Degrees of difference

AT up to $80,000 a pop, choosing the right MBA course is hardly a decision to be taken lightly. The available guidance is patchy and even contradictory, though there are indications of a trend towards employing graduates from Asian and Australian business schools.

With about 50 MBA courses offered in Australia, there is rising concern among students about exactly what skills and knowledge they will need in an increasingly globalised, post-GFC world. Which are the “best” schools, and what makes them so?

Several organisations spend a great deal of time and energy preparing rankings to answer these questions. However, there is little agreement. If you Google “top MBA course”, a prominent listing is for the Australian Education Network. AEN ranked the Australian Graduate School of Management at UNSW as the best Australian business school last year. However, AGSM wasn’t even among the schools listed by the Graduate Management Association of Australia. If you take a look at London’s highly respected Financial Times global rankings for this year, AGSM leads the pack of Australian schools, coming in at the heavyweight position of No 41 in the world. Yet it’s way down the list on the MBA Global 200 ratings compiled by Quacquarelli Symonds. What sense can be made of it all?

According to Gavin Moodie, the principal policy adviser for governance and planning at Melbourne’s RMIT, business schools go up and down the rankings regularly, and they often improve on one list while they are falling in another. “The changes in rankings are more reflective of changes in methodology, rather than in the quality of the schools,” he says.

AGSM says it participates in only some rankings, such as those by the Financial Times, whose methodology it regards as good.

Examining how the rankings are compiled does provide insight into the strengths and characteristics of courses.

National secretary of the Graduate Management Association of Australia Tony McArthur says his organisation, whose members are MBA graduates, does its rankings to “keep the bastards honest”.

“We produce star ratings for the business schools, with the primary aim of giving people an independent review of MBAs,” he says. “We’re not tied to any school. We have no vested interest.”

The association aims to maintain the quality of MBAs and it is concerned by cheap courses springing up, some of which are even enrolling undergraduates. “It gives the appearance that MBAs are becoming profit-driven, and that it’s a race to the bottom.”

The association assesses data from business schools using key indicators such as the school’s links with the business community, the size and quality of the academic staff, how well the course is resourced, etc. These are assigned values and then integrated into one overall score. The schools are then ranked in groups, from those that scored five stars down to those that were given only one. Precise individual scores are not published in order to avoid bickering. “We focus where we can look and measure, rather than on subjective student or employer opinions. In 10 years, no one has said our process is flawed,” McArthur says.

Ross White, Head of Product for the Good Education Group, says The Good Universities Guide to MBAs avoids overall rankings, preferring to rank business schools on each of 23 criteria, including graduate salaries, corporate links and the international management experience of academic staff. “This is a point of difference,” White says. “We assess the various strengths and characteristics of every business school most relevant to the student’s needs. It’s unpacked and easy to access.”

The registered address for the Australian Education Network is a brick-and-tile home in suburban Rosanna, Victoria. Its rankings may be perfectly valid, but there are unanswered questions about the methodology and “targeted marketing” nature of the enterprise. AEN did not respond to questions about this from the deal.

Speaking from London, Nunzio Quacquarelli, the managing director of Quacquarelli Symonds, explains that the QS Global 200 report draws solely on responses from employers. It rates schools within regions and specialisations, such as entrepreneurship, corporate social responsibility, financial knowledge, and so on.

While it’s not definitive, QS believes that employers know best which schools produce the top graduates. “QS believes the market will respond to quality,” Quacquarelli says. “We think the employer is the best indicator, as they go to the schools and they interview candidates. If they prove successful, the company is more likely to go back to the same school in the future.”

QS grew out of an award-winning business plan Quacquarelli developed as a student at the University of Pennsylvania’s Wharton business school. He says the QS ratings differ markedly from the Financial Times rankings because of the heavy weighting given by the latter to alumni salaries. “There is a strong correlation between [the FT] rankings and schools producing students who go into investment banking, where salaries and bonuses are very high. So Wharton and Harvard are ranked top schools, for example.”

This bias is changing, Quacquarelli says. Whereas 10 years ago about 60 per cent of MBAs went into financial services, that sector is recruiting far fewer MBAs. “Candidates these days want to start their own business or join small to medium-sized companies.”

QS is seeing structural change in the wake of the GFC. “There has been a revolution in the mindset of employers. We are definitely seeing the popularity of Asian and Australian business schools with global employers increasing year on year.”

Three drivers have been identified. First, global companies are employing MBAs for more destinations; second, there is a push to increase the level of management skills within companies; and third, there has been a dramatic change at the local level, where small and medium-sized companies in Asia are employing MBA graduates. “Within India, one local company is recruiting 1000 MBAs a year,” Quacquarelli says.

These employers are focusing on different skills and in response QS is enhancing its ratings next year to include innovation and entrepreneurship. “We see the potential for dramatic growth in MBA demand in the Asian region.”


This article orginally appeared in The Australian’s The Deal Magazine – Degrees of difference

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