Much ado about MBAs – Do MBAs cut it for nurturing management?

Posted on 6 Aug 2010 by The Manufacturer

Is an MBA a top priority or non-essential CV accessory? Jane Gray talks to manufacturers and academia about the value of MBAs and alternative methods for developing management talent.

With skills development and a demand for role model leadership in manufacturing companies gaining ever more coverage in industry conferences and the press, there is increasing pressure on manufacturing organisations to invest in the professional development of promising managers.

However, how to do this to best effect is not straightforward. There is a longstanding debate over the extent to which traditional MBA-style qualifications represent the best investment in time and money for organisations attempting to foster earmarked talent.

The decision to fund an MBA is not one to be taken lightly. Considering an MBA from a leading business school like Cranfield now demands a hefty fee of about £31,000 from an individual or sponsor, it is clear that there are high expectations about the level of skills attained and the value that the qualified individual will bring back to the company.

Is everyone convinced of this value? No. While there is still a dedicated group who say that a properly accredited degree from a prestigious business school is the only acceptable show of management knowledge to have, there is also a strong element of dissent in the manufacturing community. For them, inhouse management education or training developed with the expertise of independent providers can deliver far more direct value.

Business schools are best

There are currently 230 students on the Cranfield MBA course, 25% of whom have manufacturing backgrounds. Unsurprisingly, Cranfield’s director of the full-time MBA programme, Séan Rickard, believes that MBAs will always represent a deeper understanding and more rigorous test of ability than proprietary courses. “I don’t think there can be any comparison between a good MBA and an in-house management programme. They are in completely different leagues.

“An MBA programme is holistic. It contains a lot of knowledge about different business functions (accounting, marketing, operations) but perhaps more importantly makes students aware of their strengths and weaknesses in dealing with people. The learning environment on an MBA allows this knowledge to be acquired in a way which is simply not possible from fragmented courses delivered in-house.

“The examination process for an MBA is also a lot more rigorous and there is a coherency and a standard delivered which will never be matched in-house. Dare I say it, a lot of in-house training delivers little more than a certificate and is seen as a bit of a jolly.” In response to the suggestion that MBAs were more valuable in terms of fulfilling individual aspirations and career development than for the delivery of skills growth specific to companies, Rickard said: “It depends on the philosophy of your management school. Here we believe we are developing the senior managers of tomorrow.

We aim to give our graduates the ability to speak knowledgably to experts and to think strategically.

Effective senior managers in organisations must be able to bring experts together in a coherent team and strategically direct them towards applying their expertise to the company goals.” The suggestion that it was easier for managers to apply in-house learning directly to their work, providing immediate return on investment to their organisations, elicited a definite negative. “A large part of the value to be gained from an MBA is drawn from fellow students. There is a danger of perpetuating in-house mindsets with in-house training. Without doubt an MBA will develop better agility and flexibility in problem-solving for a far broader range of problems, because students expose each other to different cultural approaches, scenarios and opinions to get results.” Gaining this breadth of knowledge and influence was certainly a key motivator for Stephen Egli, currently the logistics manager for supply chain services company CHEP, when he took his MBA at Cranfield in 2008. “Before taking my MBA I felt I was specialising far too narrowly in my work on process improvement knowledge and techniques. I wanted to generalise my capabilities so that I could gain broader credibility in speaking on a professional basis to several different sector and business functions. The knowledge I gained during the course has allowed this and I now have a far better understanding of the different interests that exist across a business and how these interact.

“In-house training can deliver elements of the value gained through an MBA, but it can never provide the same intensity or the breadth of context that you gain from the other students. If you have a specific problem or skills gap to bridge in your organisation an MBA is not the right course. If you are looking to develop people, give them knowledge so that they can act with an understanding of the broader implications of their actions then an MBA cannot be rivalled.”

Training needs change mid-stream

If organisations decide to try to fill skills gaps and develop capability in-house there are several key considerations.

Andie Hallihan, managing director of business education consultants Applied Angle, explains: “The worst position for a company to take when they come to us [or another provider] is to be inflexible. We spend a lot of time with companies coming to understand the needs of the business – both at an individual and an organisational level. We then look at the best ways to translate knowledge into experience in order to deliver those needs.

“It is not easy to see these things from within an organisation. We always find that as we collaborate on developing the right education programme, its characteristics alter from those originally planned by the company. We also often find that although companies can identify certain technical requirements they have not always thought through how they will put this in place with the people in their organisation.

Ivory towers out of touch

Some in industry and education do not subscribe to this view, however. Owen Berkeley-Hill, now a consultant but formerly of carmaker Ford, asks: “Do MBAs not simply create ‘administrators’ who favour command and control management? Also do they represent a safe investment for companies who fund their employees through the course? Time and again when I was at Ford I saw that the people being funded to do MBAs were doing it to further themselves and rarely because it would enable them to be a better Ford leader. The majority were frustrated if they did not receive immediate promotion and then they would leave. This became a double cost to Ford who lost the value of the degree and had to pay for someone to replace that employee.” The Institute for Manufacturing (IfM) at Cambridge University has taken the choice to diverge from the chalk and talk approach of MBA-style education partly to mitigate this problem. Jasper Robertson, a senior research fellow at IfM is closely involved with the organisation’s initiatives to develop in-house management education which answers the specific needs and challenges of manufacturing organisations.

“The education we deliver in partnership with companies is at least as valuable as any MBA and since it is developed in response to industry-focused research into areas like technology management and policy, it often answers the needs of managers in manufacturing far more accurately,” he says.

“We primarily work with companies to develop capability for companies and the industry, not to develop transferability for individuals. Our training does not culminate in an official qualification partly for this reason. Does a formal qualification enable you to do your job better?” Stephen Smith, operations director at British Gypsum, part of the Saint-Gobain group of companies, says not in his experience. “As an employer it makes no difference to me whether a candidate for a job has an MBA or not. Here at British Gypsum we recruit on behaviours not qualifications. Our strategy is to grow our own talent and our succession planning is strong.” Indeed Saint-Gobain believe so fervently in developing resilient internal skills that are tailored to the company’s specific environment and operational requirements that it has developed an intensive in-house development programme which Smith believes easily rivals any MBA. “Our WCM [World Class Manufacturing] programme is a game of two halves. Firstly, it teaches managers how to apply TPM to their factory and make it work. Secondly it is about change management; about how to affect change, manage people and walk the talk. While MBAs are about theory, this is about what you need to do to drive improvement in Saint-Gobain, about the underlying principles that drive the process improvement programme in all our factories.

“The WCM Instructor qualification is mandatory for all our factory managers and it is an extremely tough course. There is an exam and a 100-day review and the pass rate is between 30 and 60 per cent. It is difficult to pass because you have to prove that you have learnt the tools, techniques and management approaches and that you can make them work. The WCM course is not just something you go on and receive a certificate at the end of – you must be able to show the examiners that you can make improvements. The examiners are people like me, who know what success looks like. Not people who are cut-off from the reality of the business.” On being challenged that the in-house WCM qualification creates a very in-house approach to problem-solving, Smith readily agrees. “We have our way, or the highway. We have optimised TPM for our industry. Our improvement approach might not be good for automotive or aerospace but it is right for process equipment. Our improvement processes are entirely designed for us and our management development is designed to get the most out of people for the company.”

Good intention, bad parenting

One industry representative who asked not to be attributed says: “Companies who offer their employees MBA courses as reward and incentive are like parents who just throw money at their children, buy them the latest game station and don’t spend any time with them.

“Many big companies throw employees funding for MBAs on the basis that it keeps them busy for a year or two and ticks a box for them in ‘fulfilling professional development’. It requires no investment from the employer in terms of time or in developing that person in their business.”