The Real Cost Of An MBA

Given economic uncertainties, professionals who have been laid off or consider themselves to be underemployed are contemplating whether or not to pursue a Master of Business Administration (MBA) program. While such a route offers potential career flexibility, enhancement and advancement opportunities, it can also come with a steep price tag. Higher education costs in the United States have outgrown the rate of inflation, and getting an MBA has associated tuition expenses along with rent and book costs. MBAs, especially those who go to private business schools, can accumulate and incur between $100-200 thousand in debt and expenses in just over a two-year period. For those that are highly motivated to secure a MBA, are there alternative options one can explore in order to both receive the degree as well as minimize the costs? (With job opportunities rising daily, find out if you need an MBA to stay competitive

Advertised Costs Vs. Real Costs
Business schools market their programs in order to jockey for competitive positioning, mostly by way of attempting to secure higher rankings among peer groups. Professionals view the degree as providing greater career flexibility, such as opening the door for a new function or industry. Employers can look upon an MBA grad as holding management potential. It is important, however, to assess a program beyond tuition rates. A yearly tuition rate of $30,000 ($15,000 per semester) can easily be augmented with $10,000 in additional boarding and book expenses. Additionally, many programs require the purchase of laptop computers as well as costly overseas tours or trips. It is conceivable that such "peripheral" expenditures can lead to a total semester cost of twice the tuition.

Some professionals may want a "win-win" situation that allows them to earn an MBA at an acceptable cost. While attending a private business school can saddle an individual with low six figures in educational debt, programs at public universities offer a less expensive option. Exploring the full menu of public school MBAs allows professionals to possibly cut their debt in half

Part-Time Programs
In addition to the real costs associated with tuition rates, room and books, professionals who undergo a full-time MBA generally must forego at least two years of salary income. There is an additional exposure of graduating at a time of an economic or industry downturn that can establish or prolong the unemployment period. Assuming a professional earns $60,000 a year, a full-time MBA program can tack on an additional $120,000 in lost income and opportunity cost. Additionally, he or she will have lost two years of work experience subject to possibly greater visibility within the organization and promotions.

So summing it up, $60,000 for tuition, $20,000 boarding and books, $40,000 peripheral expenditures brings the total MBA cost to around $120,000, while the lost income brings the tab to a whopping $240,000. That figure amounts to four years of salary at an annualized income rate of $60,000. And this is an average school. If you are thinking about attending a more prominent business school, the costs shoot up. In 2008 the average cost of the top 10 business schools in the U.S. was $94,900 for tuition in a two-year MBA program.

Professionals can undergo a part-time or evening MBA program that allows them to retain their full-time job. Such programs typically take three or more years to complete. However, business training in an academic environment can supplement one's learning experiences on the job. And a newly minted MBA who took such a route will have a well-regarded degree along with three years of additional work experience and exposure within the organization.

Work for a Major Company and Get a Free MBA
Some companies, especially major Fortune 100 corporations, can assume partial or the entire costs of an MBA program (assuming one earns satisfactory grades). Thisis an ideal situation for many professionals. To be sure, many would jump at the opportunity to continue earning a salary, get an MBA and have it paid for by one's employer. Those that can wait a couple of years or so before starting the program should seriously consider this route. Perhaps they might also pay for a master's degree in accounting, a master's degree in finance or help pay for you to pass the CPA or CFA license? Those with family, however, should exercise caution in undertaking a full-time job as well as an intensive part-time MBA program. It can be a difficult challenge to find time and attention for loved ones, let alone having a social life. One can easily dedicate at least 70 hours per week on work and academics. (A couple of letters can mean a big difference. Find out which designation you need and how to get it,
Professionals who want an MBA at less cost can consider one-year MBA programs. Thaiscan reduce overall educational expenditures as well as allow the newly-minted MBA the opportunity to start earning a salary one year early. One should undertake diligence and ensure that the quality of the one-year program matches your expectations. You are, after all, a consumer/ customer of the program and the business school is the supplier.

Conclusion
Given that an MBA program is a capital-intensive endeavor, carry through with a level of diligence as of you were purchasing a home. It costs that much. Finally, various vendors offer online degrees including an MBA. Undoubtedly, such a route generally entails the least amount of expenditure. However, one should take a serious look at the credence employers give to online MBA programs. You might end up shelling a few thousand dollars without tangible monetary rewards on the back end.

Traditional MBA Or Business Graduate Degree?

Young professionals and recent college grads who wish to advance their careers often look upon a Master of Business Administration (MBA) degree as a means for achieving their professional goals. While there are exceptions, MBA programs are generally two-year commitments that may instill training and knowledge in specific fields (information technology, finance, etc.) as well as management skills that require soft and intangible skill sets (teamwork, leadership, negotiation).

The latter approach attempts to enhance managerial skills with the aim of progressing the professional's career, which comes with added responsibilities, expectations and a larger scope of assignment. In other words, many young professionals pursue an MBA in order to better position themselves for a vice president, CFO or CEO job in the future.

It is possible, however, to attain higher levels of responsibility and visibility within your organization by pursuing an advanced degree in business that is not an MBA. The academic universe offers a variety of programs that are tailored to individual goals and circumstances. An MBA program generally emphasizes a case study approach as it develops and molds future business leaders out of class participants possessing varied educational backgrounds, work experiences, career goals, and skill levels
MBA Characteristics
An MBA is a one-size fits all product, instilling just enough functional knowledge (in statistics, accounting, finance, etc.) while equipping and molding students with business skills that may be utilized in a whole host of future situations and settings. Real world case studies can involve finding the optimal debt-to-equity mix for a publicly-traded company, solving logistical scheduling problems for a transportation company, or coming up with a differentiated and innovative marketing campaign for a brand new product. Most MBA programs push students to secure a summer internship with a company and/or an ongoing consulting/CO-OP project with an organization as part of the emphasis on grooming future generalist managers.

While popular media may be heavily skewed in its coverage towards the one-size fits all approach of a MBA, young professionals – given their career interests and personal goals – may instead be more suited to either a more specialized and technical program or a more research-intensive, academic program.

Alternative Master's Programs in Business
There is a broad array of advanced programs being offered by colleges and universities across the United States. For instance, a professional can obtain a graduate degree in the following fields:

1. Master of Accounting
2. Master of Taxation
3. Master of Finance
4. Master of Statistics
5. Master of Actuarial Science
6. Master of Risk Management / Insurance
7. Master of Organizational Behavior
8. Management
9. Master of Economics

More Flexible Than an MBA?
Programs within specific functions of a company or organization, such as the above, can typically range from one-year to three-year programs. An applicant without a spouse or family has the option of opting for a shorter and more intensive one-year or two-year program. However, those who want to keep earning a salary and/or have family obligations to attend to can often request the dean of the program to extend the duration of his or her program in order to pursue a part-time schedule. Because universities are motivated to attract talented candidates into their master's programs for positioning and ranking purposes, they can offer flexibility for those they are confident have the ability to complete the requirements of the advanced degree.

An MBA is not typically required to make partner at a CPA firm. So it may make sense for a degreed accountant or CPA to invest his or her time and money in a master's degree in accounting or taxation instead, allowing him or her to focus on priority areas or interests such as regulatory compliance, estate planning or financial reporting. Clients of the CPA firm can spend hundreds of dollars for each hour of the CPA's time, and they will want practical, immediate, and effective solutions to their accounting or tax problem. A research or consulting firm may also want similar expertise from a credited statistician or an economist.

Should a professional decide to become a specialist in his or her field and work on cutting-edge issues or advances, a graduate level degree (such as a master's or PhD) with guidance, can provide the opportunity to conduct research in emerging issues and areas deemed important either by industry, the government or the academic community. Generating new findings in your field can be an exciting way to contribute and shape initial impressions on new areas. A summer internship at an investment bank or Fortune 500 company, after your first year in the MBA program, won't get you there. You'll probably be working on a cookie-cutter process improvement project or product analysis assignment.

Conclusion
If you want to become a generalist manager, CFO or division president, an MBA may be the right tool for you. However, if you enjoy being a subject matter expert such as an economist, an estate planner, a tax accountant, a statistician, a risk management consultant or an actuary, you may want to consider an advanced degree in your field.

Alternatives To Business School

often assumed to be a career-enhancing option for young professionals to learn more about the different functions of an organization (such as marketing, strategy, operations, accounting, finance and management). For professionals who majored in the liberal arts or engineering, an MBA can enhance exposure to the multiple facets of business as well as provide career flexibility.
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However, graduate business programs can cost from 30,0000 to more than 150,0000, depending on the institution, scholarships and grants available and length of program. In addition, while there are part-time MBA programs that allow professionals to continue their employment as they pursue their studies in business, most MBA programs require you to trade the office for the classroom for two years. The costs, in both time and money, mean that some individuals might be better off considering alternatives to business school.

Popular Motivations for Going Back to School
Obviously, each individual's motivations, experiences and personal and career objectives are different. The dollars and time expended to obtain an MBA, however, have opportunity costs for all prospective applicants. When you ask someone why they might be interested in getting an MBA, you will get a range of responses, including a combination of:

• An MBA is an objective way to show one's abilities and justify employers' trust and increased responsibilities.
• It creates the opportunity for increased compensation and greater chances of promotion.
• An MBA offers increased career flexibility or the chance to land a better job.
• Business school provides networking opportunities.
• It might please parents or relatives.
• School is a safe place to figure out one's next step, in work or in life.
• They don't trust or know any alternatives to business school as a way to get ahead.

Some of these reasons are obviously more indicative than others of a person's interest in advancing in business, but for those wishing to climb up the corporate ladder, who enjoy corporate life and envision future success in it, there are reasonable alternatives to getting an MBA.

Alternatives to an MBA
When it comes to finding alternatives to obtaining an advanced business degree, ask yourself these basic questions:

• What is your dream organization/company looking for?
• What skill sets are critical for succeeding in the organization?
• Is spending time and money on business school the only way to acquire these skills?
• What work experiences, training and exposures can help you develop these skills?

Obviously, companies look for employees who add value to the organization – that is, employees who have the drive to work quickly and accurately, provide unique insights and manage and lead teams aligned with organizational goals. Let's look at a few development opportunities that can help you acquire these coveted skills without returning to full-time studies.

Rotational/Leadership-Development Programs
Larger companies typically have management or leadership-development programs tailored toward young professionals that display high potential. These programs can be in specific functions, such as engineering, finance and accounting, or can be general programs for future senior managers of the organization. Professionals are often rotated around various jobs and responsibilities every six months or so in order to provide exposure to different aspects of the business.

For instance, an upstart financial analyst entering the program can be placed for a few months in departments such as audit, treasury, mergers and acquisitions, financial planning or investor relations. Having gone through such exposure can make the analyst a candidate for manager, controller or CFO down the road.

Professionals who undergo these types of programs will have gained hands-on, paid experience in different aspects of the company as opposed to merely a theoretical appreciation of the function obtained in business school.
Work Experience In a Different Function
A professional can dive right in and gain experience in a certain field. An accountant who wants to transition into marketing can network and look for opportunities in the marketing department of his or her company, or join a marketing services firm. Yes, this can work.

Attitude and a successful track record are often the deciding factors in whether an applicant is selected for the job. An accountant with a solid history of success and strong references can be favored for such a position – if he or she properly communicates the reasons for the employment change – over a former accountant with an MBA who has taken a few marketing classes.

Two years' worth of experience in a certain function can be highly valuable, as one learns the intricacies and critical success factors in that field. A classroom setting probably does not provide the level of insight or the industry relationships you will need to succeed in the field.
Certifications
Moving up to management requires leading and managing teams and ensuring organizational goals are achieved. Managerial responsibilities also include financial planning and management and the handling of budgets and forecasts. Depending on which part of the organization you would like to transition to, you can prepare for a variety of designations to prepare yourself for added responsibilities and skill sets. There are certifications that are related to finance and accounting, such as the Chartered Financial Analyst, Certified Public Accountant, Certified Management Accountant and Certified Merger & Acquisition Advisor, among others.

Other certifications that are more consulting-related include Six Sigma Black Belt (for process optimization), Project Management Professional and Certified Information Systems Analyst, among others. There are a wide variety of certifications out there in virtually any field of business. Obtaining these allows you to remain employed, and successfully passing all the requirements and exams will show others your competence in the specific field of interest. An MBA, on the other hand, may be too general to convey particular expertise in an area.

Besides, there are companies out there that will gladly pay for you to obtain these certifications. Imagine that: They'll pay for you to become stronger in your field – for you to earn higher income and future promotions. Now there's a good deal.

Executive Programs, Company Training and University Extension Classes
Universities offer a variety of development programs for managers and executives that allow professionals to undertake training courses on-site during evenings and weekends. Some companies pay for such training if directly tied to one's job.

An MBA forces you to cover a variety of required topics, whether you want to or not. Executive programs and extension classes, on the other hand, allow you to target areas in which you would like to improve, allowing you to tailor learning according to your needs. These programs are typically structured so that participants must fulfill course requirements and can cover a wide variety of business topics, including:

• industry-specific lectures
• negotiation skills
• leadership
• public speaking
• strategy
• marketing

Colleges also offer extension, evening and online classes that allow you to improve your skills in a particular area. Alternatively, there are various for-profit training centers that allow you to hone certain skills. For instance, finance professionals can undergo training in valuation or in accounting. You can remain employed while enhancing your skills, and some companies provide reimbursement upon satisfactory completion of requirements
Other Development Paths and Independent Study

• Executive Mentors – Industry veterans provide invaluable insights and wisdom in your chosen field. If you are lucky enough to secure time from executives that you look up to, seize the opportunity and soak up their advice. Such experienced feedback can save you lots of time, money and energy in helping you get to where you want to go.
• Seminars and Conferences – Industry associations, clubs, community organizations, alumni associations and company-based groups often hold seminars and conferences to keep their members abreast of the latest trends and benchmark practices. Again, depending on your organization and manager's priorities and level of support, these types of seminars, workshops and training sessions can be paid for by your company.
• Independent Study – If you spend a total of 10 hours per week driving on the road, that equates to more than 500 hours per year. If you simply listen to audio programs in your car, that initiative alone can make you very knowledgeable in a certain field
• Parting Thoughts
  Abraham Lincoln passed the bar studying borrowed law books. Universities do not possess a monopoly on information, especially not in today's "marketplace of ideas". We live in an age of efficient search engines and competition among various for-profit knowledge providers.
  
  An MBA is a great professional tool if you know exactly what to do with it. Unfortunately, some MBA seekers are merely avoiding making risky choices. Don't enroll in an MBA program just to procrastinate. Be proactive and study practical alternative development programs in your field. You might simply just have to dive in. With so many viable alternative options available, incurring six figures in school debt by getting an MBA is acceptable only if you have truly compelling reasons.

 

Do You Need An MBA To Climb The Corporate Ladder.

An MBA is a substantial investment to make, but does it actually serve you well in the business world? According to the critics, MBA teaching is guilty of many crimes. Those crimes include teaching the wrong financial models, not addressing business risk, sidestepping business ethics, hiding from the real world and cloistering students in academia.

As a result, we have a generation of business leaders tainted by greed and short-term thinking. Jeff Skilling who caused Enron's financial collapse has an MBA, while Bill Gates and Steve Jobs didn't even finish college.

But are these anecdotal stories correct? We look at some of the top performing CEOs and ask if having an MBA will help you climb that corporate ladder.

Top-Performing CEOs
Steve Jobs, Apple
It will come as no surprise that Steve Jobs, CEO of Apple is the top of the list. Jobs does not hold an MBA qualification. In fact, he dropped out of college after just one year.

Yun Jong-Yong, Samsung
Yun Jong-Yong ranks for a good reason. His tenure saw Samsung dominate the electronics market. With an engineering degree from Seoul National University, Yun joined Samsung in 1966. He then ascended the company's hierarchy. He became Vice President of its electronics group in 1990, CEO and President of the consumer electronics business group in 1991, and CEO and President of its Japan office in 1995.

Alexey B. Miller, Gazprom
Gazprom is is the largest extractor of natural gas in the world and the largest Russian company. Alexey B. Miller does not hold an MBA qualification.

CEO Coincidence?
It is interesting that the top three performing CEOs, all considered industry insiders, have one thing in common: they do not hold MBAS.

But why is this? Is it because they're not trained to provide solutions according to formulas or structured methods of thinking that the MBA educational system teaches? Does a lack of "this is how it's done" in their experience leave more room for "let's do it this new way"? Instead of choosing from a list of options they learned from someone else, are they free to innovate? (For related reading,

Wider Findings
Perhaps these initial findings are misleading. On the larger scale of this study, where all other factors were equal, CEOs with MBAs had the performance edge over their peers. In a study of 2000 global CEOs, those with the MBA ranked 40 places higher than those without. This is a significant difference that suggests that while it certainly does not seem a necessity for getting the top job, an MBA could still be sufficient to improve performance.

MBA Edge
If the top three have made it without an MBA, why bother? Well, for some graduates, an MBA simply gives them better skills. It can add right-brain creativity to left-brain logic and financial acumen, or vice versa. It can help get the hard and soft skills to work together. For others, an MBA is a badge of excellence. After all, top schools only accept a chosen few. Most top companies look among the elite for their leaders. An MBA may also provide a network of future business contacts. This network offers opportunities and priceless advice which lasts for an entire career.

Those who choose to do an MBA are opting to improve themselves. Their openness to ideas and willingness to learn is going to benefit them all the way to the top, and probably long after they arrive in the executive suite.