B-Schools: Passed the Test; Following a Slump That Led to an Industrywide Identity Crisis, M.B.A. Programs Are Back on the Corporate Fast Track
Pepper, Tara, Newsweek
Byline: Tara Pepper
One little-known after-shock of the corporate scandals that began with Enron was an M.B.A. backlash. At a time when companies were scrutinizing every penny they spent, they also questioned the value of advanced business degrees, once seen as a ticket to the fast track in the business world. The scandals were the "tipping point," says Joel Podolny, dean of the Yale School of Management. Afterward, as companies began to hire fewer M.B.A.s at lower pay scales, applications to business schools worldwide fell dramatically, by 20 percent between 2002 and 2005. The result was an industrywide identity crisis, which had insiders questioning every aspect of their schools and reaching a brutal verdict: they had flunked Business 101, failing to keep up with change or to respond to consumer demands.
Now there's a sense that the worst is past. After a bout of internal reform that saw, for example, the Yale School of Management unveil an entirely new curriculum last year, the numbers are back up. In the United States, B-school applications and enrollments are rising again, according to an industry survey released this month. Worldwide, corporate demand for new M.B.A.s has risen healthily this year (by 24 percent) for the first time since 2002. So have the salaries paid to newly hired M.B.A.s, which have increased by an average 7.5 percent, according to a survey by TopMBA.com of 445 companies, also released this month. "It's been a very strong recovery, with particularly high demand in consulting and financial services," says Nunzio Quacquarelli, editor of TopMBA.com.
In general, the reform movement has been about bringing the B-school course of study out of the academic weeds and back into the real world. The standard M.B.A. curriculum emerged in the wake of the Ford Foundation's 1959 report "Higher Education for Business," which laid the outlines for a research-based business education. Since most managers spent their careers in one field, whether finance or marketing, teaching focused on specific skills. Business professors, wanting their discipline to be taken as serious "science" by academic peers, focused on narrow, quantitative courses. The result was ever-more specialized M.B.A.s entering a market that increasingly asked them for flexibility, innovation and an ability to work across cultures and disciplines. …