LU SMU Publication: The Straits Times, p B17 Date: 15 September 2008 Headline: The 'Business' Of Getting An MBA

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The 'business' of getting an MBA Key questions to ask before you fork out for that popular programme

IN THE business world, few acronyms loom as large or cost as much as MBA.

MBAs, or masters of business adminis- tration, seem to be growing in popularity among professionals here seeking to up- grade their skills in the workplace.

This is despite the hefty price tag of any- where from $49,800 to $120,000 at reputa- ble institutions.

At renowned French business school In- sead, which has a campus in Singapore, en- rolment for its MBA programme here has tripled in eight years.

"The size of the starting classes here in Singapore for the f i s t class in 2000 was 53. Today, this number has grown to over 150," said the school.

Numbers have also grown for the Uni- versity of Chicago Graduate School of Busi- ness (GSB) since the United States universi- ty opened a Singapore campus in 2000.

Now only one in three applicants lands a place in the programme, said Chicago GSB, without revealing figures.

And Singapore Management University (SMU), set up in 2000, has launched two MBA programmes of its own - one full-time, the other part-time - and its pio- neer group of 23 for the latter programme will start classes next week.

The financial advantages of doing an MBA may be obvious: According to Forbes, the average pay of students before e ~ o l l - ing at the Top 20 schools it ranked ranged from US$35,000 (S$50,000) to US$75,000, while the average salary after graduation with an MBA ranged from US$93,000 to US$200,000.

Forbes also said it usually takes about three to four years of earnings thereafter to recoup the cost of the degree.

But while an MBA is designed to help anyone looking for more dollars and sense, interested students should be "most moti- vated by the opportunity for career ad- vancement as well as career change", said Ms Gopika Spaenle, associate director of In- sead's MBA Programme Asia Campus.

If you are purely interested in practising business, you will not need an MBA, said Ms Doris Sohmen-Pao,'director of SMU's MBA Programme.

"There are plenty of examples of suc- cessful CEOs, such as Bill Gates, Larry Elli- son and Warren Buffett, who have never been formally schooled in business," she added.

Mr William Kooser, associate dean for Executive MBA Programmes at Chicago GSB, said whether or not you ought to con- sider an MBA depends on your answers to five key questions: H Do I need more skills? H Do I need greater credibility? H W i I stay with my company throughout my career? -What is the educational background of

e top executives in my company? Would I l i e to make a major career

shi i? He said these questions are pertinent be-

cause "if you've never had any formal busi- ness training or feel that your knowledge lags that of your colleagues, then an MBA might be in order".

"If all the top execs of your firm have MBAs, you need one too - if you have am- bitions to join their ranks," he added.

The Straits Tines spoke to three busi- ness schools here to find out an MBA's real value, who should fork out for the degree and where one should study.

Here is their advice on what you should consider to help you make your decision.

Why is an MBA wMth investing in? The qualification sends a signal to poten- tial employers, partners, customers or sup- pliers that you are competent, effective and have the knowledge and skills neces- sary to be successful, said Chicago GSB's Mr Kooser.

And SMU's Ms Sohmen-Pao said the the value of the MBA is that it does not pi- geonhole you into a particular field or in- dustry. Rather, it teaches through the shar- ing of experiences with one another.

~ ' l n what career do I really need an MBA to excel? Schools say there is no one specific sector that strictly requires only MBA graduates. That said, the consulting and banking in- dustries are often seen hiring up to SO per cent of business school classes, said Ms Sohmen-Pao.

"However, most candidates who join consulting after business school usually wind up in other industries in their ca- reers," she added.

Said MI Kooser: "Perhaps the best way to think of it is that there are very few plat- es where an MBA is absolutely required, but no place where an MBA isn't extremely valuable." H Should I opt for a twoyear programme, or a oneyear one? A one-year programme typically takes about 10 months. For most, it represents a very attractive return on investment, as a shorter time away from work is clearly a lower opportunity cost.

There is no doubt that a two-year de- gree costs more when one considers an ad- ditional year of foregone salary, said Ms So- hmen-Pao.

But taking two full years off is not just a big financial investment.

"Particularly for people who have been working for a few years, two years away can be seen by some people as a slowdown in career," said Ms Spaenle.

As for Mr Kooser's view: "The key is how much you will learn, not how much time it takes."

Shwld I aim for a toptier school. or settle for a second-tier one? "To some extent, brand recognition and school ranking can impact your career pros- pects as some companies recruit only from the top-tier business schools," said Ms Spaenle.

She added that consulting giant McKin- sey recruited more than 100 MBA grads from Insead last year - a quarter of its graduating class of 450.

Mr Kooser thinks if you are interested in only learning new skills and techniques and want to apply them in your current job, then the brand name "probably doesn't matter much".

"However, if you expect to change ca-

reers, perhaps take on a more global assign- ment, or need added credibility in your or- ganisation, then the brand can be a power- ful signal."

For some, however, the choice is clear. Take Ms Cheryl Lee, 28, who is bound

for a top-tier school in Europe in January. She said: "There isn't a compelling reason enough to spend $150,000 on a degree if not for a brand-name one. The return on investment is not there." H Are Asian schools not as good as E u m an or US schools? Again, experts say education is an issue of matching your goals to location and brand. If part of your goal is to immerse yourself in a culture different from your own, you should seek that out.

Insead, which has one campus in France and another in Singapore, said it noticed Asians want to spend t i e in Europe and vice-versa, so over 60 per cent of its stu- dents opt to spend time on both campuses.

SMU aims to become the first and best business school in Asia to focus on soft skills such as leadership, communication, negotiations, ethics and corporate responsi- bility, because it says those qualities are what is often lacking in, yet most desired by, the business community. H I don't have a financial backgmund. Am I at a disadvantage? The short answer: No.

"MBA programmes are looking for diver- sity in the classroom and background is a critical source of diversity," said Ms Soh- men-Pao.

She added that anyone who has uncon- ventional experiences, is eager to commit and is prepared for the academic rigours of an MBA, should apply for one.

Said Mr Kooser: "We have many stu- dents at the University of Chicago who come to us without a background in fi- nance or business.

"The common theme among our stu- dents is that they are bright, have done well in their prior university work, have done well in their aareers to date, and we expect them to do well in the future." W h e n is the right time to study for an MBA? There is no magic number of years of expe- rience that is "right", but most schools look for candidates with at least two years' work experience, as an MBA is about peer-based learning.

This means that your classmates are go- ing to help teach you as much as you will teach your classmates.

According to MBA resources online, the average age of an MBA student is 27 to 29 years.

Do I have to take the GMAT? Fortunately or unfortunately, the Graduate Management Admission Test (GMAT) is a necessary evil, not just for admission to American schools.

It is a standardised test that most lead- ing business schools worldwide recognise and use to match student competencies with programme demands - regardless of programme type or the race, gender or na- tional origin of students.

Even Insead and SMU require GMAT for admission. It costs US$25O to take the test anywhere in the 'world, including Sin- gapore. To get into top US schools like Stanford, Harvard and Dartmouth, you will need a score of at least 707 out of 800, says Forbes. --

Source: The Straits Times O Singapore Press Holdings Limited. Permission required for reproduction.