Wednesday, February 25, 2009

MBA in a Recession? Bad Idea

Many who have recently lost their jobs are thinking about avoiding the rest of the recession by going back to school to get an MBA. It sounds like a great plan - you get to go to school, sit out much of the recession and take an important career step all at the same time. Unfortunately, reality is different. As someone who graduated from business school in 2001, during the roughest period of the dotcom bust, I can tell you that this is a very bad idea. Here's why:

Banking or Consulting? Not Likely - a large percentage of graduating MBAs turn to one of two careers: banking or consulting. However, these industries dramatically reduce their hiring during economic downturns. Moreover, newly hired MBAs are very likely to be laid off by these firms. I speak from experience. My offer with a well respected consulting firm was rescinded shortly after I graduated, and weeks before I was scheduled to start work. I wasn't alone. Every other MBA who had accepted an offer from the same firm, suffered the same fate, and our firm was far from unique. The good news? I kept a very substantial signing bonus which I received upon acceptance of the job offer. 

By the way, this situation was not confined to banking and consulting. Friends of mine had their offers rescinded by Intel, Lucent, Conagra and many other well known and respected companies.

Only One Shot - if you are shooting for a career in banking or consulting, you should be aware that you only have one shot of getting into those industries, and that is through MBA campus recruiting. Sure, there are a lucky few who are able to get into those industries after graduation, but in general they are the exception. Since recruiting for those industries declines dramatically during recessions, you are greatly reducing your chances of getting into the career path you want.

Tougher to Get In - you are not the only one with the bright idea of sitting out the recession. There are many others who plan on taking the same route. This makes it tougher to get into the school of your choice. In addition, admissions officers are trying to construct the most competitive and impressive class out of the available applicant pool. They don't typically consider out-of-work, recession refugees to be at the top of that list. Want to improve your chances of getting in next year? Why not take a year to backpack your way across Asia or join a non-profit for a year to serve your community? Besides, you might actually enjoy this little detour.

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Lise said...

I absolutely agree that this probably a terrible time to get an MBA. I'm not even sure an MBA is what most people want it to be these days, either. I know Penelope Trunk, for example, criticizes it for not teaching entrepreneurship, which is a commonly-cited reason for getting one.

From my experience working at a marketing agency, you don't need to have an MBA to be highly placed (admittedly, this is a small company; but I know my boss has worked at a high level at well-known NYC ad agencies w/o an MBA). If that's the route you want to go, you're better of doing it the personal MBA way:

Shadox said...

I don't know about that. I found that my MBA program taught me a great deal about entrepreneurship. In fact, there were several courses you could take about that subject in particular. I also think that for someone without any business background taking some basic classes in economics, statistics, operations etc. can be a huge advantage.

Before b-school I was a lawyer and I lacked much of that knowledge. Going to business school allowed me to transition smoothly into a business role and gave me a great deal of useful knowledge and perspective on the business world.

Over all getting an MBA is often a good idea, but I just question wisdom of taking that step in the middle of an economic downturn.

plonkee said...

It's all about timing. Employment tends to lag behind the real economy, so you want to be graduating 12-18 months after the start of the recovery. So it's not a bad idea to wait out the recession in education, but very easy to mistime - awkward if you've spent a lot of money on your Harvard MBA.

Mr. GoTo said...

For a lot of folks, spending time and money is a poor financial decision in any economy. There are a lot of jobs being filled by "MBA's" for which having that degree is not a job requirement or even a benefit. The problem is that colleges and universities start and run MBA programs as cash cows.

Dana said...

MBAs have been around for a while, and it's only in the last decade or two that it's become the end-all and be-all. As a field of study, there is nothing wrong with approaching an MBA with a clear end goal in mind. The issue is that for a large group of people, the plushy consulting or banking jobs may not materialize, thus the risk-reward valuation does not make much sense.

As MBAs become more ubiquitous, there is some dilution in the value of it. The end result may not be a bad one, as it keeps the students more honest as to whether they can derive sufficient value from an education that they pay dearly for.

As to the issue of timing, if a degree had been in the works all along, then this is not a bad time to buckle down and get it done. But if this is some kind of a hedge/escape from unemployment, then the strategy is questionable indeed.

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