The Economist caused quite a stir last year when it pronounced “MBAs are no longer prized by employers.” But that article wasn’t alone. Fortune has also reported that employers’ demand for MBAs just isn’t what it was. More employers are now more eager for candidates with a specialized business degree.
I recently had the opportunity to talk about these trends – and their impact on prospective graduate students – with Suzanne Sanchez, a recruiter for the executive master’s degree programs at Thunderbird School of Global Management, my alma mater. Here’s an edited version of my conversation with Suzanne.
[clickToTweet tweet=”#employers are less interested in a #degree – more interested in a #skillset.” quote=”Employers are less interested in a particular degree and more interested in a particular skillset.”]
Dana: The Economist, Fortune, and others have reported waning demand for MBAs. What’s behind that trend?
Suzanne: According to data reported by The Economist, the number of MBAs awarded by business schools in the U.S. has increased sevenfold from 1970. That has left the market saturated, leading to an environment in which 20 percent of business-school graduates report that their MBA did not increase their earning power, reports the Graduate Management Admission Council. It is in this environment that specialized master’s degrees, ones that offer more particularly relevant preparation, have become more popular.
Dana: Are employers looking for a particular degree or a particular skillset?
Suzanne: It used to be that an MBA was a proxy for the skills needed to be an effective manager. Using the MBA as a proxy allowed employers to filter résumés by who had an MBA and who didn’t; they felt like they knew what they would be getting if they hired an MBA, just by virtue of the candidate having that degree. But employers “no longer see an MBA as a differentiating factor,” as headhunter Debbie Goodman-Bhyat explained to The Economist.
Now, employers are less interested in a particular degree and more interested in a particular skillset. The skills that makes a person an effective manager are still necessary but no longer sufficient; the most effective employees have skills in a particular area. Which is exactly what specialized master’s programs are designed to develop – both the broad management skills as well as the specific skills that reflect a person’s ability to lead a team of data scientists or negotiate deals in a foreign country, for example.
Dana: Thunderbird offers degrees called Master of Global Management and Master of Arts in Global Affairs & Management. Why is the global element so important now?
Suzanne: Emerging markets have contributed more than 80 percent of global growth since 2008, according to the International Monetary Fund. For many products, developed markets are saturated and companies must look to emerging markets for growth. There is no organization that has not been affected by globalization. Even small mom-and-pop businesses often source from other countries, so global skillsets are essential.
It used to be that “globalization” meant sending executives overseas to live and work as expats. That presented its own set of challenges, but those challenges have changed now that technology has enabled seamless cross-border communication. As a result, teams are more global than ever, and being able to work with teammates – and lead teams – across cultures is increasingly essential for success.
Every society has its own “cultural themes” that impact how business gets done. Navigating them goes far beyond cultural etiquette. A lack of cross-cultural competence can (and often does) lead to financial loss and damage to individuals’ and organizations’ reputations. Ken Bouyer, Director of Inclusiveness Recruiting at Ernst & Young put it well when he said, “In today’s changing landscape, a global mindset has become a prerequisite for helping to build deep client relationships and to navigate economic and regulatory differences around the globe.”
[clickToTweet tweet=”In a truly global-focused master’s program, the #global perspective infuses everything.” quote=”In a truly global-focused master’s program, the global perspective infuses everything.”]
Dana: Is the message that an MBA is no longer valuable?
Suzanne: No, that’s not the message. The general business curriculum that an MBA offers is the right choice for some people. For example, people who aren’t looking to do business globally, or work in a global organization, or people who generally don’t have a global mindset are probably better off with an MBA or another type of specialized master’s rather than a Master of Global Management or Master of Arts in Global Affairs & Management.
For people who are looking to do business globally, or work in a global organization, then a master’s program with a specialized focus on global business can offer better preparation than a broader program like an MBA. In a truly global-focused master’s program, the global perspective infuses everything. It’s not just an add-on at the end of the regular program. It’s not just a few extra courses. It’s the lens through which courses are taught. It’s in the faculty’s global business experience.
When the student body is as diverse as the global business world that graduates will enter into, students get to learn firsthand rather than from a textbook why – and how – business is done differently in different regions of the world. Students also get to live the experience of collaborating across cultures, with people who have diverse ways of thinking.
The best training for a global work environment is a graduate program where you’re in a classroom with people from around the world. Additionally, learning from faculty who themselves have led teams across cultures adds a layer of global subject matter expertise. That kind of specialized global education is not right for everyone, though demand for it is rising in a world where all business, really, is global business.