(CEP News) Toronto - It's Tom's first day on the job and already one of his new co-workers is asking him for help.His chest puffs up with peacock sized pride - until she explains that she just wants him to send a package out for shipping.
"You don't understand," Tom says condescendingly. "I don't do shipping. I have an MBA."
"Oh, you have an MBA?" the company veteran replies. "In that case I'll have to show you how to do it."
That scene from a FedEx commercial aired on U.S. TV a few years ago. It lives on at YouTube, where two different postings of the 30-second ad have been viewed almost 91,000 times (type in key words "FedEx" and "MBA" at www.youtube.com to view the spot).
The ad closes with the narrated tag line: "FedEx.com makes shipping so easy, even an MBA can do it."
It may be a fictional ad skit, but it highlights questions being asked more frequently in the real world. Does an MBA really teach grads useful skills for today's corporate world? And is the degree a worthwhile financial investment in terms of cost and potential earnings - or do many MBA grads start out in the shipping room like the rest of us?
As thousands of Canadian MBA students gear up for classes in a few weeks, perhaps the only thing that's indisputable about MBAs is their popularity. The number of MBA grads in the U.S. reached 142,600 in 2005, almost double the number in 1991. According to the Canadian Federation of Business School Deans, total enrolment in Canadian MBA programs (both full-time and part-time) was 6,148 in 2001-01, nearly triple the 2,153 recorded in 1977 by the Association of Universities and Colleges of Canada. And it's a global trend; the number of MBA programs in China skyrocketed from one in 1994 to over 160 in 2004.
As enrolment figures and tuition costs continue to soar, the debate over the value and relevance of a grad school business degree is also heating up. Many Canadians in their late twenties or thirties are thinking twice about spending $50,000 on a one- or two-year MBA when a weakening global economy no longer guarantees them a high-paid job once they graduate.
Cost was certainly an issue for Crystal Samuels, a student at Ryerson University's Ted Rogers School of Management in Toronto.
"I wanted the best quality education for the best value without racking up a lot of debt," said Samuels, 30, after speaking to a roomful of prospective MBA students at a recent Ryerson open house. "You could say I wasn't into the prestige factor."
Samuels has spent most of her career working in government but is doing an MBA to open future doors to private sector work. She says the lower cost of Ryerson's MBA offerings - around $15,000 compared to over $60,000 each at the University of Toronto's Rotman School and the Ivey program at the University of Western Ontario - was a key reason she enrolled in Ryerson's program last year.
Another factor for Samuels was accessibility to industry leaders. Since Ryerson's MBA programs are only two years old, class sizes are smaller (around 60 students versus well over 100 at some other MBA schools), so students get more direct access to teachers and guest speakers who often hire them right after graduation, she says.
Samuels's dollars-and-cents practical attitude towards what she wanted out of an MBA program suits Wendy Cukier just fine. At the information session for prospective MBA students, Cukier continually stressed the 'real world' attributes of Ryerson's MBA courses, such as lower cost, employability of grads (Cukier says over 90% of Ryerson's MBA grads find full-time jobs with companies where they did their student work term) and the fact that many of its instructors have "significant experience" working in their respective industries rather than just academic or research backgrounds.
Cukier knows Ryerson is the new kid on the MBA block and doesn't try to compete with what Samuels called the "prestige factor" of older MBA schools, such as Rotman, Queen's or Ivey.
Instead Cukier, Ryerson's associate dean academic, emphasizes the niche MBA streams offered at Ryerson, including management specializations in media, real estate and retail. Other Canadian universities are also launching niche programs to answer criticisms that MBA schools teach too much generalized theory and not enough practical skills tailored to specific industries.
While Samuels and Cukier boast that Ryerson's MBA school focuses on practicality over prestige, dot-com multimillionaire Seth Godin argues prestige is actually the only value offered by an MBA.
"There's nothing you can learn at business school that you can't learn by reading 40 books," says Godin, 48, who sold his first company, Yoyodyne, to Yahoo! for $30 million US in 1998.
"You'd get better value in working for two years" instead of doing an MBA, he says, especially since an American Ivy League school, such as Stanford, charges about $80,000 US in tuition.
Unlike other critics of MBA degrees, Godin knows whereof he speaks. He got his MBA from Stanford at the tender age of 22. But he says getting it didn't teach him any useful business or technical skills on the way to building his multimedia empire, which includes 11 books and one of the most popular blogs in the world.
"[An MBA] is an excellent filter" for companies hiring in certain industries, Godin concedes, simply because MBA entrance criteria are so rigorous. But he believes an MBA is only financially worthwhile for a narrow group of people: Those aiming for top jobs in traditional sectors, such as Wall Street investment banking, where old boys' school connections can still make someone's career.
And he says an MBA is worthless in those traditional sectors unless it's from an expensive Ivy League school, such as Harvard. He calls this prestige factor "MBA branding" and says it's "a huge deal" at employers like investment banks "so they can brag about where their employees went to school." If Godin's theoretical hierarchy existed in Canada, a Ryerson MBA would carry little branding value against Queen's or Ivey MBAs among top Bay Street recruiters.
So why did Godin bother getting an MBA himself? As a 22-year-old, he recalls now from his New York base, he knew an MBA was the fastest way to give him access to powerful business connections he lacked at such a young age.
But he notes that, with the exception of himself, "none of the top entrepreneurs in the world have MBAs," implying that MBA schools are populated by followers rather than leaders: "A big part of an MBA program is doing what you're told."
The perception of MBA grads as long on academic schooling but short on practical leadership skills raises the question of how the degrees are perceived in the job market. According to a 2006 survey of 409 Canadian executives by Queen's University, 78% of executives would hire a grad with an MBA over one without if both were equally qualified in every other way.
Yet some CEOs say working your way up the ladder to learn various levels of a company's operations always trumps marching into the boardroom with a freshly framed MBA.
When asked by the Globe and Mail earlier this year about his perception of MBA degrees, president and CEO Lino Saputo Jr. said MBAs do hold positions at Saputo Inc.'s $5 billion a year food operations, but the company values passion, common sense and an understanding of Saputo's corporate culture over academic education. Saputo Jr. said none of the company's top-tier execs have MBAs and added it's "not uncommon" to find vice-presidents there with shop floor experience but no high school diploma.
And as parodied in the FedEx commercial, some critics say MBA programs breed a sense of entitlement and unrealistic salary expectations straight out of the classroom. A 2002 Stanford University poll of U.S. MBA students found that 57% expected to make more than $200,000 within five years of graduating, 58% expected to be millionaires by age 40, and 41% expected to be profiled by the Wall Street Journal during their careers.
Hopes among Canadian MBA students may not be as high, but dollar figures and job titles are still on their minds. Two audience questions posed at the Ryerson open house were: "Can you tell us how much money we'll make when we get out?" and "Can you name some positions we'll be able to get after this program?"
The biggest buzzword in the MBA world is "R.O.I.," a short form of return on investment. Most MBA schools measure it by how many of their graduates find full-time work and the salaries they make when they get out.
The Forbes rankings are widely regarded as the global R.O.I. index for MBA schools. The list calculates R.O.I. as compensation five years after graduation minus tuition and salary forgone while in school.
York University's Schulich School of Business was ranked tenth among MBA programs outside the U.S. in 2007, the only Canadian school to crack the list's top 10 that year. Schulich grads took home an average salary of $89,000 five years after graduating, giving the program a ratio-to-expenses of 146%. It would thus take an average of just 2.3 years for those grads to recoup the $41,000 in tuition they paid.
Even those considering non-Forbes ranked schools can ask to see figures tracking alumni salaries and employment levels, since most Canadian MBA programs keep those records.
For MBA candidates worried about the bottom line, the increased options out there now offer more budget conscious choices, whether it's lower cost MBA programs at Ryerson, online MBA programs, part-time programs, or Rotman's "morning MBA" where most classes are held from 7 to 9 a.m. before students go to work. And new niche MBA programs in sectors such as real estate and retail should quell complaints from employers that MBA courses are too generalized.
Ryerson's Cukier knows prospective MBA students are keeping a closer eye on their wallets as the global job market gets tougher. She says Ryerson's unabashed emphasis on its value for money means many of its graduates come out with "less of a sense of entitlement" than grads from other MBA schools that charge top dollar. She doesn't deny that sense of entitlement exists among some grads, and laughs heartily when told of the FedEx commercial satirizing it.
But she says all the post-MBA job stats and salary figures touted in MBA marketing hype won't guarantee success for every graduate. No matter how great the school is, their ultimate success or failure in the business world - and thus, the return on their financial investment - is up to students themselves, Cukier says.
"It's important not to oversell what an MBA will deliver. Ultimately, at the end of the day it's what you make of it."
By Christine Wong, cwong@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca
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