Is the MBA bubble about to burst?

He was always an ambitious student. He graduated from an engineering college with distinction and had always dreamt of an MBA degree from an elite institute. In this world of growing competition, he somehow managed to get a seat in a decent institute. After two years, he along with hundreds and thousands of MBA aspirants graduated from the business institute trying to find a good job. But did the MBA degree help him get that good job? Did it boost his career? Is MBA the last resort to career growth?

For many years, MBA has been the most sought after educational degree. With dreams of fat paycheck, glamour, luxury and social status; it has been considered as an ideal career booster. The post liberalization era had come up with lots of opportunities for the MBA candidates and since then it has become a trend to have a post-graduation degree in business studies.  Gradually, there was horde of hard-working and ambitious scholars who started plunging headlong into MBA programs, which has now become a bubble that can burst anytime. The growing demand of MBA resulted into a slew of institutes offering the courses and changed the scenario of MBA marketplace.

The prevalence of MBA has led to following changes –

  • Rising cost of tuition fee and significant rise in inflation.

  • Upsurge in the cost of financial education loans.

  • Average starting salaries post MBA.

  • Inconsistent pattern in hiring of MBA graduates.

  • Decrease in the employer sponsorship of MBA education.

Though it can be argued that getting an MBA degree imbibes additional skills in a candidate but does it enhance leadership skills?

Preconceived notions about MBA suggest that corporate leaders with MBA are better than the ones without it. However, this may not be completely true in the current corporate scenario. According to a study by Professor Miller, CEOs with MBA show self-serving behavior.

The study depicts that there are more than 30% CEOs with MBA. The figure was 12% in 70’s and 20% in 80’s. Despite their poorer performance, their compensation rise was 15% higher than that of the non-MBA CEOs. These CEOs were more self-serving as they always strived for their personal growth in climbing the corporate ladder. In the process, they become less inclined towards organizational growth, which lead to a major leadership loophole in their way of working.

With emergence of multitude of candidates with MBA degrees, firms no longer perceive MBA as a differentiating factor, unless the candidate is from a world class business school. This trend of hiring from elite schools is also shifting with more organisations reconsidering unconventional means of recruitment outside of prestigious universities, read full article here. Not only numerous schools are offering MBA degrees, there are different ways to obtain it too. There are an enormous number of online courses available and online MBA is enhancing in popularity. The people who don’t have time for full-time MBA programs, due to family responsibility or work commitments are opting for online courses to acquire the degree. In short, MBA candidates are not rare anymore, and an MBA degree does not guarantee employment.

With so many specializations and gamut of ways by which a person can attain the MBA degree, the following factors hugely affect the usefulness of the degree –

  • The rank of the school – The kind of job and salary structure one gets after MBA chiefly depends on the rank of the business school.

  • The specialization and its relevance to the job – There are many specializations offered in the institutes. It becomes difficult to select according to relevance to the kind of job one wants to do. Moreover, in the current scenario, a person with a particular specialization doesn’t necessarily get a job in alignment with it.

  • Perspective of hiring manager – Even if a person has the degree that fits like a hand in glove with the job, the employment depends on the decision of hiring manager.

  • The economic scenario of the market – The availability of jobs in market and recession play a major role in recruitment after MBA.

  • Need of street smartness in the corporate world – These days the corporate world demands street smartness in a candidate more than just a degree. A candidate with MBA degree may or may not be endowed with the soft skills and guile sometimes needed to execute a job.

After investing two years and humongous amount of money, it gets pensive to be in the zone of uncertainties regarding job.

Also, most of the top business leaders do not have an MBA degree. Mark Zuckerberg, Steve Jobs, Mukesh Ambani and even some of the new entrepreneurs are not MBA graduates; and as mentioned earlier, an MBA degree doesn’t necessarily create leaders.

MBA candidates with right skills and forte in business management are always going to thrive through the corporate ladder. But the excess of candidates getting into MBA colleges is a phenomenon that is converting into a bandwagon and is subject of apprehension that can burst the MBA bubble.