This is a guest post by Mariana Zanetti, who earned her MBA degree from one of Europe’s top business schools and has more than 12 years of international marketing experience in three countries. She is the author of The MBA Bubble and shared this post in response to an earlier Man Vs. Debt post by Joan titled Do You Really Need That Master’s Degree?
When my Harvard MBA colleague told me that I should pursue a “top” MBA program twelve years ago, I did not doubt it. “Don’t worry,” he said. “For the important things, money will not be a problem.” So I applied, I was admitted, and I enrolled in the MBA program at one of the top European business schools.
Some years later, I met all the professional goals I had set for myself: I had a high-paying and challenging job in a large and prestigious company. However, my MBA was one of the worst mistakes of my life and a huge waste of money. No, I didn’t really need to spend a fortune to get that MBA degree.
My colleague’s advice was well-meant and sincere. But I followed the advice of someone who had not needed to worry about money, as his company had financed his tuition. I learned later that everyone should definitely worry about money and debt, even if going to Harvard.
I am not saying that MBAs are useless, but they are pretty close. Except for a few exceptions, these programs have no influence on the graduates’ careers. Yes, MBAs get higher paying jobs. Yes, the MBA network is a great asset. Yes, you learn some interesting business concepts at business school from brilliant professors. Yes, employers value the degree in your résumé.
How can they be a waste of money and effort, then?
Correlation, not causation
Because the MBA is not the cause of professional success, it is only correlated to it. Ferrari owners are correlated to higher income, but the Ferrari is not the cause of their wealth.
It is easy to explain: Business schools only admit people who have already proved that they can have successful careers. The more prestigious (and hell, expensive) the school is, the more competitive and demanding its admission process. Yet the degree adds almost nothing that the student did not already have before enrolling, and there are several studies that already prove this. My wage was higher than the average, but so was the wage of all of my colleagues doing the same work, whether or not they had an MBA. I did not make a proper analysis of the Return On Investment (ROI) of my education.
As for the MBA network, it is completely overrated. You meet great people at the MBA… people like you. You meet people like you everywhere you go, and they do not ask for a certificate to connect with you.
Even if you are persuaded that there is a real advantage to pursuing an MBA, you should really think twice before going into debt to finance the degree. The world has changed a lot, but the MBA content has not. You will only use a small portion of what you learn in the program in your first job after graduation, and five years later, everything you will need to know might have changed.
Much of what you learned in the MBA is going to be obsolete, but the bills will continue arriving. Why don’t you start training yourself, instead? What sense does it make to buy a piece of paper that is constantly losing its value? No, you don’t really need that piece of paper.
But what about employers? Don’t they really value the degree?
They do. An MBA always looks good on a resume. If two candidates for a job meet the requirements, most employers will choose the one who has an MBA. What is the conclusion most professionals come to when seeing this? That the MBA is worth time and money. Wrong damned conclusion!
Employers will choose the MBA candidate… if there is a tie. But there is not going to be any tie if one of the candidates has the experience or the skills they value most. Why would people mortgage their future to buy a tie-breaking joker? Joan asks in her article: “Why on earth would they outlay the money and time [pursuing an MBA] and NOT use it to build toward something that will significantly change their earning potential?”
It is a good question, Joan. I know from experience that most MBA candidates do not even ask themselves this question first, even when most labor market experts say that these programs improve employability in a very marginal way.
If there is little advantage to getting an MBA, why aren’t there more grads with regrets?
There are a lot of people regretting it, mainly when their student-loan bills arrive every month, but they will never say it in a loud voice. There is no sense for them in shouting that the emperor is naked.
That’s why business schools continue with their deceitful marketing messages, playing with the data in the rankings: Very few people will dare to question them officially. Unfortunately, business schools run themselves the same way they teach others to run businesses: Most of them make profit without caring about adding value. This attitude was the origin of the horrible financial crisis of 2008.
So why do so many people still rush to get the degree?
It’s a good question. The truth is that, as everyone is doing it, the “everyone-is-doing-it” pressure increases, as Joan says.
Everyone was buying houses in 2006. Everyone was buying tulips in Holland in 1637, even when they were more expensive than a house on the Amsterdam channels. That is how a financial bubble is formed.
The fact is that MBA programs have increased their prices by 62% since 2005, and they are in the middle of an education bubble that is about to burst.
As Mark Twain said, “Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
No, you really don’t need that degree.
Note from Joan: I really loved hearing Mariana’s take on my fairly anti-grad-school rant from earlier this year. It’s amazing to know that someone WITH the degree feels as strongly as I do about not getting it!
I continue to be interested in your thoughts on graduate education. This is (obviously) a topic I’m passionate about!
So what do you think? Is graduate school its own “bubble?”
Would love hear your take in the comments!