Economic downturn spawns new dynamism

An emphasis on nurturing responsible leadership has emerged from the financial crisis.

By Lucy Hodges
Sunday 23 October 2011 07:52

After five years working for VSO, the international development charity, and 12 months on the staff of the Mines Advisory Group in the Democratic Republic of Congo, Jo Kelly decided she had to bone up on management.

"I believed I could make a difference by helping these organisations to work more efficiently," she says. "But I thought: 'If I am serious about going up the management chain, I need to know about finance and strategy. I need a greater understanding'."

So, she signed up for the Cranfield MBA on the basis that she had to acquire a high-quality general management training. For her, it was a plus that Cranfield was a school of management, not a school of business.

Kelly is part of a new trend in the business school world of highly educated young people working for non-governmental organisations (NGOs) deciding that they need to hone their skills to become better managers. Cambridge-educated and with a degree in natural sciences, she knew when she left university that she was more interested in working with people than with products. "What I love is international development," she says. "I was not interested in joining an organisation where the important thing was to make money and concentrate on the bottom line. I wanted to make a difference."

You may wonder how someone working in the charity field was able to afford the fees at an institution such as Cranfield. When Kelly signed up, the full-time MBA cost £28,000 for a one-year programme; that has now gone up to £31,000. She applied for, and got, a scholarship that paid half her fees. Her savings covered the rest, and her living costs.

It's not just Cranfield that is seeing an increase in interest from people who would not have bothered with an MBA in the past. HEC Paris, the French business school, has witnessed a similar trend. The proportion of MBA students working for NGOs has increased from 1 to 8 per cent, according to Valerie Gauthier, associate dean of its MBA programme.

Business schools are responding to a change in the marketplace and the zeitgeist, with more and more NGOs springing up and charities becoming bigger and more professional. All this is having an effect on the curriculum of the MBA as well. "MBA programmes are being reviewed in order to be more dynamic and responsive to change while retaining underlying sound principles of good management practice," says Frank Horwitz, Cranfield's director.

The financial crisis, the bailouts of banks and the collapse of once reputable institutions is leading to great soul-searching in business schools. There is a new emphasis on the issue of nurturing responsible leadership and on personal development and growth, says Horwitz. "You can't have effective leadership unless you have a sense of self-awareness," he says.

The economic downturn is also having an effect on the MBA marketplace. Many schools say their programmes are holding up well, and continuing to attract applicants willing and able to pay the sizeable sum needed because the MBA market is counter-cyclical. When the economy is doing badly, managers take time out to improve their prospects; in good times, they are hard at work making money.

"The feedback I have is that numbers of applicants are continuing to rise," says Jeanette Purcell, the chief executive of the Association of MBAs. "Students are doing far more research than ever before into the schools and the programmes to make sure that they are getting value for money, choosing the right MBA for them."

It had been feared that numbers applying for MBAs would fall off after an initial surge at the start of the recession, but that has not been the case, says Purcell. "Business schools are much better now at managing expectations and giving students support in preparation for the job market," she says.

Nick Oliver, head of the University of Edinburgh Business School, says applications are more than double last year's for the full-time MBA, and the part-time MBA is stable. Imperial College Business School in London is experiencing a similar pattern.

Chris Bones, dean of the Henley Business School, now part of Reading University, says applications for all programmes are up, including the executive MBA, despite fees of £33,000-odd for the full-time MBA and nearly £40,000 for the executive programme. Numbers for the executive MBA did fall, which means the class size is now lower, but demand is improving. There is a lot more interest in the bursary schemes, he adds, because MBA students have difficulty finding the money they need.

"None of us is having a great time. Some of us are feeling better than others. We're all trying to protect our pricing as well as our volumes."

ENPC School of International Management, in Paris, has also seen a decline in its part-time and executive MBAs. This is because companies are not sponsoring employees in the way they once were, and banks are sometimes reluctant to lend money, says the dean, Dr Tawfik Jelassi.

Cass Business School in London says applications are looking good and that it has seen less of a drop-off in interest for its executive MBA because it is not so reliant on corporate sponsorship as other schools.

Like other schools it has raised its fees by £1,000 or £2,000 in the past year, but has ploughed money back into the programme.

"We have massively expanded our careers service," says Professor Veronica Hope-Hailey, associate dean for the MBA programme. "We're doubling the number of people employed, and the personal development that our full-timers receive will be interwoven into the subjects they study. At the same time as you are studying organisational behaviour, you will be trying to understand something about yourself as a team worker. When you are learning project management skills, you will be studying operations management. We're weaving a stream on personal development and career development around full-time academic learning."

Cass also offers emerging economy elective trips, something that other schools are also laying on, as well as much more extensive help with careers. Some students are borrowing a lot of money to finance their MBAs, so it is important to give them value for money, says Hope-Hailey. "That is why we have put so much more emphasis on career development in the full-time programme. We work hard to help students figure out what will be the right career path for them."

Imperial does the same. According to its principal, David Begg, it prepares its students from the day they accept a place. "We immediately start working with them on their CVs and interview skills, because that's the only way they will position themselves competitively," he says.

Cass says the squeeze on jobs is leading to more internships being offered by companies, which are using this as a way to screen candidates. At the same time, schools put much effort into helping students with what they want to do at the end of the MBA as soon as they arrive on the programme.

The University of Bath School of Management is seeing no growth in its executive MBA. Like other schools, it has been experiencing a long-term fall-off in applications for its part-time MBA, which began before the economic downturn, but the full-time MBA is healthy. It still gets more overseas students applying than it would like, says its dean Richard Elliott.

The Swiss business school IMD has 42 nationalities in the MBA classroom and has a rule that it won't take more than 10 per cent of any particular one.

Katty Ooms Suter, IMD's director of MBA marketing, says that the job market for MBA graduates is difficult, but better than it was.

At Strathclyde Business School in Scotland, the dean, Professor Susan Hart, says that it is taking longer for students to find work. Where once they would have had offers in the pipeline quite early in the programme, now they are getting through their dissertations before receiving job offers.

'Imperial produced team spirit'

Bruce Girvan, 42, helped to set up the alternative energy company Ceres Power in 2001 with fellow MBA students at Imperial College Business School. The company now employs 107 people and has four sites.

"I worked for the oil company Schlumberger for 10 years and then for Atlantic Richfield. They were very successful, but when oil reached $8.50 a barrel they sold out to BP.

I was interested in management and wondered why you would do that if you knew oil prices were only going to go one way. I was interested in Imperial because of its expertise in entrepreneurship and because it was part of a college and not separate from it. I wanted to be close to cutting-edge research in energy entrepreneurship. The great thing about Imperial was it produced team spirit from the word go. It wasn't all wonderful, however. The facilities were not much good. But that has changed with the new building.

The MBA opened my eyes. The reasons to do an MBA are to give you more management understanding or to make a career change. I would recommend others to do it, but only if they are very clear why."

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