Research varies on the value of an M.B.A. A 2006 study by the Lubin School of Business at Pace University, looking at 482 companies listed on the New York Stock Exchange, found that only 162 of them had chief executives with graduate degrees in business. The companies with chief executives who went to more prestigious schools did no better than those who went to less prestigious schools, according to the study. Why this was so is unclear.
From this NYTimes story about the value of an MBA -- and the value of a Harvard MBA, in particular. The story itself is not all that great, but it has some interesting data, and some nice quotes. For example, Henry Mintzberg of McGill is quoted as saying, "M.B.A. programs train the wrong people in the wrong ways with the wrong consequences. ... You can't create a manager in a classroom. If you give people who aren't managers the impression that you turned them into one, you've created hubris."
5 Comments:
I didnot know the meaning of the last word adn found from the Webster. Posting it here for other mortals like me
Main Entry: hu·bris
Pronunciation: 'hyü-br&s
Function: noun
Etymology: Greek hybris
: exaggerated pride or self-confidence
The example of 162 CEOs out of 482 companies having an MBA degree is an example of common logical mistake made even by educated people.
To compare apples to apples, we need to look at : what fraction of MBAs are CEOs? and what fraction of non-MBAs are CEOs?
Example : If there are 200K*50years = 5Million MBAs in the US and 162 make it to the CEO then that is better than 320 (482-162) out of 200Million - 5 Million non MBAs making it to the CEO.
If the fraction of MBAs who are CEOs is greater than it implies that having an MBA degree is "relevant" to success in corporate ladder. (Note that i still do not use "Causality" in my argument).
To better understand how would one evaluate whether a given degree is worth pursuing for himself:
First of all, there is a need to define "value" or "success". It has many components - increase in income, power, prestige or respect and self satisfaction and feeling of accomplishment. Some of the aspects are easy to measure and put a $ value to but some others are subjective - however there are methods to put an estimated $ value to such aspects.
The true value of any educational degree can be measured only by looking at where the candidate would have been had he not received the degree. This by definition is well almost impossible to measure accurately as it cannot be conclusively proved that the person would not have been as successful otherwise.
A less accurate but nevertheless insightful metric to measure this would be to look at the statistical probability distribution of success in case the person did not have a degree and use the average value to compare against the current value. Offcourse assumptions would have to be made to construct such a distribution based on the individuals beliefs about his chances of success before making the decision.
As mentioned in the article, most such candidates who chose to go to Harvard Business School are satisfied with the choice they made. Assuming that they are not covering up the truth by lying and not admitting to the world that they made a mistake, there is a very good chance that the difference in the current value and the value without the degree would be positive hence making their decision a good one.
So the bottom line is that any high degree would be beneficial for the average case (as long as higher degree corresponds with higher salary and higher self esteem and better job satisfaction and blah blah) but would need closer examination in an individual case if one has a reason to believe that he/she can achieve equivalent success by making use of the time spent in school elsewhere.
I was talking to a friend who recently finished his MBA and now works for the evil empire. He opines that an MBA is a signal. It tells the world that you are smart - because you have clawed your way up and that's quite valuable in business. Besides everyone loves brands. Harvard is one of the best brands out there. We were discussing after reading this: http://www.fastcompany.com/magazine/83/mbamenace.html
Dr. Bruno: Thanks for that help with 'hubris'!
Anon: I disagree; yours is not the right metric. If MBA is meant to confer a certain advantage on its holder in a management career, what does it say when more than 50% of the companies choose non-MBAs as their CEOs?
However, I agree that this CEO-level comparison is not the only metric. Just look at the starting salaries!
Selva: I agree with the 'signalling' theory of the value of an MBA.
Abi,
> Anon: I disagree; yours is not the
> right metric.
The suggested metric is just the conditional probability.
To be an indicator of advantage to become a CEO, an MBA degree should increase your odds of making it to the CEO level.And that is precisely what is indicated by the fraction of CEOs who were MBAs and fraction of CEOs who were non-MBAs.
> If MBA is meant to confer a certain > advantage on its holder in a
> management career, what does it say >when more than 50% of the companies >choose non-MBAs as their CEOs?
It does just that - confers an advantage. Eg If there were only 5 MBAs in the world and out of them 4 were CEOs but there were a total of 200 CEOs out of a working population of 200 million, it is clear that an MBA degree increased your odds of being a CEO to .8 from a measely 1 in a million.
Post a Comment