If you are responsible for hiring people, someone with a master’s degree in business administration might look like an attractive hire. While, “Never Hire An MBA” might be a bit extreme, I see a lot of people who overvalue an MBA. In particular, small and medium sized businesses will often try to “hire an MBA”. Consider that statement. Wouldn’t it seem strange to say, “I want to hire a Bachelors of Science in Computer Engineering”? A Bachelors of Science in Computer Engineering isn’t a person–it is a degree. You can’t hire a degree. What you really want is a software engineer or maybe a computer scientist–a person. But when it comes to the MBA degree people talk as if you can just hire the degree. You can’t. You can only hire a person.
Ok so lets say you have to choose between hiring two people. One is a great smart person with a good personality, but without an MBA. The other is a good person with an MBA. You want someone with business skills, so do you hire the MBA or the other person? Remember, you can’t hire a degree. But you want the business skills, so who do you hire?
Lets do a thought experiment. What if you could take the person without the MBA and give them a business education and then hire them? Obviously you don’t want to wait two years for them to get a business degree. So lets say you find a way to implant all the information directly into their brain in some type of procedure that will take about a month. Would you hire the MBA or the person that will take one month to bring up to speed.
I think most people would agree that if it only took one month to give someone a business education, you should definitely hire the best person you can find and not worry about whether or not they have an MBA.
But this is all hypothetical right? There isn’t any MBA education brain implant surgery. Or is there? It turns out that some consulting firms (people who typically hire MBA graduates) have tried hiring people without business training and given them a crash cours in business. Guess what? They do just as well (and sometimes better) than their MBA educated peers.
Consulting firms who hired people without business degrees–some of them lawyers, doctors, and philosophers–obviously had to provide some training so these individuals could go out and give advice to companies using business language and business knowledge. Many of the companies started or expanded relatively short, 3-week programs in which “new hires” learned the basics of business. Apart from the fact that apparently it took only 3 or 4 weeks for people to cover what business schools take 2 years to teach, is the more interesting question: How did the hires without graduate business degrees perform? Internal studies conducted by the firms found that the non-MBAs did no worse and, in some cases, better than their business school counterparts. The London office of the Boston Consulting Group (BCG) reported that the “non-MBAs were receiving better evaluations, on average, than their peers who had gone to business school,” while a study at McKinsey of people on the job 1, 3, and 7 years found that at all three points, the people without MBAs were as successful as those with the degree. Similarly, an internal study by Monitor Consulting “had determined that the people… hired from high-end business schools were no better at integrative thinking than the undergraduates… hired from top-notch liberal-arts programs” (source)
Keep in mind that these consulting firms are generally recruiting from the top business schools in the nation.
Can an MBA be detrimental?
We’ve already talked about how you shouldn’t try to “hire an MBA” because you can’t hire a degree. Instead you need to hire the right person. The cost of hiring a less talented person is going to be much greater than the cost of teaching someone business skills, so whether or not someone has an MBA shouldn’t be a major consideration in the hiring process.
This is the part that is probably going to be seen as heresy–particularly by people who have or are pursuing an MBA:
It has been my experience that the MBA degree can sometimes be more detrimental than helpful.
In the following sections I will detail the ways I’ve seen this happen, but first a few caveats.
There are obviously exceptions to everything I’m going to say here, so read everything in the spirit of “increasing your odds of getting a good employee” and “some things you should think about”. In particular, this advice is primarily directed at smaller companies that don’t normally hire a bunch of MBAs, but are starting to see some job applicants with the degree and are considering hiring them. If your business has a strategic system to make use of people with this particular educational tool set, this likely won’t apply to you.
Why do they want to work for you?
The cost of starting a business was once very high. You had to rent office space, hire an accounting and payroll department, buy a telephone system, etc. This isn’t the case today. Someone who is good at running a business can start one on a shoestring budget and look just as big as anyone else. Computers are cheap, a lot of software is free, and you can outsource many parts of your business as you go and simply pay as you go. It wasn’t that long ago that getting a web server and email server up and running would cost you $50,000 just to get up and running. Now you can get a web server and email accounts for $6.95 per month or even free if you use something like Google apps.
If someone has a master’s degree in running a business, why are they coming to you for a job? Years ago, it made sense. It was very expensive to start your own business. That isn’t the case any more. So if someone with an MBA is coming to you there are several possibilities:
- They can’t run a business. – If they can’t make it on their own, do you want them working for you? Is it possible you can find someone better without an MBA? If you need a particular part of their skill set, maybe it is a good fit. Just be aware that if you need someone with a really good skill at running a business, you need to understand why you should trust their skills more than they do.
- Want real world experience. – This is a valid reason, but just make sure you aren’t paying someone for their MBA experience if they are coming to you because they don’t really have anything beyond their diploma. Someone with an MBA who says they want real world experience could be an excellent find and become a very passionate employee. However, as we’ll discuss later, one of the drawbacks of many MBAs is that they often over-estimate their skill set.
- No ideas of their own. – Not necessarily a bad thing if you just want someone to execute your business plan, but make sure you aren’t paying a premium for them to have good ideas. If they can’t come up with a good business idea on their own, they may not be able to come up with good ideas for you.
- Too specialized. – Someone who specialized in one specific area may not have a wide enough skill set to run their own business. If their expertise fits well with your business then it can be a great fit for both of you. However, usually the idea of an MBA is that it is a general education in all aspects of business.
Lack of Experience
Someone with a fresh MBA looking for a job, may not come with much real experience. This isn’t necessarily a bad thing if you understand that having an MBA doesn’t automatically make someone good at their job. A large number of people are going back to school to get an MBA after having worked for a number of years. On one hand, you may find someone who has a great deal of real world experience that they can apply to your business problems. On the other, you may be dealing with someone who is making a significant career change. When you look at someone’s experience make sure you aren’t throwing them into a situation that goes well beyond what they are capable of doing. It is easy to tweak a resumé to showcase skills in the past to align with the jobs they want in the future. If their resumé says they have “management experience” don’t automatically assume they possess the skills to handle having 40 people reporting to them. Make sure you understand exactly what they managed, the extent of their authority and the results the achieved.
Lack of experience seems to show up the most when you put someone in charge of managing and leading others. If their only experience with leadership is being under the leadership of others, they are likely to emulate all of the bad habits without picking up on any of the good ones. If you need a manager, don’t give someone this position based solely on their MBA. Make sure they have real experience with good results in management either before or after getting their master’s degree.
Overconfident
This is more of an issue with people who have had very little real work experience. While most MBA programs offer good content, simply being exposed to a lot of great ideas doesn’t say much about your ability to implement those ideas in real life. Just because someone took a class in negotiations doesn’t mean they are any good at it. Worse, they may think they are good at it and blindly cause a number of problems. Confidence is good, but not when it blinds you to your inability. A person with a bunch of confidence in their ability to fly a plane, but no actual skills is infinitely more dangerous than someone with a lack of confidence and a minimal amount of skills. Someone without confidence will double-check their results. Someone with a lot of blind unfounded confidence won’t know there is a problem until right before they crash.
I once met with a newly minted MBA who was taking a new position. I asked about what she considered her greatest strengths. She gave me a list of 5 or 6 things that she felt she was really good at. A few months later in a 360 degree evaluation (where everyone evaluates everyone else) her weakest attributes exactly matched the list she had given me a few months earlier.
If you think you are bad at something, it probably doesn’t hinder you much. When you get to a situation that requires that skill, you are extra careful, ask for help, delegate, etc. People who think they are bad at driving on ice, rarely have ice related accidents. However, when you think you are good at something its easy to overlook obvious signs that you are doing something wrong.
In looking for ways to reduce accidents, some experimenters removed all the road signs from a city and watched what happened. The number of accidents went down. It turned out that the signs made people overconfident. They paid attention to the signs instead of to other obvious clues–like the truck that doesn’t look like it is going to stop. When there weren’t any signs or lights, people had to make eye contact with the other drivers to decide whose turn it was to drive. The signs made people less careful.
I went to a college where everyone was required to pass a swimming proficiency test to graduate. It wasn’t that hard if you had ever done any type of swimming. You had to swim across the pool and tread water for five minutes. However, there was one guy named John who had no skills in swimming, but he tried to make up for it with sheer confidence. John was a nightmare for the life guards because he kept jumping in the deep end and sinking to the bottom–confidence and all.
For an MBA, the pretty piece of paper they have hanging on their wall can make them less careful. It can encourage them to jump into things that they have no preparation for. It doesn’t take too much life experience to correct this, but you may or may not want to be their employer during this learning experience. Further, the value of the MBA is quite a bit lower if their real skill set is developed on the job at your expense.
Economy and Education
A down economy is great for the educational sector. When people lose their jobs they often go back to school to improve their skills. People with just a bachelor’s degree who can’t find a job after a few months may start looking at MBA programs. Going back to school can help pause their existing educational loan payments and let them get another one at a very low rate. Both of these things will help them keep their head above water while they wait for the economy to recover. Getting a degree also helps make the gap on their resumé look less damaging and it can help give them a better shot at positions that require highly educated employees. So all in all, this isn’t a bad idea. You get laid off and can’t find a job–go back to school.
But, if you are hiring, you may want to consider a bit more how the economy works. When companies need to cut back, they generally want to get rid of the employees that have the least amount of productivity according to this formula. In many situations the highly productive employees are often many times more productive than the average–but usually they aren’t paid many times more. This means that of five employees the top two or three are probably going to still have a job. (This assumes a rational employer, which isn’t always the case, but the idea works when dealing with dealing with large statistical samples.)
So the person who gets laid off and goes back to school for an MBA is somehow a less profitable investment than the other employees. Either they weren’t as productive as the others or their pay was high enough that they were more expensive than less skilled help. However, the wildly productive employees are still working and are thus less likely to go out and get their MBA. People who have reasonably good jobs during economic uncertainty are less likely to drop $20k to $50k (or more) on a master’s degree.
So a fresh MBA right after an economic downturn may have the MBA because they weren’t an ideal employee in the first place. Obviously there are exceptions to this and there are all kinds of things that can happen on an individual level, but these are things worth considering when looking at the MBA job seekers as a whole.
You may get a better employee by hiring the guy who had a job during the downturn because his employer couldn’t afford to let him go. He may be worn out from doing the work of several people so a different job may look very attractive.
Of course with this logic, it may never be a good idea to hire someone who doesn’t currently have a job. You don’t want to hire someone else’s problem employee. Yes there are exceptions, but if you are trying to increase your odds… Just be aware of the timing of someone’s MBA. It might be a bit more complicated than an overwhelming desire for self-improvement.
Conclusion
The biggest takeaway from this article should be to hire people, not the degree. If you have a potential employee who you wouldn’t consider without their MBA degree, be very careful that you aren’t trying to hire the degree instead of the person. So should you avoid hiring someone with an MBA? Probably not. Some individuals who get the degree may have some of the negative side effects discussed above. However, as long as you are focused on finding the right person, you should be able to screen out any potential problems.
What if you are looking to get an MBA? I don’t want to make it sound like an MBA education isn’t valuable. There are a lot of worthwhile things you can learn getting an MBA. It can do a lot to strengthen your existing skill set–particularly if you are already practicing an on-the-job MBA approach. But, if you have no skills in running a business today, getting an MBA isn’t going to change that.
If you are looking to hire someone, don’t overlook them simply because they have an MBA, but at the same time don’t over-value their degree and let it blind you to their actual real-life skills.
I don’t really agree on most of the things said, not because of concepts explained but more for the motivations supporting them.
As many time times you cannot generalize, but some of the points are worth some thinking, because there’s a loto of myth and “overselling” on MBAs.
I agree on the fact that most of the people seem to over estimate MBA skills, but I also think that as, all education matters, is not a differentiator. MBA becomes a differentiator only if supported by a solid working experience.
Having a Master degree helps in not being too much generalistic and can complete, again, education and working experience.
Being a MBA graduate at 23 is not a differentiator at an absolute level: is a good starting point but definitely a starting point.
It requires to be valued but also needs the applicant to be humble and available for learning just like all the others.
Too often I see companies asking people to be at most 22 years old, with a degree and a master speaking fluently 3 languages. This creates a not so applicable bareer at the entrance, because there will obviously be an excess of requisitions and so a compromise will be needed. But of course being so often required a MBA forces people to take the challenge thinking that this will make them compete for more, while they’re alligning to the rest of the offering.
Is everything in an MBA exchangeable with experience? No. There’s always the right time to make things and I put the timeline for a MBA between 3 to 5 years after starting your work. taken Before is not usefull (is a sort of specializing, but without the critical approach coming from experience), taken after is overcome by experience.
Making an MBA should be an investment to upgrade current position or give you a competitive advantage? Overall I think that the answer is yes, but cannot be a general rule, since, many factors influence this.
I have a degree while my wife was not able to complete hers. My wife, however has an impeccable wealth of experience, and I would hire her over myself. (Ha!)
I further despise the attitude – “I have a degree so I deserve ‘x’ salary and ‘x’ position.” It generally comes from a younger, self-deserving generation. Most people I know with degrees look condescendingly down on others who don’t have one.
Because of my brief points – I would hire someone with experience and no degree over anyone with a degree with no or little experience.
You know, maybe it’s because of the recession, but I don’t generally see too many people my age (younger) thinking that way anymore. I’m going back to school part-time to get my MBA and I don’t think I’ll deserve to make $X, I know I’ll need to make $X to pay back the $100K in student loans! :)
Yes, but it’s not the job’s responsibility to pay for your loan.
The same as the other reader, the logic behind the explanation does not compell me.
I am not a fan of the MBAs, I studied 3 years at university and I started to work immediately, preferring study Chinese and working abroad as feeling it was more suitable for me.
“If they can’t make it on their own, do you want them working for you? …you need to understand why you should trust their skills more than they do.”
The premises here are that run your own business is the best choice for everyone and that everyone dream is to start his own business and that everyone has at least a good and feasible business idea.
Moreover even if it is cheaper then before, you still need money to start a business bigger than a freelance business model.
“If they can’t come up with a good business idea on their own, they may not be able to come up with good ideas for you.”
The word “idea” has different meaning in this sentence but you put them in teh same level. The business idea is a completely different thing from the ideas you can have within an existing business context. If I can not come up with a compelling business idea it does not mean I can not lead people or find a way to market a product or control costs…..
You have some good points, but I believe you over estimate how little capital it takes to start a number of businesses today. Plus, shouldn’t an MBA be trained in how to get investors, etc.?
Keep in mind that I’m writing to people who own a business and are looking at possibly hiring an MBA. I’m not saying that getting an MBA is a bad idea, but I do think most owners of small businesses will overpay for the skill set that an MBA will bring unless the new hire has a great deal of real world experience.
Mark,
The cost to open a business may be low, but people also need two years worth of survival savings (to pay rent, utilities, food, school loans, etc.). That cost will never go away no matter what the business model.
I agree that someone who is surviving from paycheck to paycheck is not in a good position to start a business. However, I disagree that a talented person needs to wait two years before they start making enough money to cover their basic living expenses. That would be the whole point of getting an MBA–getting the knowledge on how to get a business running profitable as quickly as possible. Some businesses will take two years to reach a profit, but many can start out profitable. Those are the types of businesses you want to start.
I kinda of disagree with a lot of your points as well.
I think the primary point that you are neglecting is that not everyone who has an MBA does so as a path to starting their own business or automatically reaching a managerial height in an organisation. The MBA that is offered at the university I go to, and some of the nearby ones, are both quite in depth and span a huge range of business fields. I think ‘general’ education is a bit of a cheap comment. ‘General’ education is something you would get doing something such as a bachelors of commerce. Take a look at just your average MBA’s corporate finance content… I wouldn’t call that ‘general.’
It is just a qualification, much like a masters of applied finance or management, albeit much more lucrative on its face. You can’t just discount its merit because of a set of arbitrary confinements which would only apply to some MBA students.
I do agree with the pay sensitivity issue though. I don’t think an MBA graduate should use the qualification to lever a far greater salary.
awesome post. i have started my entrepreneural journey. and this will really help me in the near future
I disagree with some of the articles core points – never mind the title itself is antagonistic, it’s pertinent and should be read to avoid the pitfalls before and/or after earning an MBA.
I never said you shouldn’t earn an MBA. If you are any good at all, there will be plenty of people very happy to hire you. In some cases you don’t even have to be any good. :)
Do you have an MBA?
No I don’t. I do have two masters degrees. At one point, I was looking at MBA programs, but decided that I’d personally be better of with a degree that was a bit more specialized.
As I said, I think the skills most MBA programs teach are very valuable. This article is written from the vantage point of someone who is looking to hire employees.
Bottom line, I don’t agree with much of anything in the post. I understand you are writing for entrepreneurs, but they are a unique group. About 5% of the population are natural entrepreneurs and want to be. That does not change for MBAs. The traditional path for an MBA is not as an entrepreneur, but as a lifetime manager starting as an associate and rising WITHIN a company. Entrepreneurship and business administration are entirely different, and I think as an entrepreneur you realize that.
The reason you are seeing so many MBAs is not because they’re poor workers or devoid of ideas. It is because the companies and roles they would normally seek are withering severely in this economy. A lot of talented and accomplished people are out of work simply because cutbacks are arbitrary. Entire divisions and layers are cut. Companies don’t have time for the metrics. They just fire (and these roles may never come back).
In any career, a person with some years of experience plus a masters’ degree is a much better hire than the person with a degree and zero years in the field. If you’re comparing a fresh MBA against someone with years in the field, you’re right. But if you’re comparing two applicants with equivalent years, and one has an MBA, hire the MBA.
I think there are some arbitrary cutbacks, but there are also a great number of strategic cutbacks. A big company may lay off an entire division, but there are a lot of cut backs that are carefully thought out. You keep the people whose work is most directly related to making a profit. I agree that a lot of people are out of work, but there are many more people who make you wonder how they ever got a job in the first place than high quality employees. I know a number of employers are hiring strategically to try to snatch up any of the truly high quality employees who have somehow lost their job. Further proof of this is the number of positions that are unfilled. Companies are looking for workers, but finding it hard to get highly skilled people. Since a job notice can produce hundreds if not thousands of resumes, companies are being selective and trying to get the very top people.
If you take two candidates without management experience, one with an MBA and one without, I wouldn’t automatically choose the MBA to put into a management role. You have a significant chance that they will run in with overconfidence and make all kinds of mistakes they wouldn’t have otherwise. The candidate without the degree may be more careful in what they do and avoid problems. As I mentioned in the article, someone with no skills is much more dangerous if they have a lot of false confidence than without.
I am absolutely shocked. “They may have a run in with overconfidence?” WOW
There is a critical relationship between self assessment and skill level. Studies have shown people with poor skills (lack of education) are quite bad at assessing their own abilities. They tend to be grossly overconfident, demonstrating a notable deficiency in self monitoring skills. I have run my own business for 15 years and have an MBA as well as an M.S.
In addition your view of what is currently going on in many parts of the country is absolutely dillusional. Your wet behind the ears kid.
As I said, a lot depends on the program and a lot depends on the individual. Most of the bright people I’ve met with an MBA were bright before they got the MBA. The degree enhanced their skills. Perhaps you are the exception to that, but I’m speaking from my experience.
Are the studies you reference specifically related to MBA programs? I have seen similar studies, but the point of this article is that MBAs are especially prone toward creating a false sense of skill in people with little experience. If you have been in business for 15 years, you probably don’t fall into this category–especially if you’ve been running your own business. Keep in mind that I’m not saying that an MBA isn’t valuable. I think there are some great programs out there that offer a great education and very helpful skill set. This post was written to people who are hiring and warns them not to overvalue an MBA–particularly with people who have no real-world experience. Make sure you are hiring the person–not their degree.
In your last sentence you said I was “delusional,” “wet behind the ears” and a “kid.” You are, of course, entitled to your own opinion and free to expend as much effort as you like trying to call me names, but I’d be much more interested in what specifically you disagree with. I think you are talking about my statements that employers are firing the less productive employees and those former employees are now going back to school. The uptick in MBA enrollment is pretty well documented, so I’m guessing that you are taking an issue with the idea the employers are letting go employees who are less profitable to keep around. However, I’m just speculating because you don’t really say. I would be very interested in reading your reply explaining what you see happening.
i think some of the points are not so real. You’ve been seeing MBA’s as bad point and you want to prove it to yourself and others. between BA’s and MBA’s who has little working experience, there is so much difference. where do you think the experience come from? BA has enough skills to work for a company, but not MBA?
I’m saying that I see hiring managers overlook the actual proven experience of someone because they overvalue their newly earned MBA.
While I would agree that an MBA could have value to the right person, I think in general it brings a lot of hype in terms of management abilities.
There are a lot of good leaders who did not decide to get an MBA but got looked over for someone with less experience but has one. It makes people feel like they need to get an MBA to compete in the leadership realm.
In terms of smaller businesses, it’s important for them to know what they really want then get the skills that can deliver on those areas.
I believe personally in keeping salaries at the about the same level for all but have good bonus system for the good performers.
An MBA is a good overview of modern, corporate business practice from a top-down perspective. It delves into many business areas one might never touch otherwise in one’s professional specialty. In this way it helps to manage cross-functional teams, a skill which is getting more and more necessary. I know many MBAs, none of whom are arrogant or think their degree means everything. It is a chance to spend 2 years looking at best practices and research-supported methods. In executive MBA program all students have 10 years of progressive experience. I am pursuing mine as well and do not think it means everything, but it is certainly a lot of work that one should get credit for in the job search process. If it were easy, everyone would be doing it. Everyone is not doing it, often preferring to sit on the beach rather than spend the extra effort. Much of what you said sounded like someone who did not understand MBA programs very well. Entrepreneurs are their own breed, MBAs are more corporate types these days, or consultants. The recession has pretty much leveled EVERYONE’S arrogance.
Doesn’t it depend on which MBA program?
Most top 10 MBA program admits have an average of 6-7 years of work experience before their application made it to the ADCOM. I had 11 years of work experience when i sent my application.
Most of my learning was through colleagues who had significantly lesser experience than I – some of them had experience in working at Senate, some worked in Structured Finance, some in mobile, some in internet, some in white-goods, some worked in steel, some worked in consulting, some worked in banking and some worked in policy departments of some governments and so on…
Only at the MBA program did i get the – experience – of [a] the models and the frameworks that make these people have an experience to begin with and [b] the language, the views and the inner workings + the challenges of working in such diverse industries and competencies/functions..
I cant imagine how it would be possible for a 50 year old { quite experienced working in whatever it is that she/he is working in} – to have an EXPERIENCE of being Greek, Indian, Brazillian, Chinese, Russian , North American..
there are these 2 camps – the experience camp lives and dies by – the so called “industry experience” and the other camp that talks about conceptual models, frameworks and views – to make sense of the world we live in.
Before MBA i worked for 11 years in tech – had a startup and sold also. If someone asked me – prior to MBA – the impact of 30 year T-note yield on say China – I would have to fake that I knew the question – Google that and read up for hours – to be able to even know the question itself..
If you dont understand that , then either you dont have a job that ever required you to know what it means – or you just dont know to or care to know.. But believe you me, some jobs not only expect but also depend on knowing what CAP reductions will mean to the WORLD.
i know people who worked for 20 plus years in Technology – in say Java – and they are BRILLIANT at say, Client -server technologies -managing 40 people – leading etc etc..,
I am talking heads of IT at even big companies, let alone small companies -> but they dont necessarily know the impact of standard wars – on their own company and industry – let alone on the technology landscape …
IF someone had ZERO work experience, then you have a point. But after say 7-10 years of experience, without any conceptual understanding we run the risk of “MORE-OF-THE-SAME”. A lot of times, the people – {yeah exec from my generation} look down upon the younger ones – and that is plain wrong.. and i see that as nothing but a knee-jerk response. Me thinks – this younger generation is much better than my generation or the generation before me..
In my 15 years of EXPERIENCE – i have seen this debate being played – every time the economy is down and MBAs seem to be the target. I wonder why
ps: Barack Obama had less experience than Mc Cain. But of course, many people dont like him, less experience being one of them..
Just like any degree, the quality of education will vary significantly from one school to another. As I mentioned in the article, there are some businesses where the skills from a high quality MBA program are vital. However, for the average small to medium sized business in the US a knowledge how a T-note will impact China doesn’t matter.
The notion of “never” or “always” rules-of-thumb in hiring are the types of extremes that I have always tried to avoid, regardless of candidates credentials. This is as true for MBAs and for CPAs, JDs, or plain ol’ high schoool grads.
I have found that experience and willingness to learn can carry as much or more weight as formal education. I’ve also found that some (very prestigious) MPA’s employees have been good for little more than answering the telephone. . . in which case, I’ve assigned them to do just that, in a sense (you’d be amazed how many clients are impressed that they have their own personal MBA at their beck and call).
In the last situation, had we pressed a littel more into specific and detailed questions during the interview, I suspect that our staffing choices for that project would have been different. On the other hand, this indivual was also helpful in sharing his B-school knowledge with the rest of the staff, who themselves could apply the concepts to our work.
In short, the decision to hire, and the results of that decision, are management up to management, and good management should always take all factors into consideration – not only intitials following the candidate’s name.
I hired a few employees recently and I would have liked to have hired someone with an MBA, however I assume that (and have found) that they expect more pay due to their degree. I was willing to train a non-MBA to do the job I needed them to do without paying the extra money for an MBA.
The question of course is whether the degree would allow someone to perform at a level that would justify the higher salary. In other words, if you have to pay an MBA an extra 10% per year, will they result in profit of at least that much more. Obviously with some people the answer is yes. However, in other situations and with other personalities they may actually have a worse ROI than someone without the degree due to the factors I mention in the article.
I don’t have an MBA. So I don’t make any assumptions as to what should and shouldn’t go into MBA training, what kind of jobs MBA grads should and shouldn’t apply for, and I don’t pigeonhole them solely as entrepreneurs or failures otherwise.
And neither should you.
Since my job is as a business consultant, I routinely help companies find, interview and hire employees. So I’m not making assumptions here. I’m speaking from experience.
Also I didn’t say anything about what type of jobs MBAs should apply for. This article is written to people who do the hiring and are likely to be impressed with an MBA–particularly in an economy that is increasing the number of unemployed MBAs looking for jobs.
What I took from this was; Don’t hire new graduates.
I work for a University and deal daily with postgraduate students, including MBAs. I can say that, hands down, MBAs are the most inept and disorganized student cohort.
It’s long been my opinion that most of the people doing the degree needed it because they were unlikely to be employed based on their merits. Based on my experience I would say that “never hire an MBA” is very sound advice.
I’ve been hiring quite a bit over the last few months. I’m always skeptical of someone who has tried to increase their earning power by purchasing a degree. Build your earning power by helping an employer build their business. Nothing speaks louder than a record of success in the real world.
Do you find that a lot of people looking for jobs have a history of helping their previous employers grow their business? I’d think those people would be less likely to be on the job market.
Highest unemployment rate in decades; there are plenty of great people on the job market.
Surprise! I know of a company who uses their best talent to grow the business, train new staff, and then lay off the best talent because they are the “highest paid.”
As someone who has an advanced degree I tend to agree with the concept that an MBA usually does not replace reworld experience. I think someone who has an MBA has demonstrated the ability to learn and the persistence to get the degree. I therefore think that a good combination is someone who both has an MBA and real world experience in a subject matter that is relevant for the postion you are looking to fill.
Just my two cents.
I saw alot of the attitude “I have xxxx degree and deserve to make xxx $ when I was working in the corporate world. I never understood where that sense of entitlement comes from.
My employer subsidized my MBA. I have a wealth of knowledge, but can’t get my self out of the low level – dead end rut. I didn’t take an MBA for instant job recognition, rather, as an individual with a social science background, I wanted to gain entry into understanding the business environment. Degrees don’t change things. I’m not entitled to making any fixed amount of money. I’ve been one of the top employees at my current company and have taken advantage of every opportunity academically and professionally to come my way. However, when I try and reposition myself, no employer will look at me regardless of how low a position I apply to. I find many of today’s “recruiting” problems a recruiter/evaluator issue more than a job applicant issue. Today’s (as in the past decade’s) recruiter environment appears very closed minded and exclusively inside the box. (I understand that a lot of closed mindedness is organizational specific for whatever factor).
Bottom line, I don’t want to increase my earning power – I want to increase my employment power.
If you are interviewing for positions and being turned down, you might try just asking what you could do to improve your chances. So when you are told that you didn’t get the job, thank them for considering you and ask if there are any job experiences or additional training they would suggest that would give you a better chance at similar jobs in the future. Most of the time you probably won’t get much of an answer, but you may find that there is something specific that is making people overlook you.
Also do a search online and make sure there isn’t something in Google that is hurting you. I heard about one guy who shared the same name as a criminal in the same town. He kept having great interviews and no call back until he realized what was going on and started being proactive about explaining that he wasn’t the guy they were going to find in Google.
While Mark may have some apple-pie sort of points it is not worth the 2000 words spent on it. The MBA curriculum is generally geared towards large enterprises. Why would some pretzel seller small business pay anything above $7/hr? or even want to hire an MBA? Medium-sized and larger enterprises do benefit from hiring people with experience and MBAs. If a business is paying you to “consult” they really need to hiring exactly the people you don’t want them to hire. Conflict of interest?
Cheers mate
I’m in my last semester of a Bachelor of Arts, and as I recognise that it isn’t the most employable degree, I was considering doing an MBA not so I could charge in with over-confidence and change an organisation, but instead so that I would have that Business foundation which I lack in my Arts degree. I am aware of how much I do not know and I am not of the ‘if I have this piece of paper I’ll earn $X’ mindset – rather I am viewing it as a way of getting my foot in the door, due to the reaction I keep getting to my undergraduate degree.
I feel that if I have the MBA and am appropriately humble, I will be able to get the work experience I need to start me off, rather than wasting time endlessly applying with just an Arts. I do not intend to head straight into a management role, but rather build my skills up from the bottom progressively.
So then, my question is – put into this context, do you think an MBA would be useful for achieving my ends? Or are there are other courses you are aware of which serve the same purpose?
Kristy – As an employee, I’d say aim high. You may be able to find people running companies that don’t have anything beyond a bachelor’s degree that will be willing to pay quite a bit more for you because of your MBA. Many people misunderstood the advice in this post. I’m not saying that you shouldn’t get an MBA. I’m saying that employers often over value them. Which means that as an employee it is a great degree to get!
Still I’d recommend choosing jobs on what will give you the widest range of experience–especially early on.
Just shut up. Its all about ones talent not degrees. u seems to be jealousy on MBA people , just want to reduce their demands. Be good at heart. its not that people with other degrees are worthy. everyone has their own stuff and u dont have the rights to judge things just like that. Guess u must be doing some schooling or illiterate, go and learn some values first.
Your title is misleading. Sensationalism is for mentally poor people.
This article is of no use to anyone because:
a) if you’re a small start-up on a budget, you can’t afford a REAL deserving MBA (our salary is in the upper five and six digits). I suppose then that this article is trying to convince you not to hire an incompetent. Thank you, Captain Obvious for your advice.
b) if you’re not a small start-up and you do have a budget, hire a good MBA.
Please delete this article. It’s mere existence is an insult to MBAs and you, Mr. Mark Shead and your “expertise”.
Thanks for taking the time to write a comment. The goal of a headline is marketing and to get people to stop and think for a minute. I was pretty clear in the first paragraph that there are many exceptions. The article “IT Doesn’t Matter” and many many other influential articles use the same technique to get attention and make a point. If you don’t like it, that’s fine, but I’m not doing something insane or mentally weak here. My first reaction to your statement was to try to take a look at what you’ve written, but of course I couldn’t because you didn’t leave a URL–or a real name. You may not like my opinion, but at least I claim it as my own.
I think you missed the point of the article or didn’t read the whole thing. I’ve seen a lot of small and medium sized businesses give more weight to an MBA degree than they should. They tend to not notice that someone doesn’t have experience when they have an MBA. The recent surge in MBA enrollment means there are going to be a lot more MBAs on the market. Now you may call that being obvious, but it is an actual problem so the article is likely to be use to someone. Probably not to yourself, but to others.
So this would be true with doctors? People should consider less better?
You picked a battle with MBA educated individuals? I mean you know what it takes to obtain a higher education degree, so you should have known you would be stuck doing damage repair for the amount of time this article is at a valid URL. The headline, while sharp, is going to attract opposition to your standpoint. You should have used lots of statistics from cited sources to help minimize the opposition’s argument, but you failed and used highly opinionated statements that are going to draw unkind responses. If you believe your statements to be correct, you should go do surveys to prove it and create a theory called “the linear model of hiring effectively” then write a article using your findings as support.
Saying pick a bachelor’s over a master’s reminds me of the burger management theory I just created. You see you are basically saying pick a single cheeseburger over a double cheeseburger when they are both the same price. First-off it is really about appetite, but the double is a single with extras. With the double you can score if it is perfect for your appetite or there can be a cost if you have to strip it down to a single. Meanwhile, the single is definitely going to cost to turn it into a double and it may never be able to be turned into a double if you have no more cheese.
Of course, some MBA’s don’t appear to be as smart as some bachelor’s, but statistics prove higher education means higher pay and a lower employment rate, so MBA’s ain’t that stupid. Besides, MSN found that the extra two years does help increase most financially on average by about $375,780. Also, most MBA’s are getting higher pay than bachelor’s degrees in their respective career fields according to a 2008 MSN CBSalary.com report.
I wish you the best in your forever pursuit of defending your statements, and the day it gets to be too much, take down the page. Good day.
Sources:
http://www.cbsalary.com/salary-information/article.aspx?id=2B316A3F-D945-4AE1-9EF7-3A1A5E6DEE8E
http://articles.moneycentral.msn.com/CollegeAndFamily/SavingForCollege/IsYourDegreeWorth1million.aspx?page=1
Most of your argument seems to be based on the idea that people with an MBA make more money. Please show me where I said that getting an MBA is a poor investment for the student/employee. :)
I completely back Bob’s post. The author needs more credibility to back up his argument. Post some statistics and peer reviewed references and re-post. The article would be a good rough draft.
Thanks Nussel for the unexpected support and I agree that a little reworking with some statements of support and this would be a dynamite article. I was just joking about taking it down because I figured Mr. Shead would never do it since he was fighting his standpoint with passion on these comments. Another option is to get rid of this comment board because a viewable disagreement with the article motivates people to speak up, in turn, requiring work by Mr. Shead to respond to comments which shift his productivity away from creating new articles. Without a comment board, a potential problem is people will still disagree and they might start to email complaints. The article is drawing people in and probably more than the ones commenting, but it obviously creates a defensive attitude in some new viewers and it is not going to motivate some of those viewers to check out the rest of this or the Xeric site without an attitude of indifference. On a side note, I do think this article, in its present condition, would have made a great poll article for information about viewers to the article, about MBA’s or several other related poll subjects.
Regardless of everything, Mark Shead deserves credit for allowing comment boards where people with differences of opinion can speak their mind because many sites would have edited out people disagreeing. By Mark allowing everyone to speak their mind, he has created a good defense for leaving the article the way it is. Productivity501 seems like a good idea, so keep working on things to make the site better. One last thing, I fully support the deletion of the hate-filled comments directed at Mr. Shead because they don’t deserve space on his comment boards.
You failed to read to correctly or answer the questions. I said you had a weak argument because you had no support. Also, begging for help https://www.productivity501.com/would-you-hired-an-mba/8075/ from a group you actually insult is not going to work. Your article implies business owners and hiring personnel are stupid. In your own words:
“I’m pointing out that many small and medium sized businesses will easily place a greater value on an MBA than they should and the current economic conditions are producing more MBAs out looking for jobs.”
Your underlying argument is based around the idea that business owners and hiring personnel run a organization with no idea of judging character or abilities. The statements in your article include other judgments made in the process. For example, the insult stating that MBA professors are failing to produce students that are worth or perform better than people with a bachelor’s or work experience. Your opinion of professors is not unexpected from someone who, in his own words:
“I completed a master’s degree (ALM in IT) from Harvard with a concentration in software engineering last year. Most of my classes were taken online.”
With all your claims of dealing with MBA professionals, I wonder if it was only on-line after you pissed them off.
You say I didn’t read or answer your questions. The three questions in your original comment were.
So this would be true with doctors?
People should consider less better?
You picked a battle with MBA educated individuals?
They all looked rhetorical to me–particularly for someone who has actually read the above article so I didn’t try to answer them. Was there one in particular that you wanted me to answer?
You said I’m begging for help from people MBAs. I’m not really sure what you are referencing with that statement.
My argument is not that small and medium sized businesses don’t know how to hire. My argument is that they (particularly when this article was written) are starting to see an influx of unemployed people with MBA degrees. It is easy to assume that an MBA gives people certain skills that it doesn’t. Does an MBA give you skills? Yes of course and there are many large companies that are designed and organized specifically to take advantage of the skill set provided by a new MBA graduate with no real world work experience. However, most small and medium size businesses do not fall into that category. Can they use someone with an MBA degree? Yes, but they need to be very careful to understand exactly what skill set the person has. The MBA may enhance the applicant’s applicable skill set, but the person hiring needs to be very careful not to assume that a new graduate has real world skills that come from experience.
Keep in mind that many of these small companies don’t usually get MBA applicants. However, they were/are starting to see an influx due to the down economy. It isn’t a matter that these business owners don’t know how to hire, but I’ve seen many who undervalue their own experience and overvalue the formal education they don’t have. This can set the stage for the problems I’m warning against.
You seem very offended by what I’ve written, so I’m sorry if I’ve caused you some type of personal distress. Your comments are leaning more toward personal attacks than any type of coherent statement of your position, so I’m not clear exactly what you are trying advocate here. What I’ve written is based on my experience working as a consultant to businesses. If your experience has been different, please share. Do you own a small/medium sized business? Is your business uniquely organized to take advantage of the skills of a new MBA? What has your experience been hiring people with an MBA who graduated in the last 2 or 3 years? Did you find that their MBA made them extremely valuable or was the MBA merely something that enhanced their previous skills?
Come on Mark, I am Bob the Builder, I don’t get offended and I don’t have a job, MBA or a four-year degree. I just read the title, checked out the article, and decided to comment. It is fine to think MBA’s are overvalued, but there is a way to say it and the statements should be supported by primary or secondary sources. The guys below, John and CharlesKay, said basically the same thing; the article is lacking support for your statements.
Many of the points you made are sweeping generalizations unfortunately in the real world you should look at most things on a per case basis. It sounds like you are being a bit cynical and unfair I also noticed in the comments alot of back pedaling indicating you may not really know what you are talking about on most of these points.
Interesting perspective. Where do you think I am back pedaling? There are a number of people who mis-understood what I said and thought I was suggesting that you shouldn’t get an MBA. This is not what I said at all. In fact, if you read what I wrote, it is probably strong support that getting an MBA will help you get a job more easily.
The article title grabbed my attention – but then I found it lacking substance. I’m 45, a degreed engineer and currently in an MBA program. I would contend that all the people here complaining that “people with degrees look down” upon others, simply don’t get it. It’s obvious jealousy and a complete lack of understanding what a good business program can teach. Where do you people think these business schools get the material they teach? It certainly isn’t from one person’s limited exposure to the business world. It’s from a multitude of practical and proven sources. Those that say “a degree isn’t worth it” or ” I know more than that college guy”… Well, suffice to say – You people don’t know what you don’t know. Now that I’ve worked for 20 years, I can tell you that there is a TON of things I wish I had known before and am now learning in my MBA program. Things that would have prevented a LOT of stupid mistakes. So, to those that may read this post – think about things this way: You can hire somebody that works hard, will make a lot of mistakes and might learn from them, or you can find somebody that has learned how to avoid those mistakes and do things properly in the first place. Who would you rather have in charge of making YOUR company more money? Hard work doesn’t mean smart work. It just means they haven’t figured out how to do the same amount of work in less time.
@Charles – I’m sorry you found the article lacking substance. It was really written to people who own small businesses and are in a position to hire an MBA grad. Also based on your experience, it sounds like you are the exact opposite of what I’m suggesting people watch out for. It sounds like you have the experience to make an MBA degree highly valuable so you are probably going to be exactly the type of person that businesses should hire.
I agree here too. Going to school after seeing what the real world is like, you learn more than if you’ve been coddled in school your whole life.
The capabilities of a person surely can’t be measured or based on his / her educational background alone. That can if possible and needed be figured out by seasoned HR professional.
Its evident that the writer is biased on the point on not appointing based on MBA degree and that people who are failures and non-prodcutive go for MBA.
MBA does teach the different aspects and fields of management but it dosen’t necessarily make you an enteprenuer.As such for being an enteprenuer, you don’t need any education.
Like any professional course, MBA is also a skill enhancement course. offcourse its not a magic wand to sucess or profitablity but it dosen’t also mean a person possessing it is not productive or an utter failure.
I however disagree with the theme of the article – which blatantly says “Never Hire An MBA”. MBA is an educational qualification which coupled with experience adds up to the net value of a person.
It’s like saying don’t hire newly trained civil engineers for building houses, they don’t have experience, instead a mason or a builder working for 5 years can do a much better job. And the incompetent mason or builder generally do civil engineering.
Been on both sides – agree with the Author.
Background: Work for dad’s construction company since 13 years old, avg. revenues of $5mm, modest salaries after overhead, taxes, labor, etc..
decent GPA at large state school + Athletic Div 1 scholarship + activities led me to top 15 MBA, and now currently work with bulge bracket as Associate..
we issue ratings using the crap we learned in “ideal, very non practical” academia, ala EBITDA & outdated NPV models (when ironically most MBA’s couldn’t read a Financial Statement besides the footnotes), with much less regard to real world sentiment and climates that you can’t measure which is how my dad started his business from nothing..
I plan to quit and take over my father’s business and know that the MBA hasn’t provided me with anything beneficial except for a sales tag line to prospective customers, many who already are starting to shy away from the designation due to the likes of Enron, Worldcom, Bain, etc that swooned over the MBA mentality – lotta sizzle, no steak..
I found most of the professors (not all) fit the bill of if you can’t do, teach (and hopefully get tenure from these kids who actually think a degree makes them more effective)
Many business circles (primarily in entrepreneurial routes and VC are starting to cringe at the thoughts of hiring an MBA, where much of the programs groom its students to ultimately be followers as opposed to what the brochures claim.
Interesting. The programs I’ve looked at actually looked like that would teach you some useful things–if you had an aptitude and some experience in the first place. Thats why I was careful not to say that you shouldn’t get an MBA–just that if you are hiring be careful how much value you place on it.
Did you find anything useful in your MBA studies that you can apply to your dad’s construction business when you go back to that?
And I read another article where you had a go at explaining the “time value of money” and some “money myths”. My 13 year old cousin can do better. Where did you get your MBA again? Maybe you should change the title to “Never hire THIS (as in yourself) MBA”.
I think you are referring to my article on time discounting where I referenced a study published in Individual Differences Research that showed people place a lesser value on a reward in the future than a reward today. I used that to help explain why it is easy to procrastinate.
I’m not sure what you didn’t like about the article, but I’d love to read your cousin’s thoughts on procrastination if you care to share a link to his writing.
Also, I have two master’s degrees one is in music composition and the other is in software engineering. I do not have an MBA.
While I cannot speak for others, personally I have never read a more distorted view of the MBA degree in my entire life. You speak of job experience as if it is the “magic elixir” of professional success. It is not. Rather, it’s the nature of the work experience and quality of an MBA program that will determine their respective usefulness.
Fact: What I learned during my one year MBA program was more than in two years of “work experience” in a front office, client facing role (and this will be the same after four years, I am sure) with one of the leading blue-chip companies of the world.
A good MBA program makes students think and come up with solutions themselves. It grows their ability to make fast, competent high-level decisions that they do not get a go at within the first years of professional life (they do not even know about situations like this at their companies at their level (This is board room stuff). They gain hands-on executive management experience in a simulated board room decision-making environment. They are forced to participate in discussions and do not get lectured hours on end by some boring business prof. This is called the “case study method”.
Good MBA teachers have a track record of business success and interacting with them will bring you closer to a giant wealth of professional experience than you will get in the first few years on the job as you will most likely not even interact with this caliber of people (nor does the author even now or he would not be arguing such a dumb point that I am actually wasting time replying to it, it pissed me off so much). Also, as you solve complex real-life problems of major companies and compare your decisions with those of the real-life management team of the time (i.e. Enron, Nestle in Ghana, ect.), you are able to pinpoint your mistakes and their mistakes. This is very valuable.
Finally, “…if they can’t start their own business, why should you trust them with yours?” Do you really think that to be an entrepreneur (esp. the “5 USD entrepreneur” you described in your article) you need an MBA? What kind world are you living in? A little “heads up” for you: MBA is a GENERAL MANAGEMENT DEGREE. Entrepreneurs are not managers! If anyone says to me they are getting an MBA so that they can start their own business I will think of them as the dumbest sheep of the whole sheep farm (unless you have a successful business already and want to brush up on management training).
My balance to the whole MBA story is this.
1. It is not overvalued. Rather, excellent MBA programs are few and are UNDERVALUED! ROI is absolutely preposterous. So if you are thinking about getting an MBA to further your career chances, avoid it (esp. if it’s an expensive program). It will not pay off, in the short term at least. Enroll in a professional certification program (those are comparably cheap and they really do pay off well). If you want to really learn something useful, get an MBA.
2. In my short professional experience of four years, I can point out mistakes and make conclusions that my non-MBA “10 year +” counterparts cannot, and will not.
3. Maybe it’s just me, but I think most managers these days cannot manage their way out of a wet paper bag if they wanted to. They are lazy, complacent scum. These are the people making stupid decisions everyday that create situations like the “global financial crisis”. They really need some replacing with fresh MBAs. They think that their “assembly line” work experience can compensate for a top-of-the-line university education that incorporates lifetimes worth of experience, but it cannot. Major mistakes by “experienced” business professionals prove this point beyond reasonable doubt. Some do have MBAs, I know.
4. When you make a generalist statement like this, please consider its shameful stupidity before sheepishly adding that you do not want to over-generalize. A well organized MBA degree remains one of the most valuable assets in a business professional’s portfolio early on in their careers and it’s because of dumb sheep statements like yours that the global employee force is getting dumber by the second and make disastrous decisions do to them being put off from making this investment into their own minds and abilities and thinking they can compensate with a few years of “assembly line” experience.
5. Remember, it’s the individual first and foremost that makes the difference. It is not the degree or the work experience. Richard Branson, Steven Jobs, etc.
You appear to say that MBA programs are undervalued and have a very high ROI. That would mean that it doesn’t take long to make your money back. Then you say that an MBA won’t pay off in the short term, but a certificate will. I’m not following you on that one.
If you have run into a lot of freshly minted MBAs who make really good managers, thats great, but it isn’t what I’ve seen.
By the way, most people with MBAs tend to think the title of this article is “Don’t Get An MBA”. I’m not warning people to avoid getting an MBA. I’m pointing out that many small and medium sized businesses will easily place a greater value on an MBA than they should and the current economic conditions are producing more MBAs out looking for jobs.
I couldn’t agree more. MBA is just paying to get noticed. Why not actually run a business? MBA’s can get you through the door at large, bureaucratic corporations but provide little practical value in terms of output improvement.
A great example of this is how MBA’s try to be about both corporate finance and management / leadership — two totally unrelated disciplines.
Don’t buoy up the aristocracy any more than it already has been.
I AM IN UTTER SHOCK. I HAVE AN MBA WITH ALMOST NO EXPERIENCE…LITTLE DID I KNOW THE ECONOMY AND PEOPLE LIKE YOU WILL SCREW ME OVER…I AM NOT OVERLY CONFIDENT NOR DO I FEEL LIKE I HAVE REACHED THE GATES OF HEAVEN BY OBTAINING AN MBA BUT YOU BET 150 PERCENT THAT I WILL PUT MY BEST FOOT FORWARD AND DO WHAT I GOT TO DO TO GET A GOOD JOB THAT WILL EVENTUALLY SOMEHOW SOME FREAKEN DAY WILL GIVE ME A GOOD CAREER..
HAVING LIKE NO EXPERIENCE AND FINISHING COLLEGE AT 24 SEEMED TO BE, AT LEAST FOR ME, NOT IN MY FAVOR BUT BY NO MEANS AM I GOING TO BACK DOWN…AND MBAs LIKE ME, ARE EVEN GOING FOR JOBS THAT DO NOT REQUIRE THEIR EDUCATION IN ANY WAY IMAGINABLE…EVERYTHING I APPLY FOR GOES DOWN THE DRAIN AND ADMINISTRATIVE ASSISTANT COMES UP SO I REALLY AM NOT A FAN OF OTHERS WHO WRITE CRAP ABOUT NOT HIRING AN MBA….ALL I CAN SAY IS YOU KNOW HE/SHE WILL PROLLY OUTSMART YOU AND TAKE OVER SO I GUESS FOR YOU ITS NOT WORTH IT..
NEXT TIME..PLEASE..CONSIDER WHO ELSE WILL BE READING THIS…EVERY MANGO ON THE TREE ISN’T THE SAME AND YOU BEING SO HIGHLY EDUCATED (I AM GUESSING YOU THINK YOU ARE!) ISN’T REALLY REFLECTED IN THIS BLOG OR ARTICLE OR WHATEVER YOU WANNA CALL IT…
I MIGHT BE TAKING MY ANGER AND FRUSTRATION OUT ON YOU BUT YOU KNOW WHAT I AM SO VERY SICK OF THIS ATTITUDE AND I BET YOU ANYTHING THIS ECONOMY WILL NOT RECOVER IF YOU DONT HIRE THESE “OVERLY CONFIDENT/DUMB-ASS MBAS’………….JUST A THOUGHT
I FEEL SO GOD **** LIBERATED……………
Shalini – Trust me, if you are having problems getting a job, this article isn’t the cause.
People who type in Caps are actually immature. Need I say more.
Anyways, in my opinion, business is a zero sum game. This means that a 15 years old who is mature and has the brains can beat any 30 years old at the business game in *terms of entreprenuership*. It’s just like Texas Hold’em which is also a zero sum game. But in terms of getting a job, 30 years old will have an edge over 15 yrs old. (Obviously no one will dare to hire a 15 yrs old who they don’t know as compare to taking a risk on hiring a 30 yrs old who has an MBA almost anyday).
If you want to change careers or work up the corporate ladder, or your employer is paying for it, MBA is perfect. If you want to start your own company, it might or might not help. I mean think of all the non-degree entrepreneurs like Michael Dell, or Li Ka Shing (only a junior high education at all). Also, getting an MBA will not automatically make you wealthy and no guarantee of a luxurious career path. I know a software developer who makes more than most MBAs..and this guy only has a Bachelors (he works in the financial industry)
If business is a zero sum game, then wouldn’t the productivity of a country be fixed? For people who are wiling to start businesses, I don’t think it is a zero sum game because value can be created–not just transfered back and forth.
Another ignorant fool posted this blog. perhaps not educated.
Bammy – If you disagree, I’d be very interested in hearing your point of view.
simply!! SHUT-UPPP!!!
If you disagree, I’d be very interested in hearing your point of view.
I really think that Mark has succeeded in overgeneralizing here. The article title is intended to incite comments and judging by the comments it has worked. I really doubt that the author would ever write an article titled “Never hire an Masters in Software Engineering graduate” considering he’s a software engineering graduate. Consider the source. I think if you’re capable of running your own business, you are probably capable of making intelligent hiring decisions whether they have no degrees or doctorates.
@Charles – Actually I would say the same thing about someone with a degree in software engineering or anything else if the person doing the hiring is blinded to the individuals actual skills just because they have a degree. You say that you think people who run their own business are capable of making intelligent hiring decisions. Yes usually they are capable, but often they don’t. It is particularly a problem when you have someone with little formal education doing the hiring. Of course that was the point of this entire article.
A degree is only one part of what should be considered when hiring someone. If you hire someone with an MBA based solely on their degree, you face a high probability of running into problems.
@Charles – that isn’t what Mark is saying. He is saying that you shouldn’t higher someone with an MBA who has no real world experience into a higher level postion.
With regards to a masters in software engineering. When they arrive at a company they have 0 experience so they have to start at the bottom and work their way up. Software engineering is a VERY good example of this since you can be TAUGHT it in school but you don’t LEARN it until your in the real world actually doing it.
According to you there is no difference between a GREEN solider fresh out of boot camp and a VETERAN who has experienced many battles. I think the army and history disagrees with you.
There is absoultly no way an MBA degree can provide you with the real experience of managing a company just as there is no way a software engineering degree can provide you with the real experience of engineering a software solution just as there is no way boot camp can provide you the real experience of a battle.
At my company having an MBA degree without real world experience will not help you.
I can’t believe that you would degrade people that have engage in “knowledge”. I was told by my employer to go back to school and finish my education. I loved school so much and the knowledge that I obtain I decided to continue on an obtain my MBA. I graduated with honors. I held down a full time job and went to school full time 365 days a year for four years, had no social life. I graduated in September 2009 and my employer had nothing to offer me as far as an promotion or pay increase, so I have been searching diligently for a new career. I can say that the knowledge that you obtain in school is more current than someone with a certificate, or vocational degree.
As a business degree holder our problem today is not because we hold a degree, or lack of experience, it’s because of our economy is in the hole, and if we continue to outsource our labor in different countries, our economy here in the US will continue to get worse. We need to increase production here in the US ,if we want to increase our labor workforce, and place our graduates in jobs that they work so hard to achieve..
Ha ha ha… why is everyone getting all worked up? This guy is obviously a hater. I own my own successful business and I have for years. Five years ago I earned (yes earned) my MBA because it was a personal goal and knowledge is power whether it makes you money or not. The real reason you never hire an MBA is because that person will end up flying by you on the corporate ladder and you will eventually become his or her subordinate. Hire idiots like the author of this article; they will always make you look good by comparison.
By the way, jealousy is one of the seven deadly sins.
I have looked into getting an MBA personally. As I said above, I think there are some valuable things you can learn from an MBA–particularly if you have some experience running a business.
At this point I’m not convinced that a third master’s degree is really worth it and would probably be more interested in pursuing a PhD. Jealousy isn’t really an issue here.
Since you own your business, how many MBAs have you interviewed for positions and did you find any who you would hire based on their MBA credentials (not work experience) alone?
Sorry, I spelled ladder wrong. See even us MBA’s are flawed. Another thing…I just noticed the photo of Mark Shead above, I would have never responded to this blog if I saw what a douche bag this guy is….talk about your 30 year old virgins.
I fixed the spelling.
The rest of your comment is so atypical of the class of people I normally converse with, that I have no idea what would be an appropriate response.
Publishing an article bashing MBA programs is probably a good way to rub top executives that run businesses in which you, the author, probable even work for. I respect the fact that you go against the grain, but the facts are stacked up in opposition of your claims.
“If someone has a master’s degree in running a business, why are they coming to you for a job?” The reason is many people don’t feel comfortable taking the risk. Furthermore, capital can be difficult to obtain and barriers to entry can be even more difficult due to large conglomerates.
I do agree that many MBA grads come out overconfident and have expectations on earning six figures out the gate.
Publishing this article has let me see that either I can’t write clearly or people have a very low reading comprehension. I am not bashing MBA degree programs. I think some of them are very valuable and the ROI for the student with an MBA is often very good–partially due to the way they are perceived. In fact, any logical reading of this article would encourage people to go out and get an MBA. It is written to small/medium sized business owners who are seeing a flood of MBA applicants due to the fact that many of them can’t get jobs right now.
Regarding risks: What you are really saying is that a lot of people with an MBA are uncomfortable taking risks with their own money. Thats fine, but aren’t they they ones that are supposed to be best trained in how to minimize risks in business? If you are an employer do you want to hire someone who wants to take business risks with your money but not their own? Keep in mind that I’m talking about “on average” and specifically talking about average small and medium sized businesses here.
Regarding capital being difficult to obtain: I would argue that it has probably been easier to get capital in the last 20 years than pretty much any other point in history. Also the capital requirement for many businesses has dropped significantly. For example, if you wanted to setup a webserver 15 years ago, you would have been looking at significant expense. The cost of the web server software itself could have easily been $50,000 and that is just for the software. Now days you can easily get something running for $5 to $50 per month.
The ability to outsource has made it much easier to handle everything from fulfillment to payroll with very low startup costs.
There are businesses that require a lot of capital. You can’t suddenly decide you are going to manufacture cars without some serious investment. However, if someone actually has business skills they know this and they also know hundreds of businesses that don’t require large capital investments to start.
A small business owner who is considering paying a premium to hire an MBA needs to ask these questions:
Why is this person confident in taking risks with my money, but not their own?
Why does this person have the skills to run my business, but not skills to start their own low capital business?
There are always exceptions to everything and maybe people would have been happier with a title that said, “If you are a small business owner, be careful not to overpay for someone with an MBA that doesn’t have a lot of experience because often times they aren’t the best fit for your business”. Of course then no one would have read it.
Rogerian argument.
The content of the article is based on “What if’s” and “Generalizations”. I fully agree that work experience of 3-5 years coupled with a masters is probably the greatest force multiplier next to having a successful military leadership background. People that do not have an education or an MBA confuse those who do with automatically being smarter or better leaders. From the experiences I have had I can say that those who seek out an education, seek our challenge, and try to better themselves are also natrually prone to be better team leaders.
The article also focuses on hiring an MBA to run a business in past vs. present times. An MBA is not geared toward making someone a CEO…but it is geared toward giving someone a well rounded business base to grow into more challenging roles.
Here is my personal example: I went into the Marines, through correspondence I achieved a bachelors degree. I have worked 5 yrs as a capital equipment sales rep. I am getting my MBA at night. I have a great skill set but I need to sharpen them if I ever want to get out of sales and move on to say..operations or marketing and bring my sales skills and my MBA with me. Having a degree or a lot of work experience does not mean X amout of money. Quality work, successful work, good team work, and customer relationship building get you more money. Some great sales positions that are very lucrative require an MBA. Not because the product you are selling or the customer is exceptionally savy or technical but, since the position is so lucrative, the company has to set a hiring barrier to weed out the bulk of candidates. Why do you think Pharma companies require their reps to have such a high GPA coming out of college? The clinical information is easy to learn, but since the position is so lucrative, especially for a young 22yr old they need to have a way to weed out all the candidates.
I have also had the pleasure of watching a lot of MBA’s say that “I’m a leader”. They use the word “I” a lot instead of using “we”. I have been through countless leadership courses and interviewed a lot of successful business leaders. The biggest X factor for greatness in a manager is being able to surround yourself with talent and having the “talent” learn the other roles on the team so they are all on the same page and they all play a part. So, the IT manager needs to also have a “sales” mindset as the Sales Manager just as the Finance Department needs to understand the product being sold. Instead of being compartamentalized, being cross functional is a game changer for companies. Having and MBA WITH EXPERIENCE just lets others know that you can adapt to knew things, take on other roles outside your comfort zone and work cross functionally. I had a real jerk MBA group member who was in the Finance Department with his company. We would give a presentation and all he wanted to work on was the Finance portion of the slides. What good does that do? I say let the IT guy in the group learn the Finance slides and vice versa. Getting an MBA does you no good and does not teach leadership unless you can jump in different seats and learn that a leader doesnt do everything himself, but he sets the team up for their own success by building on the weekness by cross refrencing the strengths.
Education is nothing….without QUALITY practical application. I see a lot of MBA’s that would make crappy managers…I have also seen a lot of fellow Marines make crappy leaders. The title does not justify the position. An MBA should be used as a hammer or measure in a carpenters tool belt.
I read this article, I think the author should consider the sacrifices you make to earn a MBA. Earning a MBA is not a walk in the park, it is hard work, dedication, discipline, will power and prayer. There were nights when I cried to get through the hard courses such as, accounting, statistics, finances, etc… Yes I understand allot of us do not have experience, however I think employers should look at the ability to start and complete a MBA means you can follow, learn, and complete assignments. The MBA also contain courses in management. What I basically saying is a MBA is not a poor degree, it cost allot of money and over two years in time, the curriculum covers a vast amount of courses that most employers are looking for to manage and operate their business. So do not be so quit to say employers should be leary of MBA we have allot to bring to any buisness, experienced or not.
While I understand all the hard work you put into your degree, let me ask you two questions.
Do you believe there is a coorelation between having an MBA and other measures of career success–like salary?
Do you think that higher grades in an MBA program correlate with business success?
In other words, do you think that on average, getting an MBA helps your career? If you do, you might want to read this study.
In the end, this article is useful when all posts are read. The title did exactly as a message should achieve with a target audience. It elicited a wide range of responses! Thank you everyone and particularly you, Mark. By the way, one of your challenges in this post, is that some folks are reading just the initial comment and not all of the follow-on threads. It has you on repeat with the whole obtaining VS. highering an MBA (food for the next post, brother)!
Sincerely,
-Retiring (soon) Soldier
The backdrop to my post –I’m internalizing and researching as to whether or not I should add a Master degree to my Bachelors and 20 years of organizational leadership (obtained in active duty military). Am I so much more marketable (to the point worth the hard work)?
Second intention, besides nervously stepping into the civilian workforce, is to start a business. So I am curious about the relevancy of an MBA to a an inspiring business owner (especially considering my degree is Psychology). Will I gain valuable, immeasureable tools for success with an MBA applied to business ownership?!?!
I’d suggest you get a copy of The Personal MBA. The first part will give you some thoughts about how applicable an MBA would be to starting a business. The rest of the book will give you a lot of the education you are probably going to want for running your business.
If you want to pursue a degree for starting a business, you might look at some of the entrepreneur degrees as they may be more focused on what you are wanting to achieve. On the other hand, the networking aspects of getting an MBA might be beneficial–particularly if your business is going to be looking at selling stuff to companies that your classmates are likely to work for in the future.
I give Mark credit for writing an article with such a large feedback. While I am not in a position to hire, Mark’s argument would be MUCH stronger if he referenced statistical evidence from valid sources. My common sense tells me that a few peoples experience with MBA grads with limited experience may not necessarily be indicative of the majority of MBA grads.
I am currently applying to the MBA at several schools and have used sites like Newsweek and businessweek for general information about how MBA candidates are selected for the top 100 MBA programs. These sites provide useful information such as the years of work experience that the middle 80% of students accepted in the program had under their belt. MOST of these programs list 3 to 5 years in this category. With that being said, we can say that generally speaking only 10% of students admitted to the top 100 MBA programs had under 3 years of work experience.
If this figure is true (please check this info as I may be making an error in my math somewhere), this article seems limited in its scope. If a small minority of MBA grads lack real word work experience, what’s the point of writing this? Are you telling small to medium business owners to watch out for the 10% (again check my math) of MBA grads who do not have work experience?
Please let me know if I am missing something here. I do realize that I am only referencing the top 100 MBA programs, but who cares about any program below this? (I am totally joking to keep this forum light-hearted :-).
But Mark,
We the forum challenge you to add statistics to your argument. (It can only strengthen your article).
All in all, can be a very great read for a potential employeer.
While I appreciate your comment, I think you are missing the point of my post. I’m arguing that a lot of small businesses owners will over-value someone with an MBA–particularly in a market where MBA programs are flooded because people can’t find jobs. My warning is for business owners to be careful that they are hiring the skills they need and not to assume that someone with an MBA is going to be better for their business than someone with experience and no degree.
Obviously it would be very difficult to create some type of study that measures an employer’s perception of someone and then attempts to come back latter and see how that person performed relative to those perceptions.
As I’ve said, this is based on my experience. If your experience is different, I’m very open to hearing about what you’ve found in hiring people who have continued on to get an MBA because of the downturn in the economy.
However, if you are interested in studies about the value of an MBA you would probably be interested in this study that attempts to answer the following questions: 1. Does getting an MBA correlate with other measures of career success. 2. Is success at business school a good indication of success in business.
From the article:
This study is looking at something completely different than what I was addressing in my post. I’ve maintained that an MBA is valuable. If they are over-valued by employers as I’ve argued, then that just makes them more valuable. However, the research that I cited above seems to indicate that this may not be the case. It doesn’t say that it is worthless, but it does suggest that you shouldn’t assume that getting an MBA will necessarily be a good investment for your career.
On a slightly related note, here is something I just learned this week about undergraduate business programs:
Students who apply for MBA programs usually that the Graduate Management Admission Test. Of all the different undergrad degrees who take the GMAT, which group do you gets the worst score? Business majors get the worst score. So on average people who study chemistry, English, or art history do better on a test that shows how well you will do in graduate business studies.
To put that in perspective, lets say there is a test that you had to take before applying for graduate school in chemistry. (There probably is one, I just don’t know what it is called.) Now lets say that the average score of people who had an undergraduate degree in chemistry was lower than any other group that took the test. Wouldn’t that make you question the value of the undergraduate chemistry degree?
Ok, I get it now.
To keep things simple, you wrote this article to educate small to medium business owners about hiring MBA’s versus a person with greater related work experience correct?
I actually agree with you. I myself (eventhough I am currently not in a position to do so), would hire a person with more work experience than an MBA with less work experience.
I just want to make sure that you are aware of the reasons you received so many negative comments however. While you have educated the business owner, you have alienated the MBA grad (eventhough it was unintentional). No matter how good your intentions, you must admit that you have singled out a specific group.
Your post has drawn a lot of attention (it was like the fifth search result when I goggled MBA). The title is also very catchy (and you explained you did this intentionally to draw traffic). You have to realize that it has a negative undertone and that your average person is going to read the title and skim the article, not really assimilating the information you are trying to relay.
You also haven’t attained an MBA yourself, no matter how educated you are on the subject, so this post doesn’t directly affect you. This leads to many angry people who have worked to become MBAs.
It’s like a person talking about the Yankees when they’re a MET fan (sorry for the sports analogy :-). No matter if you were saying how great the Yankees are, people get perturbed when you speak about something you are not yourself invested in.
Let’s be honest, the MBA, like any degree, is a business. Colleges and Universities make billions every year “selling” us education, the MBA included.
But why focus on the MBA? You could have easily targeted any degree. Why not argue “Never hire a college grad.” Do you believe that someone with more experience versus a college grad with less experience should get a job?
I implore you to think about how this article is affecting others. Yes, the MBA may be a piece of paper, but its a piece of paper many people have worked and invested to achieve and this article (again, even if unintentional) affects them. I understand that you had no ill intentions against MBAs and actually think its a great path for some folks.
Just something to think about. Btw, every position/career in the business world I have had thus far has been due to my resume and work experience. It had to be, because I was actually a Biology major in my undergrad years and needed experience to not only get started in the business world, but also move up during my career.
I’m a recent high school grad planning on attending a business school this fall. I’ve always said that I would earn an MBA and hopefully get a job that I can make a career out of while climbing up their corporate ladder. After I read the article and all the comments I have to say that I agree with some of the points the author is making.
I understand that work experience is essential in getting a new job but you can’t deny that new grads are coming out with fresh new ideas to innovate into a company. As said in the comments these people are trained to do that and solve any problems there may be. If I do go through with my plans and earn an MBA I’m sure that my mind set will be as it is now: to get a job with a good starting salary. I never thought of myself to be over confident. I recognize my flaws and do my best to better them. I don’t expect to be making 6 figures even after 10-15 years of working. I just hope the knowledge I’d have from getting an MBA will make me a better candidate for a job and give me skills to use throughout my working life to advance through a company.
A great example of someone getting a job without a degree is my mother. All her life she worked in business dealing with a lot of people and a lot of paper work. She stopped working once she was ready for kids. At this point her resume had a lot of years of experience. Once my brother and I were old enough to look after each other a little she went back to the work force and got a job in a nursing home as a director of medical records, which is dealing with a lot of paper work and all the people in the home. Like I said, she has no degree whatsoever besides a little bit of trade school. Goes to show what good experience can do for you.
While I found the article to be quite harsh, I understood where Mark’s primary focus was.
Unfortunately, this article has scared me senseless because I am an older/non-traditional student
Decided to pursue my undergrad in a totally different field after years of procrastination and a true disdainment for my job (I was a legal secretary for 5 years). Anyway, I am graduating with a B.A. in Health and Human Services and was told that I would be a great candidate for a one year M.B.A. program here. (It is not a top tier business school, however it is well know in the State I live in). My concern is: Is there anyway I can translate an MBA with my undergrad degree into program directoring a non-profit health facility or working for a pharm/biotecth co? Am I so wet behind the ears with no experience that that employers will look at me as those who are forementioned in the article? (No experience?)
I was really hoping to save myself a year in graduate studies considering my age (I’m 36). Please, any opinions or suggestions would be appreciated.
I do think its easy for those who have worked really hard on a degree to be offended when someone hasspoken so harshly about that degree in ANY context. Masters degrees, in any realm, seem hard to get. ESPECIALLY FOR SOMEONE WHO has been in the workforce and has taken time out to get it. So, I can see how people can feel that your opinion, Mark, degrades their efforts. However, I appreciate your honesty as it is helpful even it it hurts.
Danielle – A degree helps to a certain point, but once you have a great track record it isn’t as big of an issue. I worked in IT for years with only a bachelors and master’s degree in music composition and never had any trouble getting good paying jobs because I had proven skills. The ideal situation for you would be to get a job somewhere that will give you experience and pay for you to do your grad work. Often a graduate degree is much more valuable when you have experience under your belt.
Also 36 isn’t that old. Traditionally people would be done with school at that point, but the modern workplace requires you to keep learning to stay valuable. It wouldn’t be crazy to work for awhile and then look at going back to get a masters degree (while you continue to work) from a school that offers a good online program.
Danielle, I went the traditional route with an undergraduate degree in business in 1980 followed by a MBA in 1992 after I had a dozen years of work/management experience. After 30 years of progressively responsible jobs in the private sector — mostly at Fortune 500 companies — I was laid off when my job moved to India and was handled by someone who made 1/5 my own salary. I trained him. He probably wasn’t as productive as me at first, but after a few years, I’m sure he’ll either be gone or doing fine.
With my background, I landed many interviews in late 2008 and through mid-2009 — the midst of what we now call the Great Recession. Eventually, I decided to go back to school to get a PhD so I could teach in college. I was flabbergasted to discover, however, that top flight graduate schools were not interested in a 52 year old with real world experience. I was even more surprised (pleasantly) that I didn’t need a PhD to teach, I could qualify based on my professional experience. I’m now teaching in a business school.
The bottom line is this, you must take stock of what you can do and build from there. I teach many non-traditional students — they are my favorite students! They are there to learn and they appreciate the uncertainty of the real world.
If you choose to go back to school and get an MBA, I predict you will be successful and will gain confidence that may help you land a job. You will NOT have the unfounded confidence that Mark refers to in this article! But, while you are in school, take stock of what is happening around you. You may actually find the job you are seeking before you finish the degree. Always keep the end in mind. The degree is a piece of paper. You want a career, something that has meaning and contributes to society while offering you some kind of gratification. Your path is unlikely to be linear, so keep your eyes open and always be moving!
Thank you so much for this reply, Mr. Morriss filled with good advice.
I actually really needed it today as I am studying right now to take the GMAT.
Although I understood Mark’s advice to me personally, I am trying at all costs
To avoid working/attending school at the same time. I tried it before and it was truly
Difficult for me. Thus, I will apply for the one year MBA program (the good thing is: There’s is a
Mentor/Mentee program that at the school I am in really interested in where you work alongside
Someone that is doing exactly what you want to do when you intern. As forementioned, I want to get
Into the non-profit sector or Healthcare arena as to make use of my undergrad degree. You are right in that non-traditonal students are more focused! Everyday my mind is on my goals!
Thank you again,
Danielle
Business schools are earnestly competing for the best students. The ones that will look good to other students trying to decide which program to “buy.” Remember, schooling is a commercial industry with stiff competition. If it has been a while since you were in school, you may want to consider a study course to prepare for the GMAT. Some of the online programs are affordable, shop around. Remember, if you don’t get the score you need, you can go back to the books, study some more and retake the GMAT. You only need to report your best scores. Good luck on your GMAT!
Also, people leave their jobs all the time and seek nursing degrees and yet experience never comes up as an issue and they are working/dealing with individuals’ health! I had a friend who has an undergrad in music theor, did 2 years in a nursing accelerated b.s. program and was hired before she finished field work. That is not a rarity, by the way. Happens all the time. Just wanted to add that this seems to not be an issue in other areas.
I think that the person that wrote this blog is someone who has an MBA. They think analytically such as one that has a business degree is trained to do. Either he/she has one or they tried to get one and didn’t complete their education for some reason/
In general like the site, and thanks for the entertaining article, but so many fallacies.
The two that struck me the most were:
Everyone who studies for an MBA MUST want to start their own business or they’re a failure. I know a lot of ppl with MBAs and hardly any of them started the course with the intention of becoming an entrepreneur. MOST of them were looking to increase their effectiveness as paid employees. So how does that make them a bad hire?
Organisations shed the least productive employees in a downturn (assuming managers are rational). Gee, what could possibly be wrong with that assumption?
(For purposes of disclosure: yes, I graduated top of my MBA class, I now run my own business, and I would hire someone with an MBA.)
I’m glad you found the article entertaining. Keep in mind that as someone who is running their own business, you are in a very different class than what I’m describing here.
This article is assinine. I dont know anyone who makes a hiring decision based soley on a degree, whether it be an MBA, JD, or PHD. You always look for experience…while someone might not have direct experience there is something in his/her background that might be useful. I have an MBA, and I dont feel entitled to any job position just because of it. I do look at it as something that gives me a bit of an edge on top of the experience that I have. I have the experience but also I have learned fundamental concepts of business which supplements. I also think this article is very unfair.
There is an undisclosed assumption in the statement about “least productive employees” being the first let go in difficult economic times.
Most managers hire and retain people who think like themselves. While this is not good or bad in and of itself, it does play into the decision to layoff someone when times are tough. As a former Employee Relations Manager, I estimate nine out of ten managers make a decision first based on how they feel, then look for logical reasons to support it. This is especially true in large corporations, where the sources of problems are often deeply masked. “Productivity” is a conveniently abstract concept that seems precise but is easily contrived. Those managers may tell the employee something “face saving” while telling the Employee Relations Department something completely different.
A generalization of the least productive employees being the first to go is naive and dangerous. Yes, about as dangerous as saying, “never hire an MBA,” without also reading the caveats and qualifications that go along with the statement. That said, I also have an MBA and was an Employment Manager for many years. It was my practice to hire the person, not the degree… or the resume… or the work background. It takes a lot more time in the short run, but the company is rewarded in lower turnover, better job fit and, in the end, less time in hiring and more time in producing.
Thanks for your comment.
Pretty much all of our economic theories are based on some level of rational behavior under the idea that with a large enough sample rational behavior will emerge. Let me follow your line of reasoning. Lets assume that 90% of the managers that let people go do so without considering the skill level of the employee. We will define a more productive employee as the one that will result in more profit for the company. Lets also assume that every manager has to let go the same number of employees and that the employees released without considering their skill level are randomly distributed in their skill level. That would mean that of 100 people who get pink slips, 10 are let go because they are less productive than the people retained, 45 are less productive than the people retained (but let go by chance) and 45 are more productive than the people retained. So 55 less productive employees vs. 45 more productive employees.
So is your experience that 45% of the time, a person who is let go in an economic downturn is more productive than the employees retained? If so, that is very different than what I’ve seen.
Mark, you thought through the percentages much more than I did when making the estimation in my earlier post. In doing so, you’ve both exposed my tendency toward right-brained, holistic thinking and yours toward left-brained, analytic thinking! Nevertheless, I think your calculations roughly support my personal experience.
While defining a “productive” employee as someone who will generate greater income for the firm sounds precise. It is also based on an unknowable outcome. While the financial statements of a business might differentiate success from failure, they are not able to ascertain degrees of success. For example, analysts can speculate whether Apple made a smart move by collaborating with AT&T in releasing its smart phone and then negotiating with Verizon to expand its user base… but we can never now FOR CERTAIN if the opposite strategy or one in which Apple worked independently of strategic partners would have been BETTER.
Another way of interpreting your final paragraph above is, “the likelihood an employer will let go the least productive employees in an economic downturn is only slightly better than random (50/50) chance.”
In my personal experience, companies who wait for difficult times to let go counter-productive employees are rarely more effective as a result. (I’ve seen data on success/failure due to various cost cutting strategies, but am not referring to it in this argument.) As the company is sinking, those employees who are most capable of finding (and willing to find) work, leave first. Of the employees remaining, managers tend to keep employees who are the least trouble — those who think like they do or don’t contradict the manager’s direction. For a company facing an uncertain future, this “continuity” may be the opposite strategy needed to generate the greatest return for shareholder value. Making decisions that are roughly 5% better than chance fit with my personal experience.
I’m curious to hear your experiences, contrary to mine, showing managers as more capable of far-better-than-average decisions than random chance.
Most of my experience is with small and medium sized companies–at least that is where I have the most insight into the reasoning behind the layoff process. What I usually see is something like this: A company decides they need to cut costs, so they start looking at their biggest expenses. Usually salaries are a big part of that. They then start asking, “What would happen if we got rid of Tom? What would happen if we got rid of Jane?” They go through a mental simulation of what would break without the person and then look at how others could step in to handle the things that would be broken. Then they let the person go who will have the least impact in terms of creating problems and the most impact in terms of cutting costs.
I’ve seen several situations where someone was let go and a week or two later everyone was scratching their heads wondering “What exactly did they do? Nothing broke when they left.”
In my experience, this type of process gives better than 45% chance of letting the “right” person go. That being said, sometimes the person let go is very skilled and a good people person, but just isn’t a good fit for that particular organization. Someone with lots of ideas for improvement in an organization that simply wants to maintain the status quo is probably going to be inefficient. However, as you said, a highly skilled, highly motivated individual is likely to jump ship on their own when they find they aren’t a good fit.
Very interesting discussion.
Perhaps our differing experiences are indeed a matter of scale. For contrast, my last employer had 310,000 employees worldwide. I often imagined if any randomly chosen 100,000 were to disappear — other than the obvious human carnage! — they would hardly be missed. I believe there is that much waste in modern super-corporations. The reality is that large organizations are so difficult to manage, even performing 5% better than random may be quite an accomplishment!
Getting back to the original thought that started this thread… “correct fit” and “least productive” are different things. I will concede, if an employee is a poor fit for a position, they are likely not very productive either.
I will stick with my observation that “value” is subjective and difficult to assess in anything other than a binary — it worked or it didn’t work — fashion. But, while laid off employees may be the poorest fit for their previous employer, that is not the same as being the least productive. Nor, for that matter, does that make them the right people to be let go.
Hi,
From this post I think some of your points are right but not all. First you have to think why a person trying to get MBA? I am not a MBA, I am a business owner I have people working for me even people with MBA. I am proud to show that my company has number of people with good education. In your post you said that you were looking to get an MBA. Why you did not purse it? Maybe you can’t afford to go to a good school. I don’t know what was your situation was. In my company I hired few new MBA; still they are with me and doing a great job. I think may be if you received a MBA as a fresher you are afraid that you can’t do good. Good thing you did not achieve an MBA for ruining somebodies life and business. If you have to be popular write something useful for the world or younger people. I think in your point you right about small business like gas station, convenient stores etc. Yes for sure they don’t need a MBA skill to daily running.
Tom – I’m glad to hear your MBA hire worked out well for you and that they have made a good long term employee. Do you feel that your experience represents what an average company like yours would experience when hiring an average MBA fresh out of school?
1. 99.9% of MBA’s are complete imbeciles that have no idea on how to manage the people.
2. normally the position would be filled from senior workers in the group that needs managing this way ensuring an understanding of the work people are doing, something an MBA has 0 and thus it is an useless leech
3. some people were busy working instead of getting an MBA
4. I sincerely doubt your MBA is doing a good job. It just looks this way from your POV. Maybe you should try to listen why the managed people say instead.
This article is painfully biased and littered with strawman arguments. The title of the article is the first and greatest indication of this: ‘Never Hire an MBA’.
First, an MBA is a degree, not a person or a designation. Being ‘an MBA’ is a mieading statement because not all MBA programs are the same. For example, when a person is a CPA, it indicates that they have successfully passed a set of standardized accounting exams and are therefore expected to have a certain level of accounting knowledge. In that regard, one CPA can be reasonably compared to another as far as having a sufficient understanding of accounting. This can be done regardless of the quality (or lack of quality) of their education (e.g. Harvard vs no college). Since MBA programs are not all equal, one cannot assume that an MBA grad from Univ of Phoenix online has the same skill set and professionalism as an MBA grad from Harvard. Now let me clarify this point with my next point.
Second, it’s clear that you don’t understand an important part of MBA programs: The irony of an MBA degree is that a large portion of MBA grads received an undergraduate degree in something other than business, and their experience with business is often limited to their education in the program. Thus, a “Masters” of Business Administration is not true mastery of business This is true of many MBA grads, but certainly not all.
Third, let me be real: some people, no matter how smart, are just plain idiots. An idiot with an MBA is no different than an idiot with a gun–blame the idiot, not the gun.
This article is silly and lacks logic. The reasons not to hire an MBA, is just like saying I won’t go to that doctor because he has health problems. You need more than one person to run a business, if you think as a small business owner you don’t need someone with an MBA you are totally misguided. This article is more about the jealously of someone who got accepted into a hard MBA program, did the work, and is now able to command the higher salary and gets the attention. There is a reason why employers pay more for someone who gets an MBA, because a real business places value on it.
Frank – Actually there is a lot of evidence that the value of a college degree is minimal other than social and signaling expectations. As someone who has two master’s degrees, that’s a pretty big slap in the face. Specifically to MBA degrees, you might be interested in this post.