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Are MBAs worth the paper they're written on?

Date
Various studies have shown an investment in an MBA pays for itself through promotions and higher wages.

Various studies have shown an investment in an MBA pays for itself through promotions and higher wages. Photo: James Davies

The start of the first university semester each year always prompts me to consider part-time study. That is, until the shock of course costs and the time required. Has postgraduate business education become too expensive, and is the best of it out of reach for most business owners and managers?

The Melbourne Business School Executive Master of Business Administration (MBA), for example, costs $90,000 plus travel expenses for its international module. The University of Sydney’s Global Executive MBA, which looks terrific, also costs $90,000 plus another estimated $20,000 in travel costs.

Yes, these are world-class business programs from world-class universities. But even business postgraduate subjects at second- and third-tier universities cost $2500-$5000, depending on the course. A $30-40,000 commitment for a 12-subject program is fairly common.

That’s a huge investment for small business owners who, like me, appreciate the value of lifelong learning and expanding their networking through part-time university education. Then there’s the time investment for part-time study – one or two days a week - which is not easy when running a business.

I don’t know too many business owners who can invest $30,000, let alone $100,000, in their education, or are prepared to take a huge student loan that takes years to pay off. That’s assuming they have enough time for such study in the first place.

Even successful corporate managers – and their employers – must baulk at the idea of racking up $100,000 in debt for an MBA that offers increasingly less face-to-face time with lecturers.

What’s your view?

  • Is postgraduate business education becoming too expensive?
  • Is it worth the cost?
  • Do you get tired of all the ad-on costs (ie overpriced textbooks)?
  • Did your postgraduate business course lead to a promotion or other business success?

These are hard questions to answer from a statistical perspective. Various studies have shown an investment in an MBA pays for itself through promotions and higher wages.

I struggled to find information on long-term trends in the cost of postgraduate business education in Australia. I’m sure it exists, but with so many courses chopping and changing over the years, and other courses introduced, it was hard to compare course costs over long periods, or with other courses.

Some trends were obvious: more business Master’s programs shrinking from 16 to 12 or even eight courses (a shame, in my view) and a higher proportion of online or self-directed learning (another shame, if it leads to less classroom time and interaction with lecturers and between students).

Some universities could argue that $20,000 for an eight-subject Master’s degree is more than reasonable; perhaps they have a point, depending on teaching quality and course content. That is arguably a small investment if it leads to significant career or business success.

But one can’t help think the gap between the top postgraduate business courses and the rest will widen further in coming years. A handful of world-class Australian business schools charging well into six figures for their tuition (after add-ons) and the rest scaling their postgraduate business courses back to 12 or eight subjects, teaching more of them online, and charging less overall as a result.

And more second-tier postgraduate business courses dying as the trend towards free or low-cost massive open online courses in business accelerates the rationalisation of an overcrowded sector, and as universities downgrade the value of their Masters’ qualifications by reducing the subjects offered.

Do eight subjects really make you a “Master” of anything? And which subjects are being dropped: the tough ones, such as business statistics, which used to be a pre-requisite in many courses, but are often a turn-off for many prospective students?

As an aside, I can’t see the logic in having so many universities offer so many postgraduate business courses. Surely it makes sense to aggregate more of the best researchers and teachers to provide fewer, higher-quality business programs in Australia.

If postgraduate business programs become too expensive, more Australians will take advantage of our currency’s persistent strength and choose overseas universities for postgraduate education. Greater online learning, shorter classroom modules and subjects offered in multiple locations will make offshore study more feasible.

I hope Australian postgraduate business courses do not follow the path of private school fees, which seem to rise 5-6 per cent a year – well in excess of inflation and often with scant explanation to stakeholders (parents whose children attend the school).  But that’s another story.

 

71 comments so far

  • I think costs of postgraduate study are seriously prohibitive. I inquired recently for what was essentially a wholly on-line course, at certificate level was $10K, Diploma was $20K and Masters was just over $30K. Run of the mill MBA's were about $25K and higher. Stuff that. MBA are highly over rated (except for those in the business of promoting and selling them). many courses are good value however, its a matter of balancing expense and percieved outcome.

    Commenter
    andrew
    Location
    Newport
    Date and time
    March 05, 2013, 12:03PM
    • "Are MBA's worth the paper they're written on? " .......

      If MBAs (it is a plural, not a contraction or possessing) taught one to correctly use apostrophes, ..... then, perhaps!

      Commenter
      Only from named schools
      Date and time
      March 05, 2013, 12:16PM
      • MBA is not worth the paper its written on. To reach management you just need the gift of the gab

        Commenter
        masters
        Date and time
        March 05, 2013, 12:22PM
        • The Australian Qualifications Framework (AQF) is the instrument that regulates qualifications in Australia. Although in force for some time, universiites only appear to have noticed it recently with the new regulator, TEQSA, having teeth regarding standards against things like the AQF. The volume of study in Masters degrees was a key issue in the recent review of the AQF and the 8 subjects Masters is to become a thing of the past. The 16 subject Masters will be the norm (for all disciplines not just Business), with 12 subjects possible if you already have a degree in the same discipline. It will also be compulsory to include some sort of individual research/dissertation as part of the degree. Transition to the new system has to happen by 2015 for existing courses, with new courses having to comply now.

          Regarding the proliferation of degrees, this is another symptom of the dog-eat-dog competition for fee-paying students between universites. A new course pops up and if it's successful, is quickly copied by competitors. Venturing too far from the pack by embracing diversity is risky, so they all look essentially the same in terms of their offerings. Increasingly narrow, specific degrees that become increasingly irrelevant if you change jobs/careers. It's as bad at the undergraduate level. Bring back a system where students are taught to think rather than to do!

          Commenter
          TH
          Location
          Sydney
          Date and time
          March 05, 2013, 12:30PM
          • I have never had a joyful experience with personnel who claim that their "claim to fame" is their MBA.
            One instance, a mature(?) but recent MBA graduate ran a company into the ground as hired CEO by only accounting for bills paid in the accounts ignoring accumulating bills to be paid as they were in his in tray and therefore did not count !

            Experience and track record beat an MBA everyday in my book.

            Commenter
            Burnt and Stung
            Location
            Australia
            Date and time
            March 05, 2013, 12:37PM
            • For the past 15 or so years, I have come across a number of so called senior execs (with the exception of one very smart lady) aged from about 25 on...who constantly claim or put across that their MBA gives them greater insight or knowledge of business strategy and management than the rest of us but also who have absolutely no idea of the basics of running a company or business..or even Marketing101. They also don't appear the understand simple stuff like inventory logistics but claim to be able to put together corporate strategy for a warehouse and distribution business. The classic was the new MBA holder who did not know what a 'business cash receipt' was! Like really....

              To add to my 1978 B.Bus and 2 following Post-grad degrees (IT and Marketing) , some 10-12 years ago I looked at doing an MBA at several of the schools but found not one that really added to my business experience gained over the past 25 years or so at that time. .

              to pay the sort of $ mentioned here for no extra knowledge but for the piece of paper really does not stack up....

              Commenter
              Les
              Location
              Melbourne
              Date and time
              March 06, 2013, 10:29PM
            • Yes, pretty accurate description of another MBA qualified CEO who ran a company into the ground,losing $500k/per week and reducing the shareprice by 80% for about 12 months before the Board demanded his resignation. Glorified accountant, no vision whatsoever, not one original thought, 0 EIQ, cost cutting being his speciality. Will never secure another CEO position again, MBA or no MBA.

              You either have it (and are born with the ability to be creative in a business environment) or you don't, and should stick to golf - it'll be less damaging to all concerned.

              Commenter
              lex
              Date and time
              March 07, 2013, 9:34AM
          • In the USA an MBA is expected in many white-collar industries. It is also a distinct advantage in India, Norway, Denmark, Germany and Japan - particularly if it came from a reputable institution overseas. In Australia, it means very little. Only if you desperately want a management consulting job in Melbourne or Sydney would you bother, and even then you could probably get in there with good results in an undergrad business or law degree. I completed an MBA 9 years ago and it did absolutely nothing to enhance my salary or career progression. Indeed, I found interviewers (in Brisbane) totally disinterested in that portion of my education - even for management roles. They were more interested in practical experience at a management level. And it's true - an academic qualification does not a manager make, particularly when there's absolutely no practical component and the teachers are career academics rather than real-world business people. Only now that I have recently started my own business am I finding *some* of the marketing principles I learned in my MBA of minor help. MBA programs are great money-spinners for the universities because they essentially re-hash the undergrad BBus. For me an MBA was a waste of time and money.

            Commenter
            $40,000 poorer
            Date and time
            March 05, 2013, 1:00PM
            • Its pointless doing an MBA in Australia unless you want to become a management consultant. As most of the responses show, there is little value because the corporate values here have an emphasis on practical applicable experience. However, if you go to a top MBA school around the globe and want to work your way up in an international company, be a high flyer in the finance industry, be a management consultant or a career change into one of these then its worth your while. So anyone doing it here in Australia for a promotion in their business, its really pointless and a waste of money because that's not how it works here. If your not smart enough to work out that it will cost you more than you will earn, then your probably not smart enough to be a manager anyway!

              Commenter
              Nathasn
              Location
              Sydney
              Date and time
              March 07, 2013, 9:28AM
          • I've just finished the MBA at Deakin; 12 subjects including the dreaded Business Statistics (yes, it was as hard as it sounds). If you can’t commit to 10 hours a week (for each subject) don’t bother enrolling. At Deakin they have no hesitation failing you if you don’t know the subject matter (I had to repeat two subjects because I didn’t do the work !!). As a mature age student with a full time job is was hard work (make no mistake), but, I can now walk into any senior corporate forum and know that I know what they know !!! And most importantly, I now know what I don’t know and where I need to go to find the people who do know !!! So yes, I thinks it’s worth it and yes, Donald Rumsfeld was onto something !!

            Commenter
            The Silent Majority
            Location
            Surrey Hills
            Date and time
            March 05, 2013, 1:11PM

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