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Tuesday, September 10, 2002

By Justin Pope, The Associated Press

BOSTON -- These should be heady days for American business schools, with more than 100,000 new students arriving on campus, eager to sit out a weak economy and emerge from the cocoon two years later with a fattened salary.

	Recruiters again rank CMU among top 5 business schools The business schools at Carnegie Mellon University and the University of Pennsylvania have been ranked among the top in the world in a new survey of corporate recruiters, although CMU slid a spot from second last year to No. 3 in The Wall Street Journal's survey of 2,221 corporate recruiters. Dartmouth College in Hanover, N.H., remained the top business school, while the University of Michigan jumped two spots to edge CMU. Northwestern University and the Penn's Wharton School rounded out the top five.

But despite the strong demand, some master's of business administration programs are feeling uneasy about a new article by two researchers at Stanford's Graduate School of Business, who call into question the value of the degree.

Surveying decades of research, Jeffrey Pfeffer and Christina Fong argue that, with the possible exception of the most elite programs, MBA operations teach little of real use in the business world. They say the degree has little effect on salaries in the long run.

The article has provoked a public relations counterattack from some in the multibillion-dollar MBA industry who bristled at the wide-ranging critique, which appears next month in the debut issue of the journal Academy of Management Learning and Education.

The article lays into everything from a mollycoddling teaching culture to an outdated curriculum. It also questions whether the explosion in the popularity of MBAs had diluted their value. In 1956, only 3,200 MBAs were award; today that number has grown more than 35-fold.

The article even notes that 40 percent of U.S. chief executives mentioned in a Fortune Magazine article called "Why CEOs Fail" had MBAs. And the researchers cite one report that characterizes life at one top business school as a two-year-long networking and bonding ritual revolving around alcohol.

Students can take on as much as $100,000 in debt to pay for a two-year program, the article notes.

In response, the Graduate Management Admission Council sent out results of a study showing that U.S. MBA graduates reported an average starting salary of $77,000, up from an average of $50,000 before they pursued the degree.

The GMAC also noted that global demand to take its GMAT, the admissions test most business schools use, was up 13 percent in the first half of the year, and officials say it's jumped even faster in the past month. Some schools have encouraged media interviews with officials hoping to make their case, and some deans have chimed in with op-ed pieces in newspapers.

"The harsh reality is the demand for the MBA is incredibly strong, it's a hundred years old and it isn't a fad," said Dave Wilson, president of the GMAC.

The article notes how many top executives don't have MBAs. But critics say that's not the point. Sure, some people succeed without MBAs, they say, but think how many use an MBA to go further than they otherwise could -- and not just investment bankers and consultants who graduate from the highest-rated schools.

"The vast majority are going to the Big Three auto manufacturers, the retail outlets, Colgate and Clorox and not-for-profits," Wilson said. The typical MBA grad might "get a job at Ford Motor for $57,000. Does that compete with [Pfeffer's] grads? No. But now she is able to have a marketing position at Ford, making more than she could before."

Pfeffer acknowledged some of the criticism, saying there is certainly value in the networking that is often part of getting an MBA, and that salary is an imperfect measurement of the degree's value.

But, he said in an interview: "The question which I believe remains unanswered ... is do you learn anything at business school?"

The real problem, he says, is that no one in the business education industry is asking such tough questions.

"There is a role for truth-telling inside all organizations," said Pfeffer, who said some of his Stanford colleagues were none too pleased with the article, but that he'd received requests for copies from colleagues at other schools.

Even some who criticize the article's conclusions say it raises some important issues.

"An MBA may no longer be enough," said Louis Lataif, dean of the School of Management at Boston University. "There are too many of them out there. ... There are lots and lots of schools in the MBA business who in fact may not be adding value."

There are about 350 accredited MBA programs in the United States.

To counter that problem, Boston University now offers some students a more rigorous dual master's in business and information systems to give graduates an edge over competitors who have only MBAs.

Dan Zambarano, 30, who has been pursuing an MBA at Babson College in Wellesley, Mass., at nights while continuing to work as a consultant at KPMG in Boston, said his experience so far has been mixed -- some mundane core coursework that hasn't been helpful, but some exciting electives.

Overall, he's pleased, and says his teachers are serious about tying their courses to the outside world. "Whether it's the latest technology or biotech, they do a good job of identifying what's happening in the real world," he said.

And even Wilson, of GMAC -- who called the article "inflammatory," "far out" and "not a scholarly piece" -- conceded a kind of grudging professional admiration for the marketing that earned the article so much attention.

"If you think a scholar's responsibility is to get people talking about issues, Professor Pfeffer has really done a superb job," Wilson said.