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B-school Confidential: MBAs May Be Obsolete

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B-school Confidential: MBAs May Be Obsolete

by Penelope Trunk

The Master of Business Administration degree has been a holy grail for decades. If you wanted a career that mattered and didn't have the aptitude for medical school, an MBA was a good ticket to prestige and riches.

But things aren't so clear anymore. If the MBA used to be the entrance fee to climb the corporate ladder, there are few corporate ladders to climb anymore -- and people are increasingly experimenting with ways to speed up that climb anyway. One way is to skip the MBA altogether.
So if you're thinking of getting an MBA, you should probably think twice. Here are five signs that the MBA is becoming devalued:

1. Only the top business schools have high value.

The difference between the value of a top-tier MBA and all the others is very big. In fact, if you don't get into a top-tier program, the value of your MBA is so compromised that it's not worth it to stop working in order to get the degree. Go to night school instead.

A lot of people already know this, which has made the competition to get into a top-tier b-school fierce. So much so that you probably need a consultant to help you get in. Wondering how effective those consultants are at gaming the system? So effective that schools are publicly saying they're trying to change the application process in order to undermine the effectiveness of application coaches.

2. Business schools are compromised by a lack of female applicants.

Harvard Business School is so concerned that it's not receiving enough female applicants that it's changed the admission process to accommodate the biological clock. This means that students will have less work experience coming into the program.

In the past, business schools have said that prior work experience is important to the MBA education. But apparently, the lack of women is so detrimental to the education that Harvard is willing to take less work experience.

While the changes are beneficial for women in some respects, one has to wonder if this doesn't compromise the value of an MBA for everyone.

3. Business school is like buying a high-priced recruiter.

The best thing you get out of business school is a good job afterward. But how do you know you wouldn't be able to get that job without business school?

In an article in The Atlantic, management consultant Matthew Stewert says you probably could. He also says you should consider paying a recruiter to get you a good job, and spend your time taking philosophy classes instead. That's because philosophers, as Stewert writes, "are much better at knowing what they don't know. ... In a sense, management theory is what happens to philosophers when you pay them too much."

And if you are thinking of becoming a CEO, Sallie Krawcheck, herself the CEO of Citigroup's Global Wealth Management, says you should be an investment banking analyst first. That's because being a CEO is really about making decisions with limited information, and that's what analysts do best.

4. Hotshots don't go to business school anymore.

For a while now, it's been clear that the true entrepreneurial geniuses don't need degrees. The most effective way to learn about entrepreneurship is to practice in real life. You don't need an MBA for that.

Now that trend is filtering into the finance industry. Pausing one's career to get an MBA used to be non-negotiable for investment bankers. But today, the top candidates in finance are choosing to forgo business school. They're already making tons of money, and they're well-positioned to keep making tons of money, so the MBA seems unnecessary.

The upshot of this is that business school might start looking like something for people who are feeling a little bit stuck in their careers and need a jumpstart, rather than just a starting gate for superstars.

5. People go to business school for the wrong reasons.

An MBA is very expensive in terms of time and money, and it solves few problems. If you're not a star performer before b-school, you probably won't be one after you graduate And if you just want to make a lot of money, the odds of you of doing that are only as good as the odds of you getting into a top school -- currently about 1 in 10.

If you're still wondering if an MBA is necessary for you, here are five more situations that might put the nail in the coffin of the MBA.

The bottom line is that very few careers today really require an MBA. If you're getting one for a career that doesn't require it, you might look more like a procrastinator than a go-getter.


http://finance.yahoo.com/expert/article/careerist/47722;_ylt=AiCvp1bGSq1YrDc8A60isSZO7sMF
 
When an MBA Might Do More Harm Than Good

Oct 2 2007
By Jon Jacobs
link: http://news.efinancialcareers.com/NEWS_ITEM/newsItemId-11512

Interrupting a Wall Street career to earn an MBA is no longer an automatic choice. But can a top-school MBA ever actually hurt a candidate? In some circumstances, the answer could be yes.

A new academic year began in September, and with it came a new campus recruiting season. As recruiters renew the annual ritual of courting MBA candidates, graduate programs in business are falling under a media spotlight via the competing rankings published by The Wall Street Journal, U.S. News and World Report, BusinessWeek and other publications.

However, the New York Times upstaged the widely followed rankings with a Sept. 16th story that declared MBA degrees increasingly irrelevant to the most promising career tracks on Wall Street and in fund management.

It's not exactly news that more aspiring bankers and portfolio managers find it hard to justify leaving high-paying jobs to pursue a graduate business degree. Indeed, eFC readers often say just that when they comment on our articles.

But the Times story goes further. It suggests that in some situations, an employer might view even a Harvard MBA as signaling not elite intelligence, but an early-career setback that forced an applicant to take such a detour.

That's the view of 28-year old hedge fund manager Gabriel Hammond, who left Goldman Sachs to launch Alerian Capital Management in 2004. Hammond tells the Times that, if faced with a job candidate who'd gone through Goldman's two-year analyst program and then attended Harvard Business School, he would suspect the person must have done something "wrong" to miss out on promotion at Goldman or an attractive slot in a private equity or hedge fund.

Indeed, the Times observes that "(instead) of pushing all their young employees into M.B.A. programs," leading investment banks now "are telling the best ones to stay put."

For instance, Citigroup's campus recruiting chief estimates that only about 50 percent of Citi's analyst classes end up attending business school now, compared with 85 to 90 percent some 15 years ago. In a similar vein, Credit Suisse's U.S. recruiting head, 28-year old Julie Kalish, told the paper, "Strong performers we want to keep at the firm for as long as possible. The amount of analysts that we try to keep for the associate promotion process has grown over recent years."

That goes double for hedge funds, though MBA degrees never carried much weight in those to begin with. "If someone is doing well at a hedge fund, they absolutely do not encourage their employees to go off to business school," Glocap executive Adam Zoia said.

On the other hand, the Times says an MBA can open doors for people coming from an international background, career changers, and others aiming to break into finance. An MBA also carries weight for management consulting and for management careers in many large corporations. There were 142,600 MBA degrees granted in 2005, nearly twice as many as in 1991.

What's more, recent surveys suggest that corporate America continues to recruit new MBAs as aggressively as ever. Richard Schmalensee, former dean of the M.I.T. Sloan School of Management, told the Times: "I don't think you will see M.B.A.'s less represented in executive suites, but you may see M.B.A.'s less represented in the lists of the world's richest people."
 
I think it depends. If someone already worked in Wall Street, sure this person should stay to develop his/her career if the main interest in finance. I probably will do a part-time course related to finance or MBA.

MBA is for people who would like to change career paths, perhaps is a good choice. The story is not new because we all know that only the top MBA can create the magic. However, they are getting too expensive and over valued. Hence, one year MBA is getting very popular like Oxford, INSEAD, Cambridge...etc.

Regardless of quant field, investment banking or fund management, branding ourselves is one important factor. This is psychology. You may not agree but the fact is a branded qualification does make a different. Simple question: do you want to do business with poor people?

I will probably have more confidence to do business someone who drives a Benz, BMW or some branded cars unless I know that car is really a reliable workhorse that serves my business objectives. In other words, unless recruiters know that this particular school is good at a particular subject or field work.
 
Dual MS/MBA Degree Program Next Fall

The Courant Institute of Mathematical Sciences and the Stern School of Business are starting a joint dual degree program. We will be accepting applications in the spring for students who wish to start with the first class in September of 2008. Students will receive the MS degree in Mathematics in Finance from Courant and an MBA from Stern, after five semesters of full-time study. Doing the two programs separately would take an extra year. The suggestion of a dual degree program was made by Saman Majd at an Advisory Board meeting two years ago. Bob Kohn from Courant and Rob Engle from Stern did much of the work in seeing it through. Contact Melissa Kushner (kushner@cims.nyu.edu) for more information.
 
Dual MS/MBA Degree Program Next Fall

The Courant Institute of Mathematical Sciences and the Stern School of Business are starting a joint dual degree program.

Something similar exists at CMU, MBA/MSCF.

But I don't know why would students pursue dual degrees like that.
 
MBA might be good to work as an executive or a top manager.

But as the articles suggest, you don't really need an MBA for a hedge fund :) I think you rather need an MFE :)
 
MBA might be good to work as an executive or a top manager.

But as the articles suggest, you don't really need an MBA for a hedge fund :) I think you rather need an MFE :)

Newbie question: Do freshly minted graduates of MFE (with no prior finance experience) get jobs at Hedge funds or Private Equity?
 
Newbie question: Do freshly minted graduates of MFE (with no prior finance experience) get jobs at Hedge funds or Private Equity?

I don't know the statistics on this one, but there should be people with no experience working in hedge funds. They obviously don't become managing directors but can certainly be of some help in other areas.
 
Newbie question: Do freshly minted graduates of MFE (with no prior finance experience) get jobs at Hedge funds or Private Equity?
Sam, I've interviewed with a hedge fund before and the MD told me that for someone just starting out without experience, the first job at an investment bank would be better option. Once you work a couple of years and prove yourself, network at a bulge bracket IB, it's easier to go to a small hedge fund. To go the other way around is much harder. In fact, almost everyone in that hedge fund started out at Goldman and other banks before joining. My impression talking with them is that you will better appreciate the working environment at a small hedge fund after working a few years at a big IB.

On the other hands, the line between IB and hedge fund is blurry these days. A lot of IB has their own hedge funds and many of us working for the hedge funds. My group in fact is just like a hedge fund with its own capital and book.

I don't know about PE and what kind of experience they are looking for. You can ask Michelle. I think she works for some PE.
 
Good

I think this type of program is more practical than having a Phd in Maths or other fields if your focus is only Finance. It opens the door to many areas. I think they have done a market survey otherwise they will not offer such program.

I see the future of MBA will have a major in FE. After all, FE required only 6-7 subjects to complete the core skills. So, MBA and MFE will co-exist.

Something similar exists at CMU, MBA/MSCF.

But I don't know why would students pursue dual degrees like that.
 
I think this type of program is more practical than having a Phd in Maths or other fields if your focus is only Finance. It opens the door to many areas. I think they have done a market survey otherwise they will not offer such program.

My particular degree, M.S. Operations Research, Methods in Finance, is very flexible. I can sell it as an MFE (which is really what it is) or as an MS in Industrial Engineering (if I were to go work for Fed Ex or something) or as an MS in management because after all management is the science of improving productivity (if I wanted to take the standard military to riches route and be a defense contractor) or as an M.S. in Applied Math or Operations Research if I wanted to be a scientific analyst working for one of our labs.


I chose the degree largely because it opens a lot more doors than it closes.
 
the MD told me that for someone just starting out without experience, the first job at an investment bank would be better option

That's what I figured. The same is true for engineering. Small firms and small companies (like manufacturing plants) don't usually hire engineers straight out of college. They prefer you to work for a big company (or the military) for the first five years so that you can take advantage of the large firms' well established training programs. Once you know your head from your.... yeah, then you go work for the mom and pop operations (often at twice the income with half the work).

We direct hire contractors for $125/hr. And they get time and a half for overtime... but the work is b-o-r-i-n-g so I'd rather do something fun and a little more challenging.
 
My particular degree, M.S. Operations Research, Methods in Finance, is very flexible. I can sell it as an MFE (which is really what it is) or as an MS in Industrial Engineering (if I were to go work for Fed Ex or something) or as an MS in management because after all management is the science of improving productivity (if I wanted to take the standard military to riches route and be a defense contractor) or as an M.S. in Applied Math or Operations Research if I wanted to be a scientific analyst working for one of our labs.


I chose the degree largely because it opens a lot more doors than it closes.


Looks like you've hedged your bets everywhere :)
 
If I may ask, which program is that?

The particular program I'm talking about is Columbia's online program. However, the same is true for pretty much all of the MFE degrees that are taught by a school's Industrial Engineering or Operations Research Departments. I know some are taught by the Math Department and others are taught by the Business School.

Logistical companies like Walmart, FedEx, UPS, DHL, Target, etc, often promote top executives with MSOR or MSIE degrees over MBAs because of the enormous impact optimization models play in management decisions. It seems like a stimulating job, but often requires tons of travel (75% or more). I travel 200 days a year right now and it gets old.
 
The particular program I'm talking about is Columbia's online program. However, the same is true for pretty much all of the MFE degrees that are taught by a school's Industrial Engineering or Operations Research Departments.
I was looking for the online version of the program but could not find it, could you please post a link? :) I'm thinking about taking a course at Columbia, and it would be great if it is offered online.
 
The link for the Columbia Methods of Finance program is listed below but you need to start saving money for tuition as each course was about $3,500 or so last time I looked.

CVN - Columbia Video Network


Gus, thanks a lot for the link!

$3,500 is not very expensive if it is for 1 whole semester. I used to pay around $5,000 at CMU (two minis $2,500 each).

In light of these costs, I just love the fact that Baruch charges much less :) even out-state tuition.
 
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