U.S. They're the schools that are the most likely to get gasps from corporate managers and HR professionals when you tell them you have a degree from one of them.

Institutions like the University of Phoenix and DeVry are at the "Tier 3" level - these programs are (there's no polite way to say this) the bottom of the barrel when it comes to MBA programs.

Every other school that offers an MBA program is a "Tier 2" school, whether they think they're "Tier 1" or not. The problem with getting a degree from one of these schools is that, in the circles where these things matter, there's a definite prestige gap separating how degrees from tiers 1 and 2 are perceived in the business world.

Tier 1 schools are, conventional wisdom goes, the places that groom the future CEOs and titans of industry who shape America's future. I do wonder, though, what these schools teach that's so great, considering that if you look at the org chart of a lot of major American companies that experienced massive failure since 1990 (Enron, WorldCom, Bear Sterns, the nation's Welfare Banks, etc.) you'll find management teams made up mostly, if not exclusively, of graduates from the "best" business schools.

If I may stereotype, Tier 2 schools are where future middle-managers and people who couldn't get into a Tier 1 school go. It's safe to say that at my school there was not a lot expected from us once the tuition payments cleared. There was even a professor in the business school I attended (a very nice school with a solid reputation) who advised his students that they don't have to worry about working too hard in his class - after all, it's not like they're at UChicago!

When I was in my program, it became obvious that a student can make their curriculum as easy or difficult as they wanted. There were a couple of classes where I was challenged to think and to present quality work, but most of them amounted to little more than information seminars. I was surprised by how easy it was to avoid classes that had math or any kind of rigorous analysis. By the time I graduated, I realized that I could have learned most of the information I received from the school by spending a few weekends at the public library or studying various business-related Web sites.

When I graduated and started looking for higher-paying work, I noticed that my newly minted degree didn't exactly set the world on fire, especially at a time when a lot of students were hiding out in graduate school because they couldn't find jobs. I did manage to find work that had nothing to do with my MBA, and seeing how the job market has only gotten worse over the last few years, I consider myself fortunate I was able to get something.

Six years on, it's too early to declare that it was the worst $50,000 I ever spent. But even though I'm happy to put "MBA" after my name and on my resumé, I will say I haven't gotten nearly as much out of the degree as the time and money I put into it.

This leads me to a very important point about MBA degrees. In the United States, if you want to practice law, practice medicine, design and build buildings, drive a cab, cut hair, or do a lot of other things, you need a license. Usually this license is contingent on you completing an educational program. Once you do so, you're entitled to engage in activities other people can't legally do unless they also have one.

You don't need a license to manage a company or start a business. You can become the CEO of a billion-dollar international corporation without an MBA (or a high school diploma for that matter). That's one thing that makes America's free enterprise system great. But that's also the problem with an MBA degree - it's not a step toward licensing someone to "administrate business" the same way an MD degree sets someone up to practice medicine. Unless you're interested in getting specialized credentials in one of the subjects a typical MBA program touches on (CPA, CMA, CFA, Six Sigma, etc.), any of which you can do without earning a Management degree, an MBA doesn't give you privileged access to certain jobs that are more exclusive, and high-paying, than others.

So, should you get an MBA? Generally, I would say no, not unless you can get into a Tier 1 school, someone else (like your employer) pays your tuition and you have some indication (a guarantee would be better) that your career will advance because you earned a business degree. Otherwise, if you're interested in beefing up your skill set and learning new things, I would advise you to pursue an advanced degree in another field that will enable you to get a license to do something other people can’t do. --KS

Karl Sacherman (BA, MBA) is a 20+ year business veteran who has worked at all levels of the corporate ladder, from temp worker to business owner. His column is exclusive to GLI Press. Do you have a business or economics related question for him? Send him an e-mail!

Other "Ask a Businessman" articles:
Should I start my own business?

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