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Battle of nerves over MBAs: Business schools are past the slump but now face a crisis in confidence and credibility

BUSINESS SCHOOLS did not start to feel the recession until the last few years and are only now starting to emerge from it. This is because the MBA market is late into a recession and late out of it, said Roger McCormick, director of the Association of MBAs. To do a full- time MBA, the most expensive kind, 'it takes two to three years to raise the money and square the family,' he said.

The 1980s saw a dramatic rise in the popularity of the MBA, especially in Britain, which for most of the decade produced as many MBAs as the rest of Europe put together. Fewer than 1,000 students enrolled for an MBA in the 1970s, but by 1992 there were 92 UK business schools awarding 5,792 MBAs annually, with an annual 18 per cent growth.

Then, suddenly, there was a 10 per cent dip in 1992. 'The growth rate was unsustainable,' said Mr McCormick, although he expects 1994-95 to show a 'resumed modest growth'.

There is still a wide variety on offer, including full-time, part-time, distance learning and modular programmes. Business schools report a drop in full-time applicants, and a significant increase in part-time or distance-learning programmes. This reflects the high cost of study and the reduced employment prospects of MBAs. Fewer people are prepared to risk leaving their jobs to take a full- time MBA.

The rest of Europe was rather more circumspect in the 1980s and suffered rather less of a shock at the start of the 1990s. But the cold wind has been felt throughout Europe - both by business schools which are finding it harder to attract well qualified candidates, and by MBAs themselves in search of their first job afterward.

The rapid expansion of courses led to criticism that some MBAs were not well regarded in industry and sparked debate about what exactly made up an MBA. Even after a century of MBA teaching in the US, there is no worldwide or even Europe-wide agreement about what an MBA is, and what a person with an MBA ought to know. The European Federation for Management Development, which brings together companies and training providers, has tried without success to establish common quality standards in Europe. In the US, affiliation to the American Assembly of Collegiate Schools of Business (AACSB) is seen as a guarantee that a school's business qualifications are worth having, but there at least six other US associations for schools that are not AACSB members. Some European schools use the AACSB as an accreditation by allying themselves with an American university. The Madrid Business School, for example, is a member of AACSB; its MBA is validated by Houston University.

In Britain, the Association of MBAs accredits courses, but only 28 of 92 schools that award MBAs have the AMBA mark.

Some French MBAs have been accused of being too theoretical, without enough practical content. In France, management training is not done in the universities but in Grands Ecoles, which are harder to get into - and they deny the charge. Their academic standards are certainly high. Grands Ecoles are ranked, in strict order, by two publications, Expansion and L'Etudiant. The top school is Hautes Etudes Commercial.

HEC is acutely aware that in these hard times, it has to justify the expense and disruption of asking someone to abandon a career and spend a large sum studying full time to gain the qualification. Professor Eric Briys, principal of the ISA (Institut Superieur des Affaires), the MBA-awarding arm of HEC, said: 'If a full- time MBA were just a collection of disciplines - economics, finance, and so on - it is dead, because a part-time course or distance learning can easily duplicate all that.'

A full-time MBA has to offer something more, and at ISA they reckon on sending out a very different person from the one they took in.

ISA sends its full-time MBA students to stay with Benedictine monks from the monastery of Ganagobie in the French Alps. They debate ethical issues, general and business, not only with monks but also with business practitioners. When they come back: 'They know much more about themselves than when they left.'

The view that the MBA, wherever it is awarded, is too general and is taught by people with insufficient direct knowledge of business or commerce, has begun to take hold in some companies, and they are now looking to take greater control over their training, investing in courses specifically designed for them. These are either being provided by the traditional business schools or by in-house training facilities.

But these customised courses have drawbacks. Because they are insular, they can perpetuate company weaknesses. A recent study by the Wall Street Journal showed that more than three in four of the dollars spent on executive education goes on such courses rather than open enrolment business school courses.

Sometimes customised courses are also MBA courses - 'company-specific MBAs'. These are attractive to companies because they are not portable. The company can be sure it is not training people to be poached by the competition.

Customised courses can be of any duration and for specific purposes. London Business School has been developing customised programmes for several years, and Harvard and Stanford have recently entered the field. In Europe, Insead, an international business school which, while based in France, is not part of the Grands Ecoles system, offers a one week programme for Western managers who want to do business in eastern Europe and Russia.

But business schools may sometimes feel they cannot win. They expend effort to meet the demand for more business specific, less academic courses - only to encounter criticism of the academic quality of some management research. In Britain a report commissioned by the Economic and Social Research Council has recommended that a Management Research Forum be created to deal with the problem.

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