Thursday, April 06, 2006

How much is an MBA worth?

In South Africa, we have had an unhealthy fascination with the Chartered Accountancy (CA) qualification for many years. It is certainly an excellent qualification, but it became a testament to business knowledge when companies sought to appoint managers.

Elsewhere in the world, MBAs held the equivalent allure. During the 1990s MBAs gradually gained respect and popularity in South Africa.

So how valuable is an MBA? Value is typically measured by scarcity, and so the following statistic from Fast Company blew me away:

"More than 100 000 MBAs graduated from business schools across the country this spring, and while many of them walked away with a sheepskin - some graduated without a job or internship."

100 000 per year!

Of course, all of this means any of three things:
  • Employers will look to other scarcer qualifications as a measure of value

  • Employers will only employ the top graduates in an MBA class

  • Employers will attach far more value to MBAs from some schools than others.

Frankly, when I hire people, I look at performance and applicability as the entrance requirement to an interview. From then on, I forget about the past and judge the person on their performance in the interview and later on the job. That's why multiple testing interviews are important.

And now that I am interviewing, the boot is most surely on the other foot!


ChittyChittyBangBang! said...

You've touched on a very good subject and frankly I believe the MBA has lost value.
An MBA does not immediately make you a good manager or leader, but people seem to think so. What took people years to achieve and accumulate in the business world is now churned out in a matter of 2years or more, but is the recipent truly worthy of that piece of paper?
I completed my 1st year of MBA studies and then gave it all up. While it would have been nice to put another formal qualification to my name for what I had come to learn & know through training and experience, I realised that there is very little that distingishes me from my classmates. What set me apart was what I knew, my track record and my experience. And that they can't teach in a classroom.
I know ppl who are walking around with MBA's, yet even with it, are worth nothing when it comes to the crunch.

It is the question said...

CCBT: MBAs do serve a purpose - I think they are an excellent means for a non-commerce major to catch up theory they never learnt academically. But as to an indicator of capability, I'm not sure.