Why the value of the MBA is in decline

Posted February 2nd, 2012 in Articles, Blogs by admin

Few business schools—particularly MBA programs or executive training programs—adequately address the importance of developing leaders.

For the most part these programs are theory-oriented in nature, and use the traditional tools of conceptual learning—case studies, lectures, films and discussions—relying on the contrast between what managers do and what leaders do. And it appears that the MBA degree and salaries of MBA students are not longer what they used to be.

The problem with many business school leadership programs is that they teach ideas, not real life behaviors, and business school professors are chosen by virtue of their ability to publish detailed research, not having had leadership experience themselves. Understanding something intellectually often has little to do with being able to do it. Adult learners need experiences and coaching to turn concepts into leadership behaviors.

New York Times article entitled, Is It Time To Retrain B-Schools? has had a massive response. Kelly Holland, the author of the article says among other things, “Critics of business education have many complaints. Some say the schools have become too scientific, too detached from real-world issues. Others say students are taught to come up with hasty solutions to complicated problems. Another group contends that schools give students a limited and distorted view of their role – that they graduate with a focus on maximizing shareholder value and only a limited understanding of ethical and social considerations essential to business leadership .Such shortcomings may have left business school graduates inadequately prepared to make the decisions that, taken together, might have helped mitigate the financial crisis, critics say.”

In an article in the London Times, entitled Harvard’s Masters of the Apocalypse, Philip Broughton, a Harvard Business School graduate and author of What They Teach You At Harvard,  says, “ The Masters of Business Administration, that swollen class of jargon-spewing, value-destroying financiers and consultants have done more than any other group of people to create the economic misery we find ourselves in…You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lak-shmi Mittal – and there’s not an MBA between them. Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business. From the Royal Bank of Scotland to Merrill Lynch, from HBOS to Lehman Brothers, the Masters of Disaster have their fingerprints on every recent financial fiasco.”

Henry Mintzberg, a professor of management studies at McGill University in Montreal, also argues that because students spend so much time developing quick responses to packaged versions of business problems, they do not learn enough about real-world experiences. Rakesh Khurana, a professor at Harvard Business School and author of “From Higher Aims to Hired Hands,” a historical analysis of business education, says that business schools never really taught their students that, like doctors and lawyers, they were part of a profession, with professional standards.  And in the 1970s, he said, the idea took hold that a company’s stock price was the primary barometer of a leader’s success. This, among other things, changed the business schools’ concept of proper management techniques. Instead of being viewed as long-term economic stewards, he says that managers came to be seen as mainly as the agents of the owners – the shareholders – and responsible for maximizing shareholder wealth. He goes on to say that “we can’t rely on the usual structure of MBA education, which divides the management world into the discrete business functions of marketing, finance, accounting, and so on.”

Warren Bennis and James O’Toole have written how business schools have been on the wrong track for years, claiming among other things that “MBA programs face intense criticism for failing to impart useful skills, failing to prepare leaders, failing to instill norms of ethical behavior.” Rakesh Khurana and Nitin Nohria wrote that schools of management will fail to produce consistently principled, decent leaders until management itself becomes a profession, like medicine or the law which will include a code of conduct.

For universities, business schools have been a means to an end—money. Business schools are less expensive to operate than graduate schools with elaborate labs and research facilities, and alumni tend to be generous with donations. Business education is big business, too. Some 146,000 graduate degrees in business were awarded in the U.S. in 2005-06; roughly one-fourth of the 594,000 graduate degrees awarded that school year, according to the U.S. Education Department. Still, there have been signs that all is not well in business education. A study of cheating among graduate students by Linda Trevino, Ken Butterfield and Donald McCabe, published in 2006 in the journal Academy of Management Learning & Education, found that 56 percent of all M.B.A. students cheated regularly—more than in any other discipline. The authors attributed that to “perceived peer behavior.” In other words, students believed everyone else was doing it. No wonder the issue of ethics in corporate America has been seen as important.

McCabe, writing in the Harvard Business Review, contends the prevalence of cheating among MBA students is because of the “get-it-done, dam-the-torpedoes, succeed-at-all costs mentality that many business students bring to he game.” McCabe describes an MBA student mentality of getting the highest GPA possible so that they can get the highest paid jobs in the pharmaceutical, high tech and finance industries.

Michael Jacobs, writing in the Wall Street Journal, argues that there have been three profound failures of sound business practices at the root of the economic crisis that have not been addressed by business schools. The first is the practice of financial incentives as a motivation for leadership, which has morphed into greed. The second is the failure of instituting a financial regulatory system and the absence of any meaningful corporate board responsibility and oversight of CEOs. The third breakdown has been the focus on short-term financial gain for the shareholder at any cost.

Some employers are also questioning the value of an M.B.A. degree. A research project that two Harvard professors released in 2008 found that employers valued graduates’ ability to think through complex business problems, but that something was still lacking. “There is a need to broaden from the analytical focus of M.B.A. programs for more emphasis on skills and a sense of purpose and identity,” said David A. Garvin, a professor of business administration and one of the project’s authors.

Indeed, students themselves may welcome an emphasis on character skills and personal development. In surveys that the Aspen Institute regularly conducts, M.B.A. candidates say they actually become less confident during their time in business school that they will be able to resolve ethical quandaries in the workplace.

The value of the MBA degree may also be in decline. Many recruitment experts now see the MBA as having replaced the bachelor’s degree as a threshold for management and leadership positions. John Bryne, in an article in BNET, reports data showing the salaries for MBA graduates from 2001 to 2010 have actually declined, in comparison to the high costs of getting a the degree in the top schools.

In fairness, a number of business schools recognize these problems, and are trying to revise their model and focus but most have yet to realize they have credibility problem. Business schools such as the Rotman School of Business, Carnegie-Mellon, Wharton, Yale, Stanford and others are overhauling the MBA program, with a focus on better problem-solving, decision-making, ethics and social responsibility, along with a greater focus on experiential opportunities.

Angel Cabrera, President of the Thunderbird School of Global Management in Arizona, says that business schools are slowly beginning to move towards accepting the broader responsibility of management, citing the example of more than 200 business schools around the world that have endorsed the Principles of Responsible Management Education, a movement sponsored by the United Nations.

So what should business schools focus on? I would argue that business school or executive training programs should focus more on developing individuals’ personal growth with an emphasis on values, emotional intelligence and ethical behavior in business. The challenge for business schools is how to develop leaders not managers, and who believe that business has bottom lines beyond shareholder value.

Do you work for love of the job or the money?

Posted February 2nd, 2012 in Articles, Blogs by admin

The question of what motivates employees more-financial compensation or things that are more intrinsic-is the subject of ongoing debate and new research. New research that shows no link between rising GDP and life satisfaction/happiness complicates the issue even further.

According to a 2010 Monster.com survey, the top-rated item on would-be employees wish list (87%) was an employer “that truly cares about the well-being of its employees.” A challenging and fulfilling job was rated second, job security third, and an attractive benefits package was fourth. Financial compensation was rated much lower at 5th (66%).

This search is consistent with another research study conducted the employee benefits company Unum, in collaboration with Harvard Business Review analytic services. The study found an ethical, transparent corporate culture, and caring about the well-being of employees were more likely to be viewed in attracting and treating employees as was providing a high base salary.

According to the research of psychologists Tim Kasser and Richard Ryan, published in the Journal of Personality and Social Psychology, “the more people are driven by a desire to be wealthy, the poorer their psychological health on a range of measures.”

G. Douglas Jenkins, at Arizona State University, writing on the issue of financial incentives, concludes when it comes to the issue of performance, incentives don’t help, a finding that psychologist Janet Spence, in her research, reiterated. Alfie Cohen, author of Punished By Rewards, a long-term critic of extrinsic rewards as a motivator for performance, argues “no controlled scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system.” Cohen argues that employers and executives need to think about what employees need to be happy and fulfilled, rather than what rewards can be offered to get them to do what they are told.

A striking conclusion from other new research about the happiness-income paradox is that over the long-term-10 yeas or more-happiness does not increased as a country’s income rises. According to this research, conducted by economist Richard Easterlin and his colleagues at the University of Southern California, it contradicts the conventional wisdom research that claims a rise in happiness levels occurs with improvements in GDP. Easterlin found measures of life satisfaction and happiness increased with improvements in democratization, in contrast to no connection between long term increases in life satisfaction/happiness with GDP improvements.

Recent evidence points to increasingly income inequality in North America, notably in the U.S., and the prevalence of media focus on the lives of wealthy celebrities, athletes and business people as though there was  a clear correlation between the increased wealth of individuals and their absolute state of well-being and happiness.

So too, corporations continue the practice of attracting and retaining the best talent by focusing on financial compensation and incentives. Both perspectives are increasingly myopic and ignore the increasing mass of search that underscores what really motivates employees and creates conditions for improved performance.

Why networking is an essential professional skill

Posted February 2nd, 2012 in Articles, Blogs by admin

Networking is increasingly being promoted as both a business and personal social skill. There’s no doubt that both the social media form of networking and personal face-to-face networking has become a fundamental part of the modern landscape.

Brian Uzzi and Shannon Dunlap, in their article entitled “How To Build Your Network,” in the Harvard Business Review, contend “Networks determine which ideas become breakthroughs, which new  drugs are prescribed, which farmers cultivate pest-resistant crops and which R& D engineers make the most high-impact discoveries”. They cite the work of Randall Collins of the University of Pennsylvania who showed that breakthroughs from icons such as Freud, Picasso, Watson, Crick, and Pythagoras were the consequence of a particular type of personal network that promoted exceptional individual creativity

“Networks deliver three unique advantages: private information, access to diverse skill sets, and power. Executives see these advantages at work every day, but might not pause to consider how their networks regulate them,” Uzzi and Dunlap argue. They show in their research how developing diverse, rather than “self-similar” network contacts through shared high-stakes activities builds a more powerful network.

Deborah Mills-Scofield, writing in the Harvard Business Review argues that networking has existed for the past 2000 years and it has enabled our survival. She postulates that networks promote new forms of communication, spread knowledge and therefore our networks need to be cultivated and treated well.

Many career coaches and talent managers now see networking both as a professional skill and the best source of possible jobs. Bill Barnett, writing in the Harvard Business Review, cautions networkers to not limit their contacts to the few people they know well. Rob Cross and Robert Thomas, writing in the Harvard Business Review argue that “network size doesn’t usually matter…the executives who consistently rank in the top 20% of their companies in both performance and well-being have diverse but select networks, made up of high-quality relationships with people who come from several different spheres and from up and down the corporate hierarchy.”

Linda Hill, and Kent Lineback, authors of Being the Boss: The Three Imperatives for Becoming a Great Leader, describe how three networks are critical for success: operational, for day to day work; developmental, a collection of individuals whom you trust and to whom you can turn to for a sympathetic ear, advice and a place to discuss and explore professional options; and strategic, the most important, comprising those who can help you do two critical tasks-define what the future will bring and second, prepare for and succeed in that future.

In my article in Psychology Today co-written by Darcy Rezac, “Give Away Your Network,” we argue that “championing an ethos called Positive Networking®…is discovering what you can do for someone else. In other words, networking is not about you and how others can help you. Instead, it’s bout others, and how you can help them.”

Ivan R. Misner, one of the most active proponents of networking, and founder of BNI International reports that based on his research in the U.S., Canada, the U.K and Australia, the highest-rated traits associated with networking are the ones “related to developing and maintaining good relationships,” which includes traits such as a positive attitude, being trust worthy, a good listener, being enthusiastic, helpful and sincere.

Darcy Rezac, Gayle Hallgren-Rezac and Judy Thomson, (authors of Work The Pond, ) professional trainer collaborators and promoters of positive networking, provide these ten great networking tips for 2012:

1.     “Accept that there’s nothing wrong with you. Recognize that if all the online connecting and the ability to work in your pajamas from home, is making you feel isolated, you are not alone. Sherry Turkle, author of Alone Together, says, ‘We may be free to work from anywhere, but we are also prone to being lonely everywhere. In a surprising twist, relentless connection leads to a new solitude.’

2.     Rage gently against the machines. Things happen faster if you talk to someone in person or pick up the phone. Curb the desire to email close-proximity colleagues; instead walk over to their office.

3.     Embrace the octopus. Social media is a many-tentacled creature that squeezes time out of your 24 hours. Accept that it may not be practical to be brilliant tweeter, blogger, You Tuber, LinkedIn or Facebook updater; instead of hopping on all social media bandwagons, do one or two things well. Before you upload, send or comment, ask yourself, ‘what did that add to my reputation, my brand or to anyone’s else’s world.?’

4.     Make the effort on LinkedIn. LinkedIn is the go-to-site for business connections, it has become the search engine for finding people.

5.     Start using your initials. In the social networking world you may not be that special. If you have a common name, or have the misfortune of sharing one with a criminal, start including the initial of your middle name. Any wild and crazy pictures of you bounding around the digital world? Google yourself and look at those images. Do you see your professional headshot or a less than flattering version of you with the same name?

6.     Commit resources to the face you show to the world. Your business may have a Facebook Fan site with 36 million ‘Likes,’ really cool videos, contests and then there’s one raunchy “Wall Post” that you didn’t catch. Maybe you need a DSM Director of Social Media.

7.     Redefine networking . It’s about time to toss out the image of a glass of wine, cheese cube schmooze-fest and accept networking for what it is-simply reaching out and making a connection, but one with dignity. It happens in the hallway at work, sitting on an airplane, at social and business events,. If there’s at least one other person in close proximity there’s an opportunity to connect. Networking is an attitude, not an event.

8.     Teach your children social intelligence skills. Who else is going to do it? Do they think to shake hands when meeting an adult? Do they know how to converse with those more senior? If you are a young person reading this and your parents forgot to share these life lessons, join a young professionals group in a business organization. It’s amazing how senior business leaders say ‘yes’ to mentoring students.

9.     Be “nicer.” Make this Maya Angelou quote your mantra for 2012: ‘People will never forget how you make them feel.'”

10.   Transfuse the dead zone. Do your part to bring some life back to the office by talking and sharing ideas. Take it from Steve Jobs: “There’s a temptation in our networked age to think that ideas can be developed by email and IChat…That’s crazy. Creativity comes from spontaneous meetings, from random discussions.” (from Walter Isaacson’s book, Steve Jobs).