Once upon a time, a graduate from a Master’s of Business Administration program could write an employment ticket anywhere. Times have changed. MBA programs have exploded in enrollment to such a degree that graduates might think the degree has lost some of its professional cachet. More likely, however, the facts of the 21st century economy are forcing companies to consolidate, downsize and impose myriad efficiencies that eliminate jobs altogether. As the overall pool of available positions continues to shrink, MBA holders must be that much more resourceful and assertive when applying for jobs. Without these qualities, they will have difficulty distinguishing themselves from the growing competition.
MBA Education Requirements
Eligibility for entrance into an MBA program varies by educational institution, but most often, applicants have at least two years of work experience in a corporate or entrepreneurial setting. A bachelor’s degree and acceptable scores on the Graduate Management Admissions Test are also thresholds that must be crossed prior to entrance. Once admitted, students are usually subject to a battery of core curriculum courses before going on to elective classes in their chosen concentrations. The University of Texas provides typical offerings. Required courses include financial accounting, statistics and career planning, as well as management courses in operations, finances, marketing and economics. This common core gives prospective managers a broad overview of the components of a successful business. Given the international flavor of business today, additional mandatory classes may focus on global commerce and multicultural human resources.
Once grounded in the basic principles of business, MBA candidates can then go on to specialize in an area of particular interest. The Wharton School at the University of Pennsylvania, for example, offers 18 different concentrations, ranging from health care management to real estate to multinational management. Of course, these specializations are not mutually exclusive whereby graduates of one are precluded from employment in another. Environmental Risk and Management is a distinct major from Entrepreneurial Management, for instance, but there is nothing preventing a newly-minted MBA in the latter from starting a hazardous materials remediation business. Students choose concentrations to focus on the knowledge they find most necessary to their goals.
Of course, any business-related degree can not rest on theoretical knowledge. While most students come to school with corporate experience, opportunities to apply classroom lessons to real world environments are an important element in graduate business education. As a case in point, Stanford University Graduate School of Business enables students to participate in month-long internships during the summer. Positions are provided in settings as diverse as start-up enterprises, international conglomerations and non-profit associations. Day-to-day immersion in the activities of these organizations affords students a vantage point that books and lectures can not give. It also gives them needed exposure to prospective employers.
With an MBA in hand, what then should a graduate expect from that first job out of school. As the “A” in MBA stands for administration, the position should allow the new employee to exercise as much acquired knowledge in leadership and management as possible. A diversity of administrative slots serves this purpose. A marketing manager must coordinate the activities of a sales force with the creative output of graphic artists, for example, and formulate the best strategies to move a product or service. A human resources manager, on the other hand, will spend the day evaluating the claims of competing health benefit providers, or consulting with company attorneys on hiring practices. Meanwhile, financial managers are examining cash flow, approving income reports and making profit projections. While these various occupations require differing talents and responsibilities, each of them calls for decision-making and policy supervision. This separates managers from the managed.
In a just world, greater administrative burdens should always yield higher earnings. Still, other variables are at play in the volatile job market. One is that some industries are more financially lucrative than others. Alternatively, some new MBAs choose to apply their skills to start-ups or very young businesses that are still developing, and can not yet generate competitive salaries for their executives. As a consequence, there are MBA graduates that end up with an income reduction, at least temporarily. Given those disparities, however, median salaries for newly-hired MBAs hovers around 90,000 dollars annually. National and global recessions of late have caused that figure to stagnate since 2008. Certain recent graduates, however, escaped this rut.
Degree-holders from the most prestigious—and expensive—full-time MBA programs are bringing in over 120,000 dollars per year, representing an average increase in pay of over 90 percent above earnings prior to the conferral of the degree. Bloomberg Business Week reports that PayScale, a company specializing in human capital valuation, has discerned a measurable difference in the starting salaries of graduates from the elite, private institutions compared to those from state universities and part-time programs. This report, however, reveals more than meets the eye. A large plurality of the top school graduates go into financial management and financial consulting, two fields that are among the highest paying.
Areas That Need MBA Graduates
Still another influence on MBA earnings is geography. Austin, Houston and San Antonio—Texas cities all—were ranked by Forbes magazine among the top five cities in the United States favoring businesses. Also among the municipalities are Virginia Beach, VA and Colorado Springs, CO. Indexes for this research were number of impediments and incentives to start a business; the amount of business-related government regulation; ease with which businesses can hire; and the availability of training and networking options. Nashville, TN, Raleigh-Durham, NC and Columbus, OH were included in the list of top 10 cities. Of course, earnings should be measured relative to cost of living, which differs from region to region.
Not every MBA graduate is suited for an MBA career. Equal in importance to academic knowledge and corporate experience are temperament, energy levels, communication skills and character. Management positions and senior executive slots often require long hours and a fast pace. Confrontations with difficult employees, contentious board members and strong-willed colleagues are par for the course for company leaders. While the degree teaches skills that help cope with these challenges, it can not instill a new personality or change a disposition. Accordingly, prospective MBA students should take a critical look at themselves before investing in an expensive degree program.
With a gut check completed, an MBA student can take advantage of the lessons learned by generations of entrepreneurs before them. A future executive can discover what practices have failed, and which ones are tried and true. Prospective leaders can also learn how to navigate businesses through tempestuous economies and myriad rules and regulations. If they possess the innate qualities common among leaders, their MBA educations will serve them well as they start new ventures or assume established ones. Helping them maximize their earning power are thoughtful specialization, and flexibility with regard to the type and location of the future employer. These attitudes will make the MBA degree worth all the time and money invested.