Perhaps the biggest news on the downside was the squeeze in job placements for MBA graduates. On the upside, though, the financial crisis made graduate management education more attractive to students. Indeed, the financial crisis provides so many points for discussion that business schools have essentially become living laboratories.
The Simon Graduate School of Business at the University of Rochester points both to major accomplishments and to concerns. Dean Mark Zupan says one 2008 highlight was the continued success of the school’s Early Leaders Initiative, which recruits students with up to three years of work experience to pursue an MBA or MS. Notably, Zupan reports, a full half of those recruited have been women. Zupan also notes that Simon continued in 2008 to be highly competitive among its peers in recruiting international students, now 50 percent of the student body.
The school announced new MBA scholarships targeted to individuals who have been adversely affected by the economic downturn. Additionally, Zupan reports that placement rates and salary offers were essentially flat compared with last year. Moreover, he says, both students and school staff had to work harder to keep those numbers at 2007 levels.
After focus groups at Rochester revealed that second-year students were nervous about their job prospects, the school stepped in with extra coaching and encouragement. Downward trends, Zupan tells students, are also good learning opportunities.
Rochester has also benefitted from a trend that many schools noted this year—a decided uptick in applications. Coming off a record year in 2007, when the Simon School saw 30 percent growth, the school this year is “running substantially ahead of that pace,” Zupan says. As it considers enrolling an extra MBA cohort, the school is recruiting heavily with the message that now is a good time to invest in human capital.
The economic crisis has been felt strongly in statehouses across the country—and thus by schools that rely on state support. The University of Buffalo, for example, is asking students in its School of Management to pony up an extra US$184 fee to help offset a US$1 million budget reduction. To save money, Arizona State University has announced a plan to fold its School of Global Management and Leadership into the W.P. Carey School of Business.
At Florida State University, the College of Business has taken a 4 percent hit in the money it gets from the state. One immediate effect was that the school, one of the largest business schools in the country, wasn’t able to fill seven faculty positions. Dean Caryn L. Beck-Dudley expects further cuts in the months ahead. She’s keeping an eye on faculty/student ratios and, depending on the severity of future cuts, may have to curb enrollment in order to sustain quality.
While enrollment has held steady, Beck-Dudley reports that applications for the school’s part-time MBA program are down “pretty significantly” from last year. Waiting for numbers about applications for full-time programs, Beck-Dudley sounds cautiously optimistic in the face of a jump in inquiries.
“I look at these types of budget situations as opportunities to fine-tune what you do,” she says. The school will now look for ways to improve the things that it does well.
Speaking to another trend that gained traction in 2008, Beck-Dudley takes note of how fast students are adapting to the next generation of technology. From Facebook to Twitter, she says, “the country is totally changed in terms of young people and the way they gather information.”
Beck-Dudley believes that technology has the potential to transform business schools. “We’re no longer the holders of the core knowledge,” she says, “which is what the core curriculum assumes we are.” Technology’s effect, she speculates, may not affect what is taught as much as it will change how teaching takes place. To help anticipate some transformations that technology may engender, Beck-Dudley has asked her colleagues to read and discuss Wikinomics: How Mass Collaboration Changes Everything, by Don Tapscott and Anthony D. Williams.
Asked how she responds to criticism that business schools may have helped create the economic crisis, Beck-Dudley is frank. Adam Smith, she says, “believed in making profits, but he also thought you needed to do it by being a good person and thinking about what your consequences were.” She acknowledges that when we look at the sources of today’s crisis, one of the lessons may be that some business students “didn’t pick up the virtue side of business.” She predicts “a rethinking about that” as the crisis shakes out.
Similar upside/downside trends pertain abroad. In Spain, for example, the IESE Business School at the University of Navarra continues to see a strong stream of MBA applications. At the same time, Dean Jordi Canals says, “I think we are going to see a crunch time for career services and placement.” Assessing IESE’s experience with its executive MBA, Canals says that while corporate underwriting has slowed appreciably, students are more willing to pay for such programs out of pocket to hone their competitive edge in a soft job market.
Meanwhile, Canals says, demand for executive programs is strong in sectors that are doing well despite the downturn, such as pharma, biotechnology, and energy. “They keep investing in people,” Canals says.
One big difference that Canals sees in European business schools compared with those in the United States is in the level and commitment to globalization. “In general I think European schools are much more global,” he says. “Their curricula are also much more international.” The sheer size of the US market for students, Canals suggests, undercuts the motivation of US schools to move more aggressively to become international.
Canals rejects any suggestion that business schools have to shoulder some of the blame for the economic crisis. Still, he says, “we have not done enough to help students take a more comprehensive view of management of companies to think more about long-term value vs. short term.” Canals suggests that business schools need to reflect on what they can do to improve society’s appreciation for business and how they can educate students to help prevent crises.
“In any crisis, I think that the only asset whose value does not get diminished is the value of investing in human capital,” Canals says. Rather than settle for educating managers with recipes for short-term success, he believes business schools should rightfully assert their critical role in educating people who can contribute to society over the long term.
Looking ahead to 2009, Caryn L. Beck-Dudley says “this is an exciting time for business schools, but it will be challenging.” Mark Zupan agrees. Bullish overall, Zupan anticipates success in recruiting both faculty and students. However, he also foresees challenges in placing students in jobs and in managing the school’s endowment.
Zupan says that in the current environment, his school needs to help students learn how to function in adversity. “We’ll go through a period, too, questioning the appropriate role of markets in society,” he says. To his mind, that argues for business schools to articulate a case for market effectiveness, “to combat the doubt that will seep through the system.”
“This is a time when you have to rethink and consolidate and strengthen your positioning in the market in terms of who you are and what you offer,” Canals says, and “what’s unique about your value proposition.” It’s also an opportunity, he suggests, to take a closer look at dropping programs that have not been adding sufficient value.
“This is not a time when you can stand still and hide until the crisis fades away,” Canals argues. “Business schools have to be at the forefront of change. We have to be proactive in helping companies get out of the crisis as soon as possible. We have to get involved.” By pitching in to find solutions and not sitting on the sidelines, Canals believes, business schools can serve as productive role models “for the business community and society at large.”
Perhaps the silver lining this year has been that more students are thinking about going to business school. Between September 2007 and September 2008, GMAT testing volume rose nearly 12 percent. The downside for students is that competition may be much fiercer. But since we live in competitive times, maybe that’s not such a bad thing.
