There
is a clear link between people development and business success, but many MBA
courses are failing to include this vital subject. Philip Whiteley examines
exclusive research from the Work Foundation and highlights some of the key
findings
Last month, the HR consultancy Hewitt/Bacon & Woodrow published a survey
showing that managers spend around 45 per cent of their time on personnel
issues. In 2000, Hay Group researchers discovered that most business leaders
are unprepared for promotion, and handling people was the main area of
weakness.
It would be reasonable to suppose that the Masters in Business
Administration, the standard-bearer for management development, would reflect
these pressing needs. However, a study by the Work Foundation, due to be
published later this year, comes to the disturbing conclusion that many MBA
courses in the UK remain obsessed with accountancy, marketing and strategic
positioning. Most treat management of people as an optional extra.
It is the equivalent of expecting someone who has studied musical theory
intensively, but rarely actually picked up a violin to be a concert violinist.
Given that corporate collapses are common and that most mergers and
restructurings fail to add value (according to numerous reports – notably the
1999 KPMG study Unlocking Shareholder Value) serious scrutiny of the
development of our business leaders is long overdue.
The Work Foundation study also uncovers strong indications that employers do
not use MBAs in a strategic way, and make little effort to evaluate its
effectiveness.
There are two areas of interest to the personnel manager here. First the
pressing need for them to understand the closeness of the links between people
development and business success, so as better to show these to board members.
Second, that as the custodians of the training of future executives, personnel
managers need to look more critically at the management courses they arrange
for them.
Whether these necessary changes can come about by reforming the MBA, or by
scrapping the qualification, is the subject of fierce debate among management
thinkers.
Author and business analyst Henry Mintzberg, for example, is a fierce critic
of the MBA, in which the case study method treats all organisations as being
the same. "Execution [of business strategy] is about context; about depth
of understanding of the specific business or industry in question. That is
missing in MBA education," he wrote in Fortune magazine last year.
Mintzberg has set up a rival to the MBA, the International Masters in
Practising Management. Running since 1996, through a university network, the
IMPM is not based on departmental subject matters, but on core behavioural
abilities.
Conversely, Lynda Gratton, HR author and professor of organisational
behaviour at the London Business School, argues that there is scope for
innovations within the MBA. "At the London Business School we have always
put a big emphasis on leadership and people management skills," she says.
"We have a detailed first-year portfolio that includes interviewing and
presentational skills."
And this can be done within the MBA or separately, she contends.
"There are all sorts of different ways of learning," she says.
"It is great that people have set up alternatives, so that individuals can
choose the one that suits them."
These exclusive extracts which follow demonstrate some of the problems
facing MBA providers and the companies who ultimately pay for the
qualification.
Key findings
– Only nine modules out of the 20 courses offered training on personal
development and leadership skills
When senior executives set strategy, raise capital or deal with the media
they are communicating, persuading, delegating. They are dealing with people
almost the whole time. It could be argued that ‘management’ and ‘people
management’ are one and the same thing.
Susan Bloch, head of the executive coaching practice at Hay, says:
"Most managers are technically prepared – they have all the right skills
in operations, finance or marketing – but on the way up they have had very
little coaching or training on how to manage relationships. So when they get to
the top they are unprepared, not only on how to manage relationships
internally, but also externally – with shareholders, investors and the media.
"What they find is that around 40-50 per cent of their time is taken up
managing and working together in teams; managing across countries and regions;
and handling different cultures. Most of their ‘training’ will have focused on
learning their specialist expertise… very little would have focused on
helping them to understand the importance of managing relationships."
The Hay Group study in 2000 found that only 55 per cent of business leaders
felt adequately prepared for their promotion. When asked for the skills they
needed to develop, the same group cited ‘influencing across organisational
boundaries’ and ‘top team development’.
– Out of 20 courses there were 29 compulsory modules on accounting and
finance, and 22 on strategic positioning. This compares with eight on HR
management
On the 12 courses without a compulsory HR module, there was typically one
available as an option. This could be seen to qualify the finding, but equally
it could be argued that there is something quite surreal about the notion of
people management as an option for a managerial course. Where are all these
organisations that are not run by people?
Personnel managers are accustomed to hearing the accusation that they lack
sufficient knowledge of the business objectives and how the organisation makes
its money. The corollary is that many accountancy-trained managers need to
learn about how the recruitment, skills and team development of the
organisation are the means to their strategic ends.
Ewart Keep, principal research fellow at Warwick Business School and a
co-author of the Work Foundation report, comments: "One of the most
striking things about many UK MBAs is that people management is not part of the
core curriculum. Too often it is an optional extra. We are in danger of
creating a cadre of future senior managers who know a lot about finance,
accounting, marketing and strategy, but know next to nothing about how to get
the best out of people."
The Work Foundation study did uncover one MBA course that has struck a
balance and an analysis more attuned to 21st century management than most of
the rest. Its compulsory modules on people management and strategy respectively
read:
People at Work module: "Taking the link between business strategy and
the management of people as its starting point, this module focuses on HR
strategies and the importance of the function to organisational
effectiveness."
Strategic Learning Workshop: "This module develops and integrates key
themes of the programme such as team development and the management of change
with a focus on collaborative problem-solving, strategic learning and making
meaningful connections in your thinking."
The cross-references both ways indicate recognition that strategy and people
cannot be neatly separated; nor one regarded as an option. Such an approach is
still the minority view, however.
– There were two compulsory modules on ethics, one of which incorporated
social responsibility and corporate governance
Although it is heartening that the matter of business ethics has appeared on
the agenda, it is still far from mainstream. The presence of a separate module
on ethics is not the only yardstick, however, and the Work Foundation research
indicates that the subject is also being taught within accountancy and general
management modules. Ashridge College, for example, insists that it is integrated
into all disciplines and not treated as a separate subject, while London
Business School has appointed a professor of business ethics.
Teaching ranges from fairly ‘narrow’ subjects such as the importance of
accuracy and good faith in accounting, to the broader corporate social
responsibility matters of avoiding pollution or the exploitation of workers.
Ethical matters have become of more pressing concern to business in the wake
of the Enron scandal. With greater media exposure of many companies, and the
importance of brand and reputation, the hidden cost of unethical behaviour is
becoming more evident. Although there is still progress to be made, it seems
course providers are waking up to the importance of ethical teaching.
– At least £10m is spent by British employers each year on MBA
participants who leave the company within 12 months of graduating
This finding is the one that strikes at the heart of the personnel
profession. The most recent annual report of the Association of MBAs shows that
just over half of MBA graduates stay with their employer for a full year after
graduating. This correlates to the £10m estimate made by the Work Foundation.
This does not necessarily translate as a net loss to the economy, but it does
seem that little or no return on a considerable investment in training is
realised by large numbers of employers sending managers on MBAs. The
qualification is not cheap, costing between £8,000 and £60,000.
This indicates extremely poor management development programmes and a lack
of thought as to what the MBA is for. Rather than forming a part of a programme
to strengthen the managerial capacity of an organisation, in which a series of
development exercises, integrated into succession planning, are placed at the
heart of the business, it seems that doing an MBA is a perk or an afterthought.
There is a link here with the findings on individual personal leadership
skills. If the typical MBA does not address how to lead, and the personnel or
training department is not looking for it to do so, it calls both the
qualification and the priorities of the HR profession into question.
Sending someone on expensive courses, with an unknown impact on their
performance, and being indifferent as to whether they stay, is hardly a recipe
for success. In the course of its research, the Work Foundation came across one
major US-based multinational, which requested not to be named, which is
questioning whether it will continue to spend ‘tens of millions of dollars’
sending its European managers on MBA courses, because it is unsure whether it
is getting value for money.
– Nearly a quarter of MBA graduates are in consulting; of this group just
6 per cent were in consulting prior to the MBA
– One third of the total MBA-qualified population is in general
management or consulting. Only five per cent are in the public sector
These two findings can be taken together and indicate that the MBA is a
route out of ‘boring’ parochial jobs into the international world of
consulting. A major slice of the expenditure on MBAs is therefore not used as a
means of improving managerial capacity of the service, manufacturing and public
sector organisations – even though these often pay for the courses.
Work Foundation co-author and MBA lecturer Ewart Keep says: "Many MBA
students want the qualification in order to change jobs or earn more, not
because they want to hone their skills and knowledge. Too often students want
to minimise the learning and do the least necessary to pass. This may well be a
rational strategy, given the fact that students on ‘executive’ – that is, not
full-time – MBAs are trying to hold down very demanding and time-consuming jobs
while they are studying."
Conclusion
The MBA industry is vibrant, but it is being kept alive by the innovations
of some course providers, and by the strength of the MBA as a brand, rather
than by the concept per se, which is beginning to look anachronistic in this
day and age.
Many individuals do an MBA course for the badge, not in order to become more
effective business leaders.There has been little or no work done on gauging the
qualification’s true effectiveness.
The bulk of MBA teaching is on accountancy, marketing and strategic
positioning; whereas people management, awareness of technology, and personal
leadership skills are equally as important but still remain neglected.
The point of the Work Foundation study is not to bury the MBA, but to issue
a warning: unless course providers and the personnel and training professions
address the real purpose of management development, they will continue to
devote resources to an unproven qualification in an unplanned way.
Case study: Ian Carlisle, Autoglass
Senior executive roles involve a combination of analytical ability,
knowledge of the industry and inter-personal skills. The first of these three
has been prioritised in much conventional management preparation, but it is
increasingly recognised that all are needed.
Ian Carlisle, managing director of leading windscreen provider
Autoglass, employed all three in a dramatic turnaround of his business just
over two years ago.
Carlisle was promoted from operations director in late 1999,
just as a new logistics and computer system came on line that threw up
unexpected teething problems and led to serious problems with suppliers and
customers. Debt increased and staff morale plummeted.
Carlisle, who had used a coach for three years, called on her
support in his first major test of leadership.
The coach helped him focus on the impact that the leader has on
the team. She also gave an objective perspective on the matter, helping him to
analyse the options, rather than get caught up in the drama.
Most of the solutions were of a technical and industry-specific
nature, and Carlisle drew heavily on his own technical expertise to map out
solutions; but coaching played a role.
"There was no magic formula," he says. "My coach
gave me advice about my demeanour and confidence. The best advice was when she
said: ‘If your head goes down then the business will follow. You have to stay
outwardly positive and show tenacity and confidence in overcoming the
challenge.’
"We finished 1999 with a bad year. My honest feeling at
the time was one of total isolation because the higher up the organisation you
go the smaller the peer group," he adds.
The company began to recover in 2000. Carlisle "learned
more in nine months than he would have in five years in easier times".
This gave him the confidence to expand aggressively once the problems were
ironed out.
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In 2000 the company showed record results. Market share
improved from 35 to 39 per cent, despite the fact that the RAC and Kwik Fit
entered the market. In 2001 the company record customer and staff satisfaction.
Work foundation researchers
examined the curricula of 20 MBA course providers in the UK, supplemented with
interviews with lecturers, training professionals and with the Association of
MBAs, and a literature review. The research will be published in late summer or
early autumn.
