MBA’s: Maybe Best Avoided?

The MBA

The Master in Business Administration Degree was created in 1908 by the Harvard Business School and gradually grew, throughout America over a 50 year period, to become, what Andrew Main Wilson posits is now the most recognized and respected fast-track management qualification in the world.

According to Wilson, in terms of a return on investment, the MBA is good value for money:

“If you look at the salary return on an MBA, whether it’s a low cost one in Eastern Europe, or one of the more expensive ones in Western Europe or the States”, says Wilson, “the payback period is very much proven so that your salary will go up around about 50 percent within two years of leaving.”

The Chief Executive makes the argument that in a highly competitive, complex and uncertain globalized world, the MBA comes into its own, that a high proportion of boardrooms within the FTSE 100 and Dow Jones companies have an MBA or two in them and that the qualification is respected and admired by employers.

Dr Douglas Board claims that the MBA is helping to produce what he describes as a leadership centrifuge and a flow of grading talent that is increasing its power and influence in the world.

Board compares the MBA favourably in terms of its impact on society to the motor car:

“We’ve come to realize”, says Board, “that the motor car produces some socially bad things along with the good things, whereas I think most people wouldn’t be able to name a single bad thing that this growth of management education produces.”

Beyond appearances

Harvard Business School’s ruthlessness in pursuit of financialization ideology would suggest that there is more to the MBAs pastoral image than meets the eye. Harvard has consistently beaten the drum for maximizing shareholder value at the expense of everything else, while MBA programmes continue to push that mantra to death.

But Wilson doesn’t believe that business schools can be blamed, either for the ruthless culture that occurs in the boardrooms of multinational corporations, nor for the financial crash which the ‘maximizing of shareholder value at all costs culture’ helped facilitate.

Board makes the point that top-end earnings of somebody with an MBA can be around $250,000 and hence some significant change-value orientation is almost inevitable. He notes that there have been academic whistle-blowers within business schools, including Harvard, who have remarked on this.

The Dean of Harvard Undergraduate School, Rakesh Khurana, who has written a book about the definitive history of business schools in the United States, is one such whistle blower. In the closing pages of the book, Khurana expresses deep concern that under conditions of shifting change-value orientation, there is a tendency for the professional motivation of a business, as a socially responsible profession, to go astray.

But Khurana also says that there is an historically positive aspect that underpins these kinds of tectonic shifts. The academic notes that the motivation of people who created business schools was to nurture socially responsible business school models.

The Jihad for shareholder value

What Douglas Board describes as “the Jihad for shareholder value”, didn’t metaphorically appear from a clear blue sky, but rather emerged from a number of places including the post-war emphasis on science and quantification as a key value signifier. Khurana is thus aware of the detrimental impact the shifting change-value orientation is having on the ability of business schools to incorporate ethics into their programmes.

Jeffrey Pfeffer at Stanford, who has also written a lot about business schools and ethics, arrived at the opposite conclusion to Khurana arguing that business schools need to teach business people that they’ve got to be more selfish. Pfeffer’s premise appears to be that ethics has no place within an MBA culture whose ultimate justification is the maximizing of returns.

Andrew Main Wilson agrees with Khurana that business schools are placing too much emphasis on salary growth but nevertheless argues that a secondary selling point is driving the primary selling point for the MBA courses. The main selling point, claims Wilson, is that people don’t study for MBAs for the salary but because they’re perhaps a specialist in marketing, operations or finance.

The role of recruiting people to business schools is rarely undertaken, either by those who possess intellectual qualifications, or have been to business schools themselves. As somebody who has been involved in recruitment, Wilson says that in his experience the role and way of doing things is similar to osmosis.

Douglas Board agrees:

“What business schools are doing is affecting a much broader group of people than those who go to them. Although the MBA is regarded as the very best qualification that someone can get to understand how to run something – and indices point to the fact that the best are Harvard and Stanford – I’d love to have a business school in which we didn’t just have one-track league tables that measure one notion of the best. We need lots of bests.”

Incorporating philosophy

One way of measuring quality could be to incorporate philosophy within the business school model. Associate Professor at one of the world’s most supportive schools for responsible management and sustainability, Copenhagen Business School, Professor Ole Bjerg, wants business students to use philosophy to address challenges instead of thinking in the usual linear and well-trodden way.

Bjerg explains the paradox that underlies the world of business:

“On the one hand society is run by corporations. On the other hand, the corporate model of doing things does not seem to be working anymore. We find medical companies selling more and more drugs without making people healthier. We find banks creating more and more debt and we see social media companies providing more and more outlets for communication while at the same time putting pressure on our freedom of speech.”

Bjerg continues:

“At my school we teach philosophy in combination with more conventional courses in business administration. Philosophy teaches you how to ask the right questions. The question for business today is not how to make people work harder, produce more stuff and earn more money. Instead businesses have to ask, what is work, what is value and, most fundamentally, what is money? Only when we get the questions right, does it make sense to start thinking about answers.”

Denmark is one of the happiest and most sustainable-oriented countries in the world while the United States is one of the unhappiest and least sustainably-oriented. So maybe there is a link between happiness/sustainability and the philosophical teaching approach of the former compared to the explicit way business schools in the latter are rewarded by wealthy institutions on the basis of how scientific they make the subject?

Board says that it’s the unsustainable US approach of consciously giving primacy to the ‘Jihad of shareholder value’ which laid the groundwork for financialization and the reduction of everything into the magic power of numbers, equations, trajectories and graphs. It’s this reductionist and societally damaging top-down way of allocating resources that Board argues has to change.

The problem, however, is the business school establishment in the US is likely to resist any attempt to integrate creativity or collaborative concepts into their teaching programmes, largely because their prestigious academic journals are overwhelmingly scientific or quasi scientific and are ideologically wedded to a cut-throat competitive logic. It’s these prestigious journals that remain the DNA of what is said to make an outstanding business school. Arguably, this outdated notion is embedded in the American psyche.