Monday, February 01, 2010

Best MBA Schools 2010: Choosing the Right Graduate School for Business

In an earlier post, I observed four important reasons for the rise of quality online MBA programs; the foreign and expatriate interest in American management programs, the need for mainstream universities to find a way to add students without significant increase in costs, the demographic trend of experienced managers going back to school at later ages to earn their MBA, and the cost-effectiveness of various programs. In this post, I’d like to discuss the types of programs available, and which sort of student should consider a given program as their best option.

Let’s start with the traditional MBA at a prominent university. The MBA, after all, was always intended to mark the superior business professional, someone who could materially improve a business’ performance and profitability. One disadvantage of so many schools offering MBAs these days, is that the degree has lost some of its prestige. That statement is a bit unfair, of course. Some of the so-called ‘prestige’ schools did not really teach business skills so much as reinforce engrained patterns of common behavior. And some schools have found innovative ways to discuss real-world case studies, incorporate personal experience of students who worked in management prior to joining the MBA program, and otherwise increased the scope and validity of management as an academic discipline. But it’s pretty well undeniable that an MBA from Harvard Business School will get many more offers, and for much more money, than an MBA from, say, Penn State or Alabama. And frankly, for-profit schools like the University of Phoenix or Kaplan University are fighting an uphill battle to be taken seriously at all by major companies. In fact, the present climate is such that a degree from a university known only as for-profit is likely to damage the professional image of many managers at major corporations. I don’t agree, but I nevertheless feel compelled to relay the comment made by one executive I overheard about a manager earning a degree from a for-profit school; “If he’s able to earn a degree worth anything, he should go get into a program at a real school.” That attitude, however unfair, is going to continue for a while at some of the larger corporations. This is because such corporations hate the appearance of taking unnecessary chances, so they greatly prefer to hire new executives with degrees from schools whose programs they know – or think they know. Every year a number of major publications rank the ‘best’ full-time MBA programs at traditional schools, and every year the list is a little different, no school shooting far up or down the numbers but a little movement all the same. And little by little some schools gradually gain respect long after they have earned it, while some other schools gradually lose some of their prestige from bygone years, as it becomes apparent that the school no longer stands out among its peers.

There are essentially three types of traditional, full-time MBA schools. There is the elite class, the ten or so schools whose names and reputations pretty much guarantee extra money and prestige to the candidates who are accepted to and graduate from their programs. The next group is a pretty broad group of schools with regional prestige and a certain name recognition, which enhances the reputation of their graduates in a smaller, but very real, circle of influence. And after that are the schools which lack effective name recognition, the schools which may cost less than the prestige schools but offer less value for the money than the high-priced but high-payoff universities. The problem is two-fold. First, the prestigious schools are selective, which means that average grades and test scores won’t get you in. And second, many people who might be able to meet the entrance requirements may have trouble with the costs. An MBA at Stanford or Harvard, for example, will run you about a quarter-million dollars, plus whatever living costs you have, your books, and any accessory costs like a laptop computer and so on. And of course, even if you are freaking brilliant and willing to take on the huge debt in the expectation that after graduation you will be in such good economic shape that the payoff is worth it, you still have a problem if you can’t take off two to three years to go to school. If you are between 22 and 28 years old, able to handle more than $300,000 in debt and stress and a poolful-of-piranha environment, and you can boast a 3.8+ GPA in your undergrad degree and GMAT scores above 720, then congratulations, Clark Kent, you’ve found your MBA home. If you are 30 years old or younger, can handle up to about $175,000 in debt and a moderate level of Machiavelli in your life, a GPA of 3.5+ and GMAT of 700+, then you can look at the regional elites for your avenue. Anyone else can do better with a different route, in terms of cost, stress, and work-life balance. It’s worth noting, by the way, that just about half of the CEOs at major public and private companies did not earn an MBA at one of the traditional “great” schools, so going to such a school does not guarantee you a position at the top of any company, let alone an industry leader, and going to a “lesser” school does not automatically lock you out, either.

Next to consider is the Executive MBA. A relatively recent creation, this particular degree came about as traditional universities began to consider what to do about senior executives with solid experience but no MBA, and no possibility of taking the morning and afternoon classes offered in traditional MBA programs. Rather than add the experience that these professionals carry to the enthusiasm and imagination of the younger generation, traditional schools generally segregate the older executives and group them into their own night and weekend cohort, dubbing their work the “Executive MBA”. The value of an EMBA is very debatable, however. Most companies pay for the degree for their executives and so it’s great for the student who can get that deal, but many companies do not consider the EMBA quite the same thing as a ‘standard’ MBA, largely because many MBAs today are focused on a concentration while EMBAs tend to be less specialized. And ironically, more so, because the EMBA was created for mid-level and senior executives, and so its value depends on the undergraduate degree and the associated work experience. A manager with solid experience can enhance his resume with an EMBA, but the EMBA is not generally helpful in changing industries or demonstrating mastery of new skills or knowledge. Consequently, the EMBA is valuable only as an extension of significant experience, rather than a foundational tool for seeking a position.

This brings us to the part-time MBA. For a very long time, the part-time MBA was dismissed by academics and businessmen alike as a discount degree, something done when you could not afford the time and cost of a “real” MBA. In the 1990s, however, that image began to change, and in the last decade the part-time MBA has gained respect when associated with major schools. A lot of credit for this has to go to schools like Drexel and Wharton, who made sure that part-time MBA curriculums involved the same courses, material, and faculty as the nominal programs, thereby eliminating reasonable grounds for derogation. Also, most schools which offer an MBA to part-time students do not make any distinction when the degree is awarded; it’s simply an MBA, worth everything the school’s name and the student’s effort can claim. What I mean by that last part is this – a number of companies discovered that part-time MBAs were earned primarily by working managers, so that graduates of part-time MBA programs not only had relevant experience in addition to their degree, but demonstrated superior concentration and diligence. It takes real time and money management skills to work full-time and still get your school work done. So much so that there is no stigma at all to the part-time MBA in most working circles. The snob appeal schools do not offer part-time MBAs, but frankly that represents a choice to be obsolete in some respects. I would, however, warn the younger student from the part-time MBA, unless he or she can show that they are working in a position which requires full-time work. It costs just about as much as the full-time MBA, and this option is most valuable to the student who is unmarried but in a professional position, able to go to a specific location for classes without interruption, and who benefits from the structure of face-to-face networking. The part-time MBA is generally best-suited for young professionals between 25 and 35 years old, with no children, some management experience already, and the ability to pay or accept debt of about $25,000 a year.

This leaves us with two roads left to consider, one of which is the online MBA and the other is the temptation to try a quick road to the degree. To the latter possibility, I must be blunt and clear – any Master of Business Administration degree that is honestly earned, must require multiple years of work, at least 48 credit hours of work and no less than sixteen courses, with regular assignments, lecture attendance and participation in discussion, as well as regular examinations with strict supervision, proctors, or some other reasonable assurance of ethical compliance, which I will discuss in more detail as I consider the online classes. There is no MBA value to ‘life experience’, nor does work experience qualify as a waiver of academic prerequisite on its own. Also, some level of accreditation is an absolute must, and I mean one common to nominal universities. My personal choice is the Association for the Advancement of Collegiate Schools of Business (AACSB), the international body which considers and evaluates the programs of thousands of MBA programs worldwide, but which has accredited only 580 member schools thus far. If you pay for a degree from any school which does not meet the standards I just described, you are for all reasonable purposes throwing your money away and staining your reputation.

And in this dark tone, we come to the online MBA. The online MBA was not even possible until very recently. The closest comparison would be correspondence learning, where someone would listen to a tape of a lecture, work out the assignments, and mail in their responses. Obviously, this system held a great risk of abuse, and worse, the faculty involved were seldom the first string of schools. And when first offered online, such classes were commonly offered by for-profit schools, unaccredited and lacking any real peer review. As recently as 2000, an online degree was considered of very little value.

That changed for the reasons I wrote about in my last post on the subject, and also with the technological threshold of virtual proctoring. For example, in one online course I attended, an examination was made up not only of coursework questions, but also the occasional personal question that only the student would actually be able to answer, confirmation that the IP address was the same used during discussions and in turning in assignments, and other technical tweaks were used to make sure the student taking the test was, in fact, the student. A variety of technologies were also used to track participation in class, originality of submissions, and other guarantees against plagiarism and cheating. In fact, the actions taken to prevent online students from cheating have made it more secure than face to face classes in many ways. Also, instructors have learned to make use of a number of advantages in online classes. For example, a simple word count helps professors identify which students are leading discussions and which are just hanging out, and the timing of submissions also indicates which students are having trouble with material and assignments. The online class experience is very different from both the full-time and part-time systems. For one thing, online students must be independent of mind and able to stay on schedule for assignments, discussions, and preparing for tests. The online student must take the initiative to seek out other students for study groups and to plan times and locations for practice, study, and test review. Online students generally have to make more extensive use of technology, especially when doing research, a skill which often pays off in work situations, where the same tools are available as well as similar time deadlines. Consequently, the online MBA is optimal for the student who is 28 or older, with significant work experience, especially management, who is time-disciplined and focused on achieving major objectives with effective use of resources both independently and in a team situation. The online degree is usually less expensive, as fees are often waived for parking and campus access, but even so a student should expect to pay between $15,000 and $20,000 a year for tuition, books, fees, and necessary supplies. Obviously, a very good desktop computer and high-speed internet access is a must. The online student should have an undergraduate GPA of at least 3.0 to handle the coursework, and/or a GMAT score above 650.

Speaking frankly, it is a rare student who can overcome a C average or a GMAT below 650 and still do well in an MBA program. That's not to insult anyone, but any good program is going to be difficult and takes discipline and preparation. If your GPA was under 3.0 or your GMAT is under 650, in all honesty I would suggest you take additional undergraduate courses in business at a community college until you can show 3.0+ work. It's not a requirement, but it is a strong suggestion so that you will have a decent chance to succeed.

NEXT – what makes a good online MBA program