More than half a million students graduates from business schools with an MBA degree each year. Students & management aspirants spends ton of money, puts in a lot of hard work, spend hours and days and months just to get their hands on their MBA degree Certificate. I remember the roaring 90s & early part of the first decade of 21st century when parents specially from India found another alternative of an MBBS & BE/BTech, when they can proudly say that their son or daughter is an MBA grad. The tag lines of these B-Schools were ( I think still is unofficially ) something like, “ Come join us for a great career” or “ Do you want to start your career with a six figure salary ? “. The fever was catching fire all over the world and in India we kind of consistently had around 3 lakh Management graduates every year. The first blow came during 2007-2008 during the great recession when most of the MBA grads were jobless, although there was a recovery in MBA job market post the recession was over but if we look at trends till 2021 it has been not that encouraging, rather scary. In 2007, one fourth of Harvard Business school Grads were jobless, you can think what might have happened to other B-Schools during that time.
THE 2nd BLOW-
A lot of people think and believes that Covid19 gave MBA aspirants a second blow. They have reasons to believe and I will agree to that point partially ( Not fully – I will tell you why, read on ). Between May 2019 & May 2020, the decline in overall jobs was 27% but the decline of MBA jobs were more than that overall decline, it was 34%. In 2021, the problem got amplified, nearly half of the B-Schools reported overall decline in job opportunities. So you see there are enough indicators and data for a lot of people to think and say that covid19 is a big blow. Sure it is but here is my analysis on this, the lack of demand of MBAs is not a covid19 effect, it has just amplified the crisis so it became visible to everyone.
THE UNDERLYING CAUSE –
To understand the root cause, we have to travel back much before covid19. There were a lot of studies done on this matter, in some, job market for MBAs were shown as down and in some it showed as moving up. Now I am not going in that debate of how business school spins out propaganda on MBA jobs and boasting themselves to be number one in campus recruitments but to establish my point, I will only present one of those study which no business school could refute till date. In 2016, a study done by ASSOCHAM ( The Associated Chambers of Commerce and Industry of India ) concluded that out of tens of thousands of MBA grads churned out of 5500 B-Schools n India 93% were unemployable. Few of the IIMs were an exception ( but today IIM grads also struggling to get their dream pay check ). The report even said that those lucky ones who could get a placement were earning only Rs8000 to Rs 10,000 per month. I am sure covid was not there in 2016 or 2015 right ? So what has been lacking, what is causing this sudden job market change for MBA aspirants ?
- Outdated Curriculum – The rate a which the world, specially technology is changing, if you are not keeping up then your graduates will find their knowledge inadequate to put to use. That is exactly what has happened to MBA courses, they rested on their past laurels and students are paying for that. More and more companies are going tech, so specializations or skill based MBA is need of the hour. So outdated curriculums is number one on my list.
- Oversupply – There is a lack of demand caused due to growing in house trainings offered by many organizations. Organizations are finding training and promoting their own employees to management roles more effective & profitable over hiring an MBA from outside paying a fat paycheck. On job MBAs are more attractive proposals now. This oversupply has also caused faculty issues. A healthy teacher to student ratio for an MBA is considered to be 1:15 and as per that we need 6000 quality teachers for top 100 B-Schools alone. We do not have so many teachers so quality suffers.
- Focus on analysis & theory– Leadership & management in today’s world is not about data analysis & financial planning only, it is more about developing human centric skills. The workforce has changed, its more demanding now, market is wide open, you have more competition who can snatch away your talents. On top of that people have seen and read about the greedy CEOs who has caused layoffs and recessions so even if you are brilliant in analytical or financial skills or a master strategist, unless you are able to establish a connection with your workforce, unless you are inspiring to them you cannot sustain success. MBAs lack that. MBA courses have to bank on data, case studies, analysis and brainstorming but what they miss out is practical exposure to actual problems. One of the argument against MBA graduates is that they spend too much time analysing problems and organizing recommendations with too little emphasis on executing a solution. And, success depends on execution.
- Criticism from Legends – Some of the most inspiring & successful CEOs or ex-CEOs never had MBAs. Whether it is Bill Gates or Mark Zuckerberg or Steve Jobs or Elon Musk or Jeff Bezos. James Sinegal, Sir Richard Branson, Howard Schultz, Satya Nadella ..you name it. A few of them did not have even an Arts degree. Recently Elon Musk has also spoken against MBA-ization of business in America. Most importantly for human society when you see enough live examples of successful entrepreneurs without MBA with your own eyes then you start doubting the necessity or validity of an MBA. It is like you witnessing the best doctors did not get an MBBS degree or the best engineers never went to college for a BE or BTech, Instead it forces you to rethink whether you should spend an astronomical amount behind a dying MBA culture or you spend less than half of it sometimes a quarter of it to do some skill certifications which will get you much better opportunities in the existing and future job markets.
I would not advise any of you who read this article either for or against doing an MBA in the present scenario, it is your choice, it is your wish, it is your life. But if anyone asks me to do an MBA in 2022, my answer will be NO unless it is skill specific.