Key questions to ask before you fork out for that popular programme
By Michelle Tay
IN THE business world, few acronyms loom as large or cost as much as MBA.
MBAs, or masters of business administration, seem to be growing in popularity among professionals here seeking to upgrade their skills in the workplace.
This is despite the hefty price tag of anywhere from $49,800 to $120,000 at reputable institutions.
At renowned French business school Insead, which has a campus in Singapore, enrolment for its MBA programme here has tripled in eight years.
'The size of the starting classes here in Singapore for the first class in 2000 was 53. Today, this number has grown to over 150,' said the school.
Numbers have also grown for the University of Chicago Graduate School of Business (GSB) since the United States university opened a Singapore campus in 2000.
Now only one in three applicants lands a place in the programme, said Chicago GSB, without revealing figures.
And Singapore Management University (SMU), set up in 2000, has launched two MBA programmes of its own - one full-time, the other part-time - and its pioneer group of 23 for the latter programme will start classes next week.
The financial advantages of doing an MBA may be obvious: According to Forbes, the average pay of students before enrolling at the Top 20 schools it ranked ranged from US$35,000 (S$50,000) to US$75,000, while the average salary after graduation with an MBA ranged from US$93,000 to US$200,000.
Forbes also said it usually takes about three to four years of earnings thereafter to recoup the cost of the degree.
But while an MBA is designed to help anyone looking for more dollars and sense, interested students should be 'most motivated by the opportunity for career advancement as well as career change', said Ms Gopika Spaenle, associate director of Insead's MBA Programme Asia Campus.
If you are purely interested in practising business, you will not need an MBA, said Ms Doris Sohmen-Pao, director of SMU's MBA Programme.
'There are plenty of examples of successful CEOs, such as Bill Gates, Larry Ellison and Warren Buffett, who have never been formally schooled in business,' she added.
Mr William Kooser, associate dean for Executive MBA Programmes at Chicago GSB, said whether or not you ought to consider an MBA depends on your answers to five key questions:
# Do I need more skills?
# Do I need greater credibility?
# Will I stay with my company throughout my career?
# What is the educational background of the top executives in my company?
# Would I like to make a major career shift?
He said these questions are pertinent because 'if you've never had any formal business training or feel that your knowledge lags that of your colleagues, then an MBA might be in order'.
'If all the top execs of your firm have MBAs, you need one too - if you have ambitions to join their ranks,' he added.
The Straits Times spoke to three business schools here to find out an MBA's real value, who should fork out for the degree and where one should study.
Here is their advice on what you should consider to help you make your decision.
Why is an MBA worth investing in?
The qualification sends a signal to potential employers, partners, customers or suppliers that you are competent, effective and have the knowledge and skills necessary to be successful, said Chicago GSB's Mr Kooser.
And SMU's Ms Sohmen-Pao said the the value of the MBA is that it does not pigeonhole you into a particular field or industry. Rather, it teaches through the sharing of experiences with one another.
In what career do I really need an MBA to excel?
Schools say there is no one specific sector that strictly requires only MBA graduates. That said, the consulting and banking industries are often seen hiring up to 50 per cent of business school classes, said Ms Sohmen-Pao.
'However, most candidates who join consulting after business school usually wind up in other industries in their careers,' she added.
Said Mr Kooser: 'Perhaps the best way to think of it is that there are very few places where an MBA is absolutely required, but no place where an MBA isn't extremely valuable.'
Should I opt for a two-year programme, or a one-year one?
A one-year programme typically takes about 10 months. For most, it represents a very attractive return on investment, as a shorter time away from work is clearly a lower opportunity cost.
There is no doubt that a two-year degree costs more when one considers an additional year of foregone salary, said Ms Sohmen-Pao.
But taking two full years off is not just a big financial investment.
'Particularly for people who have been working for a few years, two years away can be seen by some people as a slowdown in career,' said Ms Spaenle.
As for Mr Kooser's view: 'The key is how much you will learn, not how much time it takes.'
Should I aim for a top-tier school, or settle for a second-tier one?
'To some extent, brand recognition and school ranking can impact your career prospects as some companies recruit only from the top-tier business schools,' said Ms Spaenle.
She added that consulting giant McKinsey recruited more than 100 MBA grads from Insead last year - a quarter of its graduating class of 450.
Mr Kooser thinks if you are interested in only learning new skills and techniques and want to apply them in your current job, then the brand name 'probably doesn't matter much'.
'However, if you expect to change careers, perhaps take on a more global assignment, or need added credibility in your organisation, then the brand can be a powerful signal.'
For some, however, the choice is clear.
Take Ms Cheryl Lee, 28, who is bound for a top-tier school in Europe in January. She said: 'There isn't a compelling reason enough to spend $150,000 on a degree if not for a brand-name one. The return on investment is not there.'
Are Asian schools not as good as European or US schools?
Again, experts say education is an issue of matching your goals to location and brand. If part of your goal is to immerse yourself in a culture different from your own, you should seek that out.
Insead, which has one campus in France and another in Singapore, said it noticed Asians want to spend time in Europe and vice-versa, so over 60 per cent of its students opt to spend time on both campuses.
SMU aims to become the first and best business school in Asia to focus on soft skills such as leadership, communication, negotiations, ethics and corporate responsibility, because it says those qualities are what is often lacking in, yet most desired by, the business community.
I don't have a financial background. Am I at a disadvantage?
The short answer: No.
'MBA programmes are looking for diversity in the classroom and background is a critical source of diversity,' said Ms Sohmen-Pao.
She added that anyone who has unconventional experiences, is eager to commit and is prepared for the academic rigours of an MBA, should apply for one.
Said Mr Kooser: 'We have many students at the University of Chicago who come to us without a background in finance or business.
'The common theme among our students is that they are bright, have done well in their prior university work, have done well in their careers to date, and we expect them to do well in the future.'
When is the right time to study for an MBA?
There is no magic number of years of experience that is 'right', but most schools look for candidates with at least two years' work experience, as an MBA is about peer-based learning.
This means that your classmates are going to help teach you as much as you will teach your classmates.
According to MBA resources online, the average age of an MBA student is 27 to 29 years.
Do I have to take the GMAT?
Fortunately or unfortunately, the Graduate Management Admission Test (GMAT) is a necessary evil, not just for admission to American schools.
It is a standardised test that most leading business schools worldwide recognise and use to match student competencies with programme demands - regardless of programme type or the race, gender or national origin of students.
Even Insead and SMU require GMAT for admission. It costs US$250 to take the test anywhere in the world, including Singapore. To get into top US schools like Stanford, Harvard and Dartmouth, you will need a score of at least 707 out of 800, says Forbes.
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