What in the World Has Happened to the MBA?

June 7, 2017
The MBA degree has largely been cheapened as a credential, as it’s a poor substitute for real-life career experience.

I have nothing against outsourcing if it makes financial sense. For instance, if a company can save money having an outside service clean their restrooms, I’m all for it. That is, if that outside service does an acceptable job, hopefully at least as good as was done previously by the in-house employees. The fact that I’m willing to reduce janitorial staff so casually is that company funds need to be focused on those things that most influence financials and the correlation between who cleans the bathrooms and business results is a loose one at best.

The role of HR at most companies involves the hiring, support of and advocating for employees. In my opinion this should be viewed as an important company function. Why? Because employee morale is essential to the high productivity that is central to positive business performance. If employees aren’t taken care of, their productivity will likely be compromised, and it’s not related to the wage scale. HR has historically played a key factor in ensuring employee satisfaction.

In essence, though, many companies treat the HR resource similar to how they have treated their janitorial staff. How, you might ask? They’ve outsourced areas of employee assistance. You might say that this should be “ok” and I’d agree, if the level of employee support remained the same. However, it seldom does. Anyone who has had an issue with a company-sponsored healthcare plan—where you now deal directly with the health insurance provider without the back-up of an HR resource—knows that this is true.

I don’t necessarily lay all of the blame on HR. Rather, it is a corporation’s culture that drives changes like this. “Penny-wise and pound-foolish” is a description that I believe applies here. I’ve even heard of corporations where CEOs believe that HR should be treated as a “profit center,” i.e., year-to-year they must lower their support cost-per-employee. This seems to miss the point that employee satisfaction is an important issue in on-going business viability.

You might ask why this relates to how the use of MBAs has gone awry in corporate America. I have nothing against MBAs per se. Additional knowledge is usually good. Rather, it’s the way MBAs have been positioned in HR hiring practices as they’ve tried to adapt to their “profit center” construct that bothers me. A lot. Let me explain.

When I was a middle manager in the mid-1990s it was not unusual for me to personally recruit key employees, often in a face-to-face on a campus setting. I’d do this by reviewing a multitude of resumes and interviewing those candidates who seemed to have backgrounds that best aligned with the needs of the job I was trying to fill. In hiring people I also kept in mind the goal of recruiting future company leaders. And through this approach I was successful in hiring capable, high-potential people. In fact, once hired, I had difficulty retaining recruits within my department as my peers came to understand that if I hired someone they were probably top-notch. I actually had a streak where seven of nine of my new employees were promoted out of my department by other managers within two years of their having been hired!

Much of the control managers had over whom they hired for key positions was taken away at my employer in the early 2000s. Why? Because the company no longer felt it an effective use of a manager’s time to have significant involvement in hiring key employees. Hmmm. Instead, to initiate filling an open position hiring managers now just had to submit a standard one-page form describing the requirements of the job they wanted to fill and presto, the next involvement you had would be when HR would provide you with three to five resumes. And after conducting in-office interviews you’d select your new employee. This sounds O.K., doesn’t it? Maybe, but how many times do things that sound good in theory actually get implemented satisfactorily?

From my perspective, there were two main drawbacks to this approach. First, as background to this new approach you need to remember that our company was downsizing (not increasing) its HR staff so that department wouldn’t have as many people to support hiring managers. Second, in a cost-cutting move, HR positions were now seen as entry-level positions. This meant that more and more HR personnel had limited experience from which to draw upon—and that sometimes HR employees were, as you’d expect, fresh out of school.

What did this lead to? Excuse me, but I can’t define on a one-page form the background and characteristics needed to fill key positions, particularly when I’m being asked to evaluate new hires as future leaders. To do this I need to have at least some face- and/or-phone-time with candidates before actually bringing them in for an interview. Why did it come to this? Because with reduced resources and lack of experienced personnel, HR no longer had the wherewithal to recognize or understand intangibles related to specific positions. On top of this they were now being challenged to bring in candidates through reduced time, effort and cost.

In other words, we now had a push-button approach to hiring rather than the previously more comprehensive approach. And the MBA became a main criterion for HR’s decision on whose application paperwork to forward to a hiring manager. In fact, it is not unusual for companies to have requirements that a certain percentage of people hired for professional positions have MBAs. At this time in my company that percentage was 35%. It is also not unusual for companies to require MBAs for anyone being considered for a managerial position, i.e., key employees.

This is where the decline of MBAs started. They went from being used by individuals to try to increase their business savvy to being used by HR to represent a simple differentiator in evaluating candidates. What happened as a result of this? The typical candidate I was presented for key positions had an engineering degree (I liked to put IEs in purchasing positions), two to three years of experience and an MBA. Sorry, but that’s not the type of profile I typically hire for functional management. Further, this approach changed the whole reason for someone getting an MBA. In my experience the primary driver of many MBA students today is not the knowledge and background they provide. It is just to check off another “credential box” needed to succeed in applying for a job.

I once actually had a discussion with my division’s director of HR where I asked if I could require a portion of the candidates provided to me to not have MBAs. She was shocked by this request and asked, “Why in the world do you want this?” My reply was that I am more interested in a track record of accomplishments than I am credentials for people I’m putting in critical positions, and the profile of the typical MBA-holder you’re sending me doesn’t have this. Also, I suspected there are many qualified individuals falling through the cracks because of the emphasis placed on having an MBA. As a result of this, from that point forward, a portion of the candidates presented to me for key positions required at least several years of industrial experience along with significant accomplishments, regardless of whether they had an MBA or not. I started getting candidates who didn’t own an MBA sheepskin and ended up hiring more than a few of them. Go figure.

I had an uncle who graduated from business school in the 1950s and got an MBA in the early 1960s. Back then it was a relatively new (and rare) credential. He told me that it helped him be a better manager and this must have been true, because he ended up as a president in an S&P 500 corporation.

The way that corporations (and HR departments) use MBAs in the hiring process has led to a whole different MBA framework from that my uncle experienced in the sixties. One of my readers referred to getting MBAs as a game applicants must play and I think he hit it right on the head for most people seeking them today. An untold number of colleges and universities now participate in this game, and as a result you can get the MBA credential from just about anywhere. My uncle would be either turning over in his grave or laughing hysterically if he knew that you can get an MBA today through (mostly) online interactions with professors and other students, and with instructors who had less experience in business/industry than he did as a student. MBAs represent a cash cow paper mill for many institutions that really have no business being in the field. As a result the MBA has become more of a business certificate that can be used in lieu of experience and intuition.

Many ambitious young professionals understand that in the new corporate game they won’t be considered for positions or advancement without having an MBA and as a result, they punch the MBA-ticket as early as possible as they can in their careers. This is against the original intent of MBA training where a threshold of meaningful business experience was required just to be accepted into a program. In other words, it undermines the value of the degree.

My uncle worked in business for almost a decade before he started his MBA studies. He told me that the most important thing he got out of his MBA program was not the “book learning” (which he admitted was beneficial) but was rather being exposed to knowledge and perspectives that he could see—in retrospect—could have helped him manage situations he had been faced with in the past. I’m sorry, but someone who has only worked in industry for a couple of years doesn’t have the professional experiences to benefit in this way and their MBA is nowhere worth what it was to my uncle.

Talking about business certificates, let’s get back to HR. Remember, a certificate is seen by many as a credential—professional acknowledgement—without having to spend the time in a work environment piling up experience and background. Also, recall that a higher percentage of HR positions are now seen as entry-level, implying little or no experience. Have you noticed the last couple of years that more and more ads on TV tout both the HR profession and the certification programs that are now available in it? Hmmm. No need to wonder why, is there? In my opinion, someone with little or no experience is not likely going to be successful at doing meaningful HR work, regardless of certification.

In summary, knowledge coming out of a top-notch MBA program is very valuable when tied to real-life career experience. Unfortunately, that’s not what having an MBA implies today, and as a result the degree has been cheapened as a credential, with the exception of those from a select group of programs.

My next article will focus on the many ways in which suppliers can view their customers and which OEM supplier management approaches will lead to better results.

About the Author

Paul Ericksen | Executive Level Consultant; IndustryWeek Supply Chain Advisor

Paul D. Ericksen has 40 years of experience in industry, primarily in supply management at two large original equipment manufacturers. At the second he was chief procurement officer. He then went on to head up a large multi-year supply chain flexibility initiative funded by the U.S. Department of Defense. He presently is an executive level consultant in both manufacturing and supply chain, counting Fortune 100 companies among his clientele. His articles on supply management issues have been published in Industrial Engineering, APICS, Purchasing Today, Target and other periodicals. 

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