Empty corporate rhetoric. Patagonia vests. Esoteric coffee machines. There are a lot of things that have become ubiquitous in the Canadian business world. But no turn of phrase or fashion trend is likely as pervasive as the degree of choice for Canadian corporate leaders: the MBA.
Four of the five biggest banks, two of the three biggest grocers and one of the three biggest telecoms are helmed by CEOs with MBAs. Though this should come as no surprise, as the share of MBA-holding CEOs has nearly doubled in the last 45 years. Beyond the top job, the number of MBA grads in the C-suite, on corporate boards and in middle management roles continues to rise.
This is undoubtedly good news for Canada’s business schools. Along with bold mottoes, promising to change the world for the better, the employment outcomes of their graduates represent a useful marketing tool to entice future students into their programs.
And this prevalence of MBAs in Canada’s business elite should be equally welcomed by current and future MBA students, as data suggest that the more MBAs on a corporate board, the more likely that business-degree holders will be appointed to key roles.
But while Canadian business schools and their students may be celebrating, Canadians should be more skeptical of the increasing dominance of MBA graduates. That’s because business leaders with MBAs are more likely to engage in more short-term strategic planning, focusing on quarterly earnings, improving dividends and driving up stock price while ignoring long-term drivers of productivity like innovation and research and development.
MBA-trained CEOs tend to be more self-serving than their counterparts, pursuing rapid, costly growth at the expense of their employees or customers. And CEOs with business degrees reduce wages, on average, by 6% in the five-year periods following their appointments.
Indeed, the rise of the MBA graduate correlates suspiciously well with the increase in wage stagnation, worker precarity and corporate consolidation.
So while business schools pitch us lofty mottoes, like “Inspiring leaders for a sustainable and prosperous world,” why does it seem like their alumni have led us somewhere completely different? Because while in theory business schools prepare the leaders of tomorrow, in practice business education has become focused on technical and vocational instruction devoid of any moral or civic responsibility.
What’s wrong with business schools
Instead of accepting that managing complex organizations requires more than knowing the “5 Ps” of marketing, MBA curricula rely on frameworks and simplified management tools to reduce what is a complicated art to a simple science, rewarding memorization over creativity and critical thinking.
Rigorous analysis of business cases is meant to simulate real-world situations and force students to deal with ambiguity, both ethically and situationally. Instead, students accustom themselves to uncomplicated analyses, summarized in a few pages, written with coherent narratives.
Without reform, business schools should be understood as vocational training centres, whose sole goal is creating job-ready graduates, and whose key selling feature is the starting salary of their graduates. No more, no less.
– Danny Parys, strategy consultant
Management students are encouraged to employ a top-down view of organizations, trained to view the complex inputs of a business or economy as mere elements on a spreadsheet, devoid of ethical constraints. In business schools, humans are, often, just resources. Cases from around the globe are discussed, though little time is spent understanding the history or culture of a region, reinforcing the erroneous idea that what works in Tijuana must also work in Toronto.
This tendency to oversimplify often creates overconfident graduates who feel they can move seamlessly into new organizations and apply cookie-cutter theories and frameworks without understanding the context or culture they are operating in.
Which is ironic, because in Canadian business schools the question of culture and diversity is front and centre. The Ivey MBA, for example, boasts that its student body is made up of 40% women, 40% international students, from 25 different countries, and speaks a combined 21 languages.
Learning from one’s classmates and respecting their experience is, of course, a noble idea. Though for all the talk of geographic, ethnic and gender diversity, most MBA students share a common worldview. Unsurprising, as students are selected, and self-select, in part, based on their prior work experience, future career goals and ability to pay hefty tuition fees.
While on paper a class may be very diverse, most students tend to share similar work experiences, similar educational backgrounds and have similar goals. It seems that for Canadian business schools, diversity is reduced to metrics on a spreadsheet.
How to reform business education
It’s clear that Canadians value strong business education. Take a quick trip to any university campus and you’ll see that the business schools are often housed in the nicest, newest buildings. Their graduates command comfortable salaries. The Telfer School of Management, for example, claims that its MBA students can expect a 27% salary increase just three months after graduation.
But if business schools want to continue marketing themselves as a force for a better Canada, and retain their reputation for producing leaders, serious changes must be made. This means rethinking what diversity means and making efforts to attract candidates from diverse working backgrounds, without corporate baggage. Teachers, nurses and non-degree-holding workers could provide real diversity in MBA class discussions, sharing perspectives from beyond the boardroom.
Business schools need to rethink how they advertise their programs. It should come as no surprise that a marketing strategy focused on return on investment in the form of higher salaries will attract candidates, and create a student body, who value personal financial success above all else.
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The content of the curriculum must also evolve. Case studies can be valuable tools, but there should be more analysis of impacts outside of the organization in question. Students who one day may be forced to contemplate downsizing a company need to be discussing how layoffs affect communities and individuals. Future finance bros need to understand how leveraged buyouts put pressure on employees.
Ethics, philosophy, art, literature, history – subjects often considered frivolous or unnecessary for business careers have for centuries been considered non-negotiable when it comes to forming leaders and developing creativity. If we are going to continue to venerate business executives as leaders and visionaries, humanities education should be included in their development.
It’s of course entirely acceptable if business schools choose not to reform. Though if this is the case, we must be cleared-eyed about what it means. Without reform, business schools should be understood as vocational training centres, whose sole goal is creating job-ready graduates, and whose key selling feature is the starting salary of their graduates. No more, no less.
If reform is not on the menu, and it doesn’t seem to be, then it’s time to stop venerating business schools, and stop pretending the MBA student is a leader in training.
Choosing the status quo means more power must be given to other stakeholders and promoting alternative forms of corporate governance: more worker representation on corporate boards, more cooperative enterprises, and more bargaining power for unions and labour leaders, with the MBA graduate relegated to the role of managerial technician, whose voice is no louder than the rest.
Danny Parys is a strategy consultant based in Montreal. He holds an MBA from HEC Montréal.
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