Business schools change course as MBA fails test: Companies want more practical training, writes Roger Trapp

JUST as companies are having to learn to cope with the tougher economic climate of the 1990s, so too are the business schools that are supposed to be supplying them with managers.

Although industry has never been more aware of the need for well-trained staff, this has not translated into booming business for all those offering management qualifications.

The MBA - Master of Business Administration - does not appear to be the glittering prize it was in the 1980s.

In the US, there has been a drop of nearly 20 per cent in applications for the Graduate Management Admissions Test - the examination of verbal and quantitative skills that is an almost universal entry requirement for US schools. Applications for UK schools, meanwhile, were down about 10 per cent last year.

Roger McCormick, director- general of the Association of MBAs, believes the reduction is a natural result of the compound annual growth of 18 per cent in the previous three years. 'If we had sustained that, everybody in the country would have had an MBA before long.'

The remark reflects the growing feeling that the market has been weakened by the proliferation in courses. The handful of schools producing a few dozen graduates in the mid-1960s had become a score or so sending out 2,000 MBAs by the mid-1980s, and by last year there were 92 institutions with an output of nearly 6,000.

Although this was well behind the 77,000 in the US, it was enough to persuade sophisticated companies not to take the MBA qualification at face value. According to an alumni survey by Warwick Business School, 'an MBA from where?' is a key question.

Mr McCormick expects the 1994/95 academic year to produce a more realistic growth rate, of about 10 per cent, in MBA numbers. The schools themselves are also voicing optimism about rising rolls. But, privately, they wonder whether they are in the middle of something more significant than a cyclical downturn.

The challenge is particularly strong in the US. Although some of the country's top academics have become highly successful consultants, US business schools have traditionally been less eager to collaborate with companies to produce practical programmes.

Robin Hogarth, deputy dean for MBA programmes at Chicago University's highly rated Graduate School of Business, is a strong advocate of the academic approach. While acknowledging that the MBA education 'is in danger of becoming irrelevant unless it can respond to the evolving needs of the business community', he says the schools should teach 'conceptual knowledge' and leave companies to provide the practical side through on-the-job training.

This approach - designed to develop people who are 'smart, savvy and insightful' and therefore able to cope with the ebbs and flows of business throughout their careers - still finds favour in some quarters. But it is not universal, not even within Chicago.

Across the city at Northwestern University's JL Kellogg Graduate School of Management - which has topped Business Week magazine's business school rankings since they started in 1988 - a much more co-operative attitude prevails.

The school's James L Allen Center, which specialises in the continuing education of corporate executives, academics put their research straight into the hands of managers. They then tell them if it makes sense, says Donald Jacobs, the dean for the past 19 years.

Kellogg - which claims its applications have been rising while others' have fallen - is not alone in seeking to adapt to industry's needs. For instance, the Dartmouth and Duke's schools say they have long sought to appeal to students and businesses alike.

But most eyes are on the mighty Harvard, which is introducing radical changes to its MBA programme. The school, which attracts 6,000 applicants each year for 800 places, says it is in the second stage of a three-phase 'wide- angle' view of the entire curriculum. Among the proposals being considered are alterations to the grading system, smaller classes and an emphasis on teamwork.

While these moves towards more practical business issues have been welcomed by many in the US, business people themselves seem less convinced. Observers among the schools' European counterparts believe the huge investments made by such companies as Motorola and General Electric in setting up their own 'universities' stem from their desire for more directly applicable training and development.

Insead, the French school long noted for its international outlook, claims to be receiving increasing interest from US companies as they realise they cannot become more global by obtaining management locally.

Professor Leo Murray, director of the Cranfield School of Management - which even in Europe is noted for its pragmatic approach - says he was shocked by how little executive education US schools provided when he looked at them several years ago.

He blames the 'publish or perish' attitude for making the schools academic and insular. He says the MBA should do three things: provide teaching in areas such as finance and management methods; expose students to situations and problems; and, most important, offer personal development through teamwork.

'When you're doing distance learning or in a class of 750 (as is the case in some US schools), you can't do that,' Prof Murray says.

Money appears to be at the root of the differences between North America and Europe. US schools say they pay their staff enough to ensure that they are not tempted away from research towards consultancy.

This view is echoed by Ludo Van der Heyden, dean of Insead, who points out that European institutions are generally less well endowed than their North American counterparts and are therefore more dependent on corporations.

Accordingly, at Insead, which has about 220 MBA students a year, Cranfield, with about 150, and other European schools, the MBA is becoming a less important part of the mix and crucially a less important source of revenue.

In its place are appearing part-time programmes for those already in management, along with courses tailored to the needs of specific client companies.

The MBA itself is also changing. London Business School has an MBA 2000 plan, while Manchester - which along with London was one of the original schools set up in the mid-1960s - has reshaped its course with the aim of making it more responsive to the needs of individuals and companies. Students are now given the opportunity to complete the business course in just over 12 months rather than the usual US-style two years, cutting the cost.

This adaptability is partly a response to organisations such as Ashridge Management College, Henley Management College and Sundridge Park Management Centre, which are not associated with universities and claim to be prospering while the true business schools falter.

John Chadwick, chief executive of Sundridge Park, part of PA Consulting, says centres like his are profiting from the demands of companies for 'quick just-in-time' assistance that has a demonstrable effect on corporate performance.

'The distinction has to be made between management education, which is an investment in the future, and development, which is getting them to do something better now,' he said.

(Photograph omitted)