Alex Chu is the founder of MBA Apply (www.mbaapply.com), an admissions consulting firm based in Los Angeles, CA that has been advising thousands of applicants since 2004. He can be reached at [email protected]
by Alex Chu, Founder of MBA Apply
One of the most basic but important question I get from folks is whether an MBA is worth it (and in particular, a full-time program).
The debate seems to have been going on ad infinitum, with sentiment ebbing and flowing with the state of the economy and buzz about MOOCs (massive open online courses).
From a practical standpoint for many folks who are deciding on whether to apply or not (or whether to attend or not * after * they have gotten admission!), the answer may be clearer than you’d expect.
1) CONSULTING: AN MBA IS BASICALLY A PREREQUISITE
Regardless of your prior professional background, if you’re looking to work as a management consultant at firms like McKinsey, Bain, BCG, Monitor, LEK, Accenture, Deloitte, etc. then an MBA is worth it, because you don’t really have much choice: you’re highly unlikely to get hired without one.
Even if you are a consultant looking to upgrade your brand (i.e. you work at a small no-name consulting firm and hoping to work at McKinsey), your chances are slim unless you get an MBA. And even if you are looking to stay at your current firm, you will likely be highly encouraged to go back to do an MBA (read: your chances of getting promoted to a post-MBA position are slim unless you have one).
Moreover, for many of these firms, you essentially have to shoot for the top 16 US programs (and LBS and INSEAD in Europe), since these consulting fims hire the majority of their incoming associates from these programs. You will get some MBA hires who did not go to these schools, but they are a minority. They will also hire some folks from law schools or direct industry hires, but for the most part, consulting firms have a highly structured (and highly stratified) recruiting process that focuses on a select number of schools.
2) FINANCIAL SERVICES: AN MBA IS A MUST IF YOU DON’T HAVE A FINANCE BACKGROUND
Regardless of what aspect of financial services you’re looking to work in – investment banking, equity research, sales/trading, asset management, private equity, hedge funds, venture capital, commercial lending/underwriting, insurance, etc. – if you don’t have a finance background and looking to make a career switch into it (even if you have corporate/business experience), then you’ll have a very hard time getting these jobs without an MBA.
The culture of financial services doesn’t value the MBA to the same degree as consulting, but it is often seen as a passport to getting in the door for those with no prior relevant experience. And areas such as investment banking focus their recruiting efforts almost exclusively on top 16 MBA programs.
Also, if you’re in a “back office” or “middle office” role at a financial institution (or you’re in any support function such as IT at a bank), and you’re looking to make that switch into revenue generating functions as listed above, then an MBA is worth it to re-brand yourself because it’s hard to make that switch without one.
While some schools have introduced specialized Masters’ programs in finance, these programs are still relatively new compared to the established MBA programs. Basically, if you had the choice, the MBA is the better bet and will give you more access to recruiters than a specialized masters program.
3) NON-BUSINESS PROFESSIONALS SEEKING A CORPORATE CAREER IN THE US
If you are coming from a non-business profession (engineer, science researcher, lawyer, doctor, military officer, teacher, athlete, artist, etc) and looking to transition into business job function, then an MBA can be extremely valuable. Although not a must like it is for consulting or financial services, getting an MBA is certainly worthwhile enough since making that transition into a business career will be easier and faster.
“Corporate life” basically includes the two industries above (consulting and financial services), but also any job function on the business side in any industry: marketing, operations, financial planning/corporate finance, business development, corporate development, human resources, investor relations, etc. In many of these jobs beyond the college entry level, they require either relevant prior experience or an MBA (and most of these firms will not hire you to start alongside fresh college grads at the entry level).
4) BUSINESS PROFESSIONALS SEEKING TO SWITCH INDUSTRIES
Basically, an MBA makes it much easier if you’re looking for a fresh start (without having to fully start over) in a new industry. For example, you’re a brand manager at a consumer products company who is looking to switch into business development at a green technology firm. Or, you’re an investment banker looking to work in sports marketing.
This also applies to social enterprise and non-profit, since the kinds of jobs you would be aiming for on the admin/managerial side tend to be staffed by “corporate refugees” who previously worked in the private sector, and tend to hire people in their own image (i.e. those with business backgrounds and/or with MBAs).
Of course, it’s certainly more possible to make this switch without an MBA (unlike the other three situations above), but an MBA will make it a lot easier for you to make that switch without having to take a huge step back in pay and responsibility.
So if any of these four things applies to you, then the answer is easy: an MBA is worth it (assuming you believe these careers to be worth pursuing), even without considering any of the intangibles or personal factors, such as the network, taking two years off for personal “me” time, discovering new interests, learning more about other careers, and so forth.
5) SO WHEN IS THE MBA NOT WORTH IT FROM A CAREER STANDPOINT?
Simply put, an MBA won’t have much benefit from a career standpoint if you are already working in a business job function AND you’re not interested in switching to consulting or financial services.
For example, if you’re a banker or private equity professional who wants to stay in finance (in any capacity), an MBA won’t be worth it from a career standpoint, because an MBA isn’t going to make it any easier for you to change from one firm to the next, or from a private equity firm to a hedge fund and back again. It ultimately comes down to your transaction experience, network, and the job market in the industry – when it’s hot, you will have firms coming to you; when it’s cold, an MBA won’t help you land jobs that don’t exist.
Or if you’re simply looking to move up the ladder in your industry in a similar job function, then you don’t need to go back full-time: consider doing a part-time MBA or an executive MBA down the road.
Finally, if you’re looking to start your own business in the short-term, you are better off investing that money in wise counsel and getting that business off the ground right away while the idea is still hot in your mind, rather than spending two years in business school where you will learn mostly “book knowledge.” The biggest problem with business schools and entrepreneurship is that business schools unwittingly teach students to conceptualize their way through problems as a substitute for rolling up their sleeves and getting their hands dirty. In plain English, they confuse analysis for execution, and running your own small business often lives and dies more on the latter than the former.
6) THE MYTH OF THE LONG-TERM
Forget about the long-term value or even the medium-term value of an MBA. The reason why is simple: it’s debatable, it’s a matter of opinion, and it’s ambiguous. You will get more conflicting and differing opinions on this than you would on what it will do for you in the immediate term (i.e. right after graduation). Furthermore, if the value of the MBA in the short-term is limited at best in your situation, then it’s not going to be any more valuable in the medium- or long-term.
When deciding whether an MBA is worth it to you or not, focus on the short-term benefit: what it will do for you in terms of recruiting while you’re an MBA student? Will it give you access to the kinds of jobs you want immediately after graduation? While it may seem cynical to disregard the academics – the reality is, the MBA is a professional degree whose main purpose is to turn students into employable business professionals after graduation, so the academics aren’t an end in itself, but a means to that end. While business schools would like to say that they want to teach you knowledge that you can use for your entire career long-term, the reality is, the kind of knowledge and decision-making you do in the long-term will have little to do with what you learned ten years prior in b-school, and more to do with your recent experiences and lessons learned in the past three to five years. Again, the value of what you learn in business school is most relevant (if not exclusively relevant) to your first few years after business school.
In plain English, the MBA is a credential that helps you secure the kinds of jobs in the short-term you want that you couldn’t have gotten without the degree (or would at least make it a lot easier for you to secure those kinds of jobs). That, more than anything else, dictates whether the MBA will be worthwhile to you.