B-school 101
by Conan Tobias
Things are looking up for MBAs
2004-10-25
When Canadian Business last examined the state of business education in Canada, things looked fairly bleak. Despite being the crème de la crème of master's degrees in the late 1990s, the 21st century had not been nearly as kind to MBA programs. Enrolment was dropping, and those who had spent nearly two years and up to a year's salary (or more) obtaining the degree found themselves in a weak job market and a stalled economy, where MBAs were not only considered a joke, but openly mocked on national television. And while things weren't much better in the United States, Canada's top MBA schools were the ones finding themselves with plummeting international reputations.
Twelve months later, things haven't exactly taken a 180-degree turn, but at least they seem to have shifted in the right direction, with many in the industry anticipating an upswing in the year to come. "MBA enrolment tends to be counter-cyclical to the economy, so the current year we're in, the numbers are down generally," says David Saunders, dean of the Queen's School of Business in Kingston, Ont. "But everything is suggesting the numbers will go up next year, partly because the numbers in the U.S. were up on the MBA side, and we tend to lag about one year behind them."
Saunders, chair of the Canadian Federation of Business School Deans, says he has watched this cyclical trend happen before--interest in MBA programs usually wanes once a decade. "This year was a tight year for a lot of schools," he adds. That may explain why so few decided not to raise their tuition this year. Among the highest tuition fees in the country, MBA programs continue to get bashed in the media for having price tags that far outweigh their perceived usefulness. This year, most schools chose to raise their tuition less than 10%--or, in many cases, not at all--following a lot of double-digit increases last year. (The exception is schools in Western Canada, which are still playing catch-up following several years of a government-imposed tuition freezes.)
At the other end of the MBA assembly line, things are already starting to hit an upswing. Of the schools we surveyed, 25% are reporting a higher number than last year of students employed three months after graduation, with the University of Alberta, Carleton's Eric Sprott school in Ottawa, the University of Calgary's Haskayne school, the University of Toronto's Rotman school, the University of New Brunswick, the University of Ottawa and the University of British Columbia's Sauder school all reporting more than 90% of their 2004 graduates employed three months after graduation. (An MBA placement rate of about 70% is average in Canada.)
Having a job is one thing, but the latest batch of graduates across the country are taking home smaller paycheques than their 2003 counterparts. Of the 15 schools reporting salary information to Canadian Business this year, all but four saw a drop in the percentage change between how much money students were making upon entering their MBA programs and how much they were getting paid upon graduation. In fact, only six schools reported an increase in average starting salaries this year--which suggests employers aren't as willing to fork out the big bucks for MBA grads as they were just a few short years ago.
And consider the international MBA rankings compiled by the business press: BusinessWeek, The Economist, the Financial Times, The Wall Street Journal, and Forbes. Unfortunately for Canada's biz schools, there are more arrows pointing down than up this year. While Schulich made the Wall Street Journal's ranking this year, it fell off BusinessWeek's--which saw HEC Montréal place for the first time. And while Queen's placed first in BusinessWeek's international ranking, it dropped in both the Economist and Financial Times. Other schools, including Rotman and Ivey, fell in more than one ranking--bad news given the importance these schools place in their international reputations.
So, in short, while all the news isn't entirely good, things are definitely looking up. But with an unpredictable job market and lower levels of pay, potential students may want to give extra thought to exactly why they want to pursue an MBA.
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