By Ann Graham, an education journalist and web content manager at QS Ltd.
Like Pacific Ocean trenches, the true depth of the global recession remains to be seen. At the risk of premature optimism, TopMBA looks at current trends in the management education field and gives some insight into the future of management education, post-recession.
In July 2009, UK financial figures for the first quarter of the year showed a worse-than-expected set of results, though predictions for the latter half are more buoyant. In the US there are tones of quiet caution in some quarters, but few commentators want to say for certain when the upswing will occur. Nobody, in short, wants to predict inaccurately for fear of being criticized as they were when they failed to predict the crisis in the first place.
The inevitable results of a shrinking economy are job losses at worst and, at best, hiring freezes. The MBA sector is no exception. Some of the biggest recruiters in the finance and consultancy sectors have gone to the wall – Lehmann Brothers most famously – leaving qualified, experienced and talented MBA graduates and candidates searching for their next step.
For some of those talented young people, business school is the ideal next step as they weigh up their career opportunities. Looking at the bigger picture now could well be the best time to spend a year or two in business school, get that MBA and hit the ground running when the upturn happens. But are business schools seeking an upturn in their application figures? Nunzio Quacquarelli, Editor of QS TopMBA.com spoke with admissions officers from some of the top schools in New York to find out.
Application trends
"At NYU Stern, our applications this past year were incredibly robust," says Isser Gallogly, Executive Director of MBA Admissions at NYU Stern School of Business. "To give you some context, the prior year we expected a nearly 20% increase in applications to our full-time MBA program, the second highest number of applications received on record. We maintained this application volume this year."
However, business schools, such as Boston University are seeing big country variations. "Overall, we experienced a small decrease in applications (6%). This was most notable from India (down 34%) and Korea, which also saw a sharp fall. As expected for US applicants, we saw a significant increase in applications (up 14%) particularly from the finance sector," says Chris Storer.
The change in applicant pools isn’t affecting the quality though, according to J.J Cutler, Admissions Director at The Wharton School. "The financial crisis actually hasn't changed the quality of our applicant pool, which is still as high as ever. We're slightly up in terms of total applications. I think many people thought that we might be up dramatically and that didn't happen. So that makes us think that for people who are applying to a place like Wharton, it's a pretty well thought through decision that has been planned for quite some time."
So what application trends can we expect in 2010? "We don’t expect a sharp cut back in applications next year," says Cutler. "People plan to take an MBA over several years as a key step in their career and short term economic volatility will only put off less committed candidates. But of course you never know for sure."
Storer thinks it's too early to predict for 2010. "Our plan is to maintain, and in some areas increase, our recruitment efforts, even during this time of budget-tightening at many business schools. Setting expectations about opportunities to work in the US post-MBA and educating prospective MBA students on the latest and ever-changing visa situation will be essential. That being said, companies want excellent candidates with global experience; many are, and will continue to be, hired by top firms."
Entrepreneurial spirit
In July this year, the QS TopMBA.com Applicant Survey, unearthed some interesting differences among MBA candidates. The annual Survey, which is the most exhaustive research ever done on MBA candidates across the globe (almost 4,000 MBA candidates who attended QS World MBA Tours in Fall 2008 and Spring 2009 replied to the survey) discovered that almost 29% of international respondents want to take an MBA in order to improve their chances of starting their own business, a significant increase on the 24% in 2008. Considering the number contemplating an MBA degree is in the hundreds of thousands globally, that 5% shift is extremely significant and will have deans and MBA program creators thinking hard.
Although careers in finance and consulting still dominate and probably always will in the MBA space, this recent research suggests that MBA candidates are using the recession to acquire the learning to start their own businesses, to be self-employed or to move into less traditional areas of MBA employment, such as non-profit organizations.
Table 1 – Preferred MBA specializations 2007 - 2009
| 2009 | 2008 | 2007 | |
|---|---|---|---|
| General Mgt. | 49% | 44% | 42% |
| Strategy | 47% | 46% | 43% |
| International Mgt. | 45% | 43% | 46% |
| Finance | 42% | 44% | 41% |
Leadership | 42% | 36% | 37% |
Entrepreneurship | 42% | 34% | 32% |
Marketing | 29% | 31% | 32% |
| Operations Mgt. | 21% | 19% | 22% |
| Technology Mgt | 21% | 20% | 22% |
| CSR | 18% | 14% | 15% |
| E-commerce | 9% | 10% | 12% |
Source: QS TopMBA.com Applicant Survey 2009.
Quacquarelli believes the growing number of MBA applicants interested in the entrepreneurial field can be seen as a need for a safety net for some, and a rejection of traditional MBA careers by others. "With the credit crunch and subsequent global recession, more and more young professionals are rejecting big corporations which they feel have acted irresponsibly. They see an entrepreneurial career as a way to make a difference and be part of a business which is socially responsible for sure, because they are running it."
A new era for business schools
When any crisis occurs, particularly on a global scale, it is a time for reflection. Those left without employment due to redundancies need to re-evaluate their career options, but they’re not the only ones. After the Enron and WorldCom corporate scandals, business schools responded by introducing or increasing courses on business ethics and corporate governance. This current crisis also calls for re-visiting the curriculum. "Business schools have to go to business school themselves to avoid a bankruptcy of intellectual capital," says Professor Ismail Erturk, senior fellow in banking at Manchester Business School.
"Since this crisis highlighted a disconnectedness of a highly interconnected finance industry from its customers and the society at large, business schools need to introduce elements to their programs where the social value of business is as visible as shareholder value principle. This should be done in a much more intellectually robust manner than it is currently observed on various courses on business school curricula," Professor Erturk continues. "New business school initiatives like courses on social innovation can be further developed to play such central role in MBA teaching."
Is now the time to do an MBA?
For many MBA candidates an MBA qualification is seen as a route to diversify risk away from their country, industry or function in times of recession, partly through the alumni network of the school. However some words of caution are required, because in a recession, big career changes become harder and the MBA qualification is more likely to be simply a route to career progression.
Rose Martinelli, Associate Dean of Admissions and Marketing at Chicago Graduate School of Business in the US, says some young professionals try to time their MBA so that they graduate in time to benefit from the next boom. "Experience suggests that such forecasting is difficult and the best time to take an MBA is when an applicant feels ready personally, irrespective of economic conditions. An MBA should be viewed with a long-term career perspective."
The short-term outlook for MBA application numbers is undoubtedly positive, which is good news for schools and employers.
The QS World MBA Tour visits India between 28thNovember – 7thDecember. Candidates can register now at www.topmba.com.
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QS World MBA Tour India: Nov -Dec 2009
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