Rise and rise of MBA degrees

A masters degree in business administration - essential qualification or waste of time? JULIE MIDDLETON looks at both sides.

In the small ads at the back of magazines such as the Economist are ads for send-away master of business administration degrees and others based on "life experience."

These mainly American schemes are worthless - but their existence proves the big professional kudos attached to three small letters.

But as the numbers of MBA graduates rises - 3736 people were graduates of New Zealand MBA courses in 1999, the last year for which figures are available, and 1329 enrolled - commentators are questioning their value.

Is the standard, a-little-bit-of-everything MBA still relevant in an economy needing to embrace new fields such as biotech and IT to expand?

The degree's profile rose swiftly in NZ during the self-conscious 1980s. Seven institutions started offering MBAs between 1980 and 1999. But the history goes back much further.

The world's first graduate degree in business was offered in the United States, at Dartmouth College's Amos Tuck School in Hanover, New Hampshire, in 1900. Eight years later, the first post-graduate business school, at Harvard, was founded in Boston.

In NZ, Massey University was first, in 1972, with an MBA course that focused on agriculture.

Otago got into the game with a full-time course in 1976. Nine New Zealand institutions now offer MBAs, costing, on average, about $20,000.

Although elective subjects and the all-important dissertation allow some specialisation, the MBA aims to offer a smorgasbord of everything from marketing to finance, creating a bigger picture of business organisation and management.

The most vital requirement common to most of them is that students have relevant work experience - the ideal candidates are senior-level 30-somethings keen to network.

"If you've never had business experience, it's difficult," says Dr Alan MacGregor, director of advanced business programmes at Otago University. "We have experimented with having a few really high-calibre graduate students."

One, in particular, flew through the course, but directors do not recommend MBAs, with their experiential emphasis, straight from undergraduate study.

Most of the courses are part-time over a couple of years. Lectures are run in the evenings, in blocks or at weekends, except for distance learning, which has moved from regular mail to the internet.

The consensus seems to be that while distance learning is flexible, nothing can replace collegial study.

"You can dictate your place of study and time," says Dr Garry Clayton, director of Auckland University's graduate programmes, citing a pilot who does his study in five-day layovers in Los Angeles.

But the distance option is even tougher than a classroom-based course, says AUT's Stephen LeCouteur, information manager of the AUT/Henley part-time distance-learning MBA. About 30 per cent of students drop out, generally because "time management has let them down."

But despite the number of MBA courses now available, there are still far more places than students, says Dr Regena Mitchell, Otago's Auckland director of the executive MBA.

Competition for MBA students is now so intense that if courses don't differentiate, they will die.

And as the local senior job market shrinks, forcing people to seek work elsewhere, MBAs without a strong international focus will disadvantage their students. Says Mitchell: "MBAs have to adapt and adjust."

The change-or-perish imperative led Auckland University to review its MBA in 1998, splitting it into a prerequisite, stand-alone diploma in business administration and a fresh-faced MBA proper.

The diploma, says Clayton, now covers "toolkit" subjects such as accounting and finance, law, economics and marketing. B-plus average marks are required to advance.

One MBA with its sights firmly on the future is that taught at Auckland's Unitec. It has 25 people enrolled in its master of business innovation and entrepreneurship, which was started in March.

Says Professor Peter Mellalieu, its professor of business creativity and strategy: "We're focusing on new ventures."

He says the "old" MBA is not yet past its use-by date - "but we need people who know how to manage and create innovation."

But the MBA has its opponents. New Zealand MBAs Association president Simon Clatworthy says opposition to MBA studies from employers and also from some recruitment companies stems from a lack of understanding of what it is, and the threat it poses to senior managers without the qualification.

"The business community is polarised," he says, "into those who understand it and support it, and those who bag it."

But Mitchell says the benefits are clear: "I see people coming into the MBA programme who are already in management, and they have little or no skills around a lot of issues, maybe finance, or investment.

" Maybe they are looking back, not forward."

And she says the "huge issue" of employers imposing a bond period on to their MBA students after graduation, usually a couple of years, is unhealthy.

Employers are not recognising that following graduation, staff will be well-equipped to contribute more within an organisation or move up within it, allowing new talent in.

Making them stay benefits neither staff member nor company. Someone who has gained an MBA "has gone through a fairly significant transformational process," says Clayton.

"They're probably ready to do something quite different."

New Zealand MBA Programmes

SO YOU WANT TO DO AN MBA ...

* Know why you are enrolling. "If it's just to buy the letters," says Association of MBAs president Simon Clatworthy, "forget it."

* Recognise that it's a general management qualification. "It's not going to make you a specialist," says Clatworthy.

* Having an MBA does not mean you can do the job, says Otago academic Dr Alan MacGregor. Adds Dr Clayton: "An MBA is "just one indicator" on a CV. Richard Dean: "At the end, all you get is a piece of paper. You still need to prove your ability, and that test of ability is ongoing, every day."

* An MBA will put huge pressure on your lifestyle and those closest to you. Two crucial skills: time management and the ability to compromise.

* Recognise the importance of fellow students, and learn as much as you can from them. Says Clayton: "The more you can bring to the table and the room, the more other people are going to learn."