What Is the Value of the MBA in 2022 and Beyond?

by mba

A shelter from the storm

What can an MBA do for you? It can help accelerate your career, expand your network and deepen your understanding of business. These virtues of the degree are well known. However, a less-talked-about phenomenon is the MBA’s role as a pillar of support for business professionals when the world is buffeted by the vagaries of the economy.

Every time dark clouds filled the economic skies, those who opted for an MBA emerged stronger from the crisis and reaped the benefits of the recovery.

A haven in hard times

Traditionally, business professionals see schools as a haven from a difficult job market and a springboard for future success. One of the reasons for the higher number of applicants is that the so-called “opportunity cost”, which includes the money lost by not entering the job market, is much smaller.

The most recent economic storms – the financial crisis of 2007-2009 and the coronavirus outbreak – provide sufficient evidence that the MBA is viewed as a reliable anchor when the world seems to be falling apart.

In 2008, 77% of full-time MBA programmes reported that they received more applications than they had in 2007, according to data compiled by GMAC. The year 2009 was equally difficult for the economy, but not for business schools as professionals kept applying to MBA programmes with the same vigour. Nearly 70% of one-year full-time MBA programmes reported an increase in the number of applications compared with the previous year. What is more, 66% of flexible MBA programmes – on-campus courses that combine both full-time and part-time options for students – reported year-on-year growth in applications.

The Covid-19 outbreak also resulted in a rush to business schools. Applications around the world rose by 2.4% in 2020, reversing the 3.1% decline in 2019, according to data from GMAC. Business schools in Europe recorded a 24% increase, while those in the US saw a 20.6% gain. At the same time, applications in Canada increased by 13.3%, while in the Asia-Pacific region they fell by 7.1%.

Alvaro Darquea Figueroa, an investment banker from Santiago, was one of those who decided that it was time to go back to school. He started a two-year full-time programme at the University of Toronto’s Rotman School of Management (Canada).

The pandemic really changed the mindset of businesses and people,” he told Bloomberg. “I realised going two years to study and preparing myself for this new reality and this new world was a good opportunity.

MBA post-crisis

The reason why the MBA degree attracts so many professionals during bad times is that the rewards for them are significant once the economy turns the corner. History (and data) strongly suggests that schools are a haven from a difficult job market and a springboard for future success.

What happened to the students who decided to pursue graduate management degrees in times of a global recession? A Bloomberg Businessweek survey of 15,050 MBA alumni has tried to answer this question. The poll is based on an analysis of graduating classes of 2010, 2011 and 2012 from 126 business schools around the globe. In general terms, it found that, despite entering an unstable job market, most found work after graduating. At the beginning, some went to industries that were not their first choice, but later, as the global economy recovered, many found what they wanted.

Even more surprisingly, pay was unaffected by the crisis, especially for graduates from the top schools. Not only that, it actually increased. According to data collected by the Financial Times, students from the top 100 MBA programmes in its annual ranking, who enrolled in 2008 and 2009 and who graduated in 2010, saw their salaries double in the years up until 2014.

Adapt or die

The MBA degree is not static, much as business isn’t. There always seems to be an industry undergoing profound transformation as new and innovative companies disrupt old, complacent ones. This disruption appears to be accelerating quickly. In the 1920s, the average life span of an S&P company was 67 years. By 2012, this period had shrunk to 15 years, according to Professor Richard Foster from Yale University. This dynamism requires developing skills, expertise and an understanding of business. Against this background, business schools simply cannot afford to be stationary.

The most recent past offers good examples of business schools adequately reacting to change. When the pandemic broke out, the MBA programme at the University of Newcastle (Australia) began rapidly adapting to equip students with the skills required by the new reality. The school set up an industry advisory board to keep track of the changing environment and identify emerging trends through a network of partnerships and connections. Demand for digital, business analytics, problem-solving and change management skills exploded and the business school made them a priority in the MBA. “These new skills are embedded in the programme to support our students with becoming more effective leaders in an era of disruption, change and innovation,” MBA Programme Director Sonia Vilches-Montero said.

Changes at business schools do not only happen in response to crises. Some schools, such as London Business School, are offering shorter programmes as they try to help students get a return on their investment faster. Curricula are changing too. Case studies now reflect the increasingly globalised world of business and include examples outside western-centric business practices to appeal to the large and growing numbers of international students, the Economist reported. For instance, Asian business schools are developing Asian-centric case studies along with western-centric ones to better respond to the needs of their student cohorts.

Everything changes except the reasons for taking an MBA

While the MBA changes constantly, the reasons to enrol in an MBA course remain constant. Ask the MBA class of 2022 why they decided to go to business school and you are most likely to hear one or more of the following: to gain new skills; earn more; switch careers or expand my network. If you go back 40 years, the class of 1982 would point to similar goals.

What Is the Value of the MBA in 2022 and Beyond?However simple and understandable these goals are, there are right reasons and wrong reasons to do an MBA.

The right reasons are more or less the ones described above. The MBA can help you a great deal if you want to prepare your career for the future or are intending to make a career pivot. Business schools are often the go-to place if you intend to accelerate your professional development or expand and diversify your network.

When is the MBA not the answer? If you are looking for a magic pill that will effortlessly revitalise your career, you should delete the MBA from your list of possible options. Those who benefit the most from an MBA understand that the best results require dedication, passion and proactivity. What if you are bored and you don’t have any other options right now? Should you do an MBA? Most certainly not.

Business schools are not suited for people who just want to pass the time with no clear goal in sight. Instead, the MBA is suited for those who know what they want and are brave enough to invest in themselves even during hard times.

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