Does It Still Make Cents To Hire MBA’s?

By Mark Swartz
Canadian Workplace Specialist
Back in the 80’s and 90’s, employers large and small were fighting tooth over claw to hire MBA grads. The degree had a great deal of prestige. It was thought that if you hired an MBA, they’d help turn your business around and do magical things your other employees couldn’t.
Fast forward to the present. An MBA doesn’t glitter quite so bright as it did before the economy’s slowdown of 2007 (and the meltdown of the early 2000’s). Where were the financial geniuses, armed with their MBA’s and supposed hyper-smarts, when the walls came tumbling down?
They were there alright, but it turned out they were more human than wizard. In this light, what’s today’s value proposition that justifies spending extra to hire MBA’s, especially in smaller organizations like yours?

General Benefits of Hiring MBA’s
They may not be magicians, but MBA holders do share the following qualities. They…
  • Have shown that they have the determination and stamina to earn this advanced degree
  • Possess the brain power to handle financials along with other areas of specialization within the MBA program, such as marketing, production, international business, etc.
  • Tend to be ambitious and want to prove themselves so they can be promoted and rewarded for their efforts
  • Are trained to think strategically, which means they keep the big picture in mind while concentrating on day to day tasks
  • Can do budgeting and forecasting with considerable precision
  • Like to think of new ways to do things that save money, time and effort
  • Know how to express (and calculate) the benefits of going “green” and being “socially responsible” in terms of dollars and cents

General Drawbacks of Hiring MBA’s
You may have heard complaints from your colleagues about MBA’s. They can cost more than they’re worth. They might be arrogant. In some cases this is no doubt true – not always though. Here are some common arguments against hiring an MBA in a smaller organization:
  • The person will become  over-qualified fairly quickly because there’s not enough room for them to move up the ranks fast here
  • They won’t want to report to someone who is less educated, and possibly much older
  • Our other staff may be resentful and feel threatened (if they lack higher education)
  • We don’t need a strategic thinker; we’d rather have someone with a decade or two of real experience directly in our industry under their belt
  • What if the MBA keeps coming up with new ideas that upset the way we’re used to doing  things here?
  • The environment and social responsibility aren’t all that important to us; besides, we already have staff who look after our “green” programs
Additional Arguments For And Against
The debate about an MBA’s value to your firm goes beyond productivity or performance. Having one or more MBA’s on staff can signal your commitment to professionalize your operation. This could improve the perception of your company in the eyes of customers, suppliers and competitors. How much is that worth to you?
On the flipside, it could also telegraph that you’re about to raise prices or leave behind smaller, less sophisticated customers and suppliers – even if that isn’t the case.
Back to the positive: hiring MBA’s could shake up your company culture. If you worry that your firm has become complacent, or that it’s accumulated too much deadwood over the years, bringing in an MBA could be just the right antidote. Their “can do” attitude and ability to navigate company politics may set an example others will rise to.
But if your firm is doing well and the staff has gelled comfortably already, tossing an MBA into this mix might unsettle things. Staff members who are performing adequately might begin to fear that you’re planning to replace them with younger, more highly educated employees. Or they could start trying to overcompensate by taking unnecessary risks or working beyond their built-in capacities. Mistakes and burnout could result.

A Cost/Benefit Assessment
In the past few decades a growing number of universities have been pumping out freshly minted MBA grads. So quite a few of the newer MBA holders – in particular those without much work experience, who’ve come out of lesser known business schools – can be picked up at a slight premium over what you might pay for someone who has an undergraduate degree alone.
The story changes when it comes to graduates of the top MBA schools in Canada. Tuition fees have exploded in the last 10 years. It can now cost upwards of $60,000+ to earn an MBA from schools like UofT’s Rotman, York U’s Schulich, Kingston’s Queens, or UCalgary’s Haskayne business school.
Graduates of these leading programs command the highest salaries. They have to earn back their outlay, after all. Therefore unless you need the best of the best, you may want to look at MBA holders from other Canadian schools.
If you do decide to hire an MBA, be prepared to keep challenging them. You’re paying them a higher salary so that you can throw the difficult tasks their way. And if they manage to perform according to expectation, your investment could pay off handsomely.