One of our listeners, Clive Hearst, is in a pickle. Hearst wrote to us asking whether he should invest in an MBA. In other words, Hearst is asking what the value of an MBA is. Is it just a piece of paper, or something that business people today must have?
Now, considering I don’t have an MBA, my answer, which is at the end, may surprise you. However, my first advice is that Hearst shouldn’t just take one person’s opinion; he should get multiple perspectives. Weighing this input will help him make the right decision for his career.
Watch Colin talking about this on YouTube:
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Moreover, this question also has a broader context of investing in further education. For example, maybe an MBA isn’t right for you, but law school is, or getting another undergraduate degree. So, to help Hearst, we will focus on MBAs here, but remember that this same process applies to all kinds of education.
In this search for a path forward, I find a good place to start is to ask thoughtful questions. For example, deciding to undertake an MBA would depend on what you want to do with it. So, the question is…
What Are Your Long-Term Goals?
An MBA is a management degree, which means it should cover a global perspective of the roles within an organization. Therefore, in many programs, everyone takes a little finance, operations management, marketing, etc. The idea behind this approach is that managers should have the training to understand the contributions of all the teams to the whole.
So, before you decide whether you want one, you should know what you want to do with it once you have it.
For example, some people use an MBA as a chance to pivot from working in one area to another. For example, an engineer wants to work in Finance, or someone in Human Resources intends to transition to marketing. Without one, these pivots might be intimidating, so an MBA catalyzes this change.
Other peoples’ long-term goals are to get into management roles. Many of those require a graduate degree, usually an MBA.
A few people are in it for education, although I would argue that’s not the primary driver of this investment of time and money. Nevertheless, some want to know how a business operates, so they take a deeper dive into the academics of it with an MBA. For example, some people get an MBA alongside their Medical Doctorate (MD) or Doctor of Dental Surgeries (DDS), so they can improve and succeed in how they run their practice.
How Long Do You Want to Invest in the MBA?
As we mentioned in a previous podcast, time is a finite resource for you. So, how you use it matters. Part of the decision to invest in an MBA required dedicating time to it. Therefore, it is pertinent to consider how long your MBA program is.
Most traditional MBA programs are two years. You begin your classes in the fall, have an internship over the summer, and then return to instruction the following fall. MBA students then graduate in the spring.
However, there are different variants. For example, one-year MBA programs start in April, have intense classes over the summer, and then move into the second year of courses in the fall. As you can see, there is no time for an internship, which can be problematic for people looking to pivot and get started with a company before actually working there.
There is an evening format, too. This type lasts three to five years, and classes are after traditional work hours. The benefit of this course is that you can keep your day job while pursuing the MBA.
In some cases, there is an Executive or modular format, too. This type of MBA puts the coursework primarily on weekends and a few evenings. Again, this format is great for working people because they can keep their jobs while they study.
What are the key advantages of an MBA for your career path?
This next question relates to my experience a bit. Let me explain.
I worked at British Telecom, which was a large organization. I started in sales, went to marketing, and then on to customer training, customer service, and so on. I managed to move around the organization without an MBA.
Of course, it was a different time, a specific place, and a big company, so my experience was different than some people who work today or not in as large a company.
One critical advantage of having an MBA is that it meets the company’s requirements for hiring consideration at a particular level. Many organizations require one to get to certain positions in an organization. The degree, in this case, signals that the person is worthy of consideration for a role in management.
(However, I am not entirely sure this is the best policy. In some ways, it creates arbitrary barriers for people that prevents them from bringing their ideas to the table and participating in the economy. By having an MBA requirement, an organization might miss out on excellent managers with experience and street smarts because of the MBA requirement.)
In other cases, it’s not required, but it is a fast track. So, you could get where you wanted in an organization without an MBA, but with one, it’s faster.
It is also important to mention that people with MBAs tend to make more money than those who don’t have one. Of course, more prestigious schools are likely to give you that return on investment faster than less prestigious ones. However, you will also pay more for that prestigious degree than the less prestigious one.
Is education a good use of your time right now?
Earning your income takes up a significant amount of your time. Therefore, making room for an MBA could mean taking up some of that time for education. In other words, you might be taking your foot off the gas a bit at work while you pursue this education.
So, when the economy is hot and people are making money, they are less likely to want to pursue an MBA. Sometimes a hot economy isn’t a great time to take your foot off the gas or stop altogether to get your MBA. Earning money and gaining work experience might be the priority at that moment.
However, when a recession happens, and it’s harder to find work, climb the ladder, or make your bonus, an MBA might be more attractive to many people. Moreover, getting an MBA in a tighter job market is a competitive differentiator for candidates. Therefore, going to school during a recession might distinguish you from your peers.
Moreover, some programs might not want you regardless of the economy. The best MBA programs usually require several years of work experience. Then, when you come into the program, you can leverage that experience and build upon it. (Some programs will take you with zero work experience; however, these tend to be the less prestigious schools.)
Part of the reason work experience is critical is that people who have worked in the “real world” have a different attitude about education than undergrads. MBA students tend to push back on theories they think are impractical. They want to know how to use the approach. By contrast, undergrads will accept an idea without question because they don’t have the experience to question it. The challenge that an MBA student with work experience provides keeps a program relevant and valuable in the real world, which could be why prestigious programs prefer some experience.
How specialized do you want to be?
The demand for MBAs has softened in recent years. However, as I mentioned, we have been in a different economy for some time. It could be if the next recession does manifest that business schools see an uptick in MBA demand once again.
However, specialized master’s degrees and programs are getting more interest. For example, people can get a master’s in Marketing, Finance, or Analytics. With fewer classes and more concentrations in specific areas of business than a traditional MBA, these could be more useful to firms as the nature of business continues to evolve.
These programs are less focused on general business, which has some drawbacks. For one, it limits you to that area, which isn’t beneficial long-term as you develop your career. The higher you go, the more you need the whole picture of the organization.
Therefore, you must remember your answer to the first question and use that to guide your program selection. Moreover, if you choose to specialize, ensure that you get experience in areas outside of that specialty.
So, Should Hearst Invest in an MBA?
I don’t think Hearst should pursue an MBA. It’s a risk, and the reward is not a guarantee. It would be a shame to invest that time, energy, and money to emerge with an MBA, a boatload of debt, and no benefits to his career.
But that is my opinion. I would encourage Hearst to get more ideas, particularly regarding the answers to the previous questions. What Hearst wants to do with the degree, where he goes, and what he studies could make a significant difference in the answer he hears—and determines for himself.
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