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Degree of Change

November 15, 2007

By Boyd, Carolyn

CAN AN MBA INFLATE SALARIES OR FASTTRACK A CAREER? MUCH DEPENDS ON THE SCHOOL CHOSEN, AND OF COURSE, ON THE INDIVIDUAL STUDENT Before Maggie Leung CPA studied for a master of business administration (MBA) she was “very trapped in one way” of seeing things. The 34-year-old says doing an MBA helped broaden her perspective.

“All I thought about was purely accounting,” Leung recalls of her pre-MBA days. “I never thought of other areas that relate to the business like marketing or strategy or finance. When I go to a client now I won’t just look at the financials but also other aspects. Now I try to think what the management is actually thinking.”

MBAs have been around since the 1920s when they began in the US as business degrees designed to be taken straight after an undergraduate course. In the 1950s teaching standards were lifted and admission requirements tightened, making MBAs the “musthave” postgraduate degree for future business leaders.

MBAs still hold much stock, but face widespread competition from specialist postgraduate degrees. What began as a two-year program can now be taken in a wide variety of ways: full-time, part-time, by distance or even as an executive-style course called the EMBA. Companies can also pay business schools to develop customised executive education programs to run in-house as a sort of miniMBA. Full-time courses range from 12 to 24 months, and part-time courses can stretch from two to four years.

Leung, who now works in transaction services in New York, enrolled in the full-time 16-month Australian Graduate School of Management (AGSM) course in Sydney in 2003. She says the MBA wasn’t a fast-track to a hugely increased salary or a changed career, but it was very valuable.

“In my previous jobs, all my workmates were very much from the same background,” Leung says. “They were all accountants. Even my clients – they were all accountants. And we talk the same language.

“In the MBA, people were all from different industries, all from different backgrounds, and all had different experience. I learnt that these people actually think differently. I learnt how to work with them.”

In 2005 Helen Liossis took a year out from her career to complete an MBA at the Macquarie Graduate School of Management in Sydney. Her first role after her undergraduate bachelor of commerce degree was with an accountancy firm. Before the MBA she had also held senior management roles in strategy, planning, finance and investor relations for companies including Telstra, Coca-Cola Amatil and Gazal Corporation.

Now when Liossis comes up against a challenge at work, she often consults her MBA textbooks. As investor relations manager at Babcock & Brown Infrastructure, Liossis handles all external communications to the media and investment community.

Maggie Leung CPA, who now works in transaction services in New York, completed her MBA at the AGSM in Sydney.

Maggie Leung CPA, who now works in transaction services in New York, completed her MBA at the AGSM in Sydney.

In her 12-month MBA, Liossis chose finance electives to build up her company-valuation skills. “I couldn’t have done this role if I hadn’t done the MBA,” she says. “There’s no way.”

Although Liossis, who is in her 40s, had worked in investor relations at Telstra, she had never been in the banking industry. She believes the MBA helped her gain entry into the sector. “It’s not enough to have your undergraduate degree any more,” she says. “People look for commitment to doing further study and also being able to use other tools in making business decisions.”

MBAs generally take a team-based case-study approach. Students work in small groups to solve real problems that global companies have faced.

The MBA allowed Liossis the opportunity to be a consultant and to thoroughly analyse mergers and acquisitions. Students were encouraged to challenge the accepted methodology.

“That helps … in a real-life situation,” she says. “You’re reflecting back on the way you approached things. You’ve looked at real companies before, but not doing it live.”

Liossis established a broad range of networks. On occasion she and her former classmates will “cross-mentor” each other by calling up to discuss issues they are facing in their jobs.

Matthew Cook is Michael Page International’s director of finance recruitment in Melbourne. He says most finance professionals doing an MBA are hoping to broaden their knowledge and develop leadership skills.

For many roles coming across Cook’s desk, “an MBA is perceived to be nice to have but by no means mandatory”.

Not all MBA degrees are equal. “It is important which MBA school you go to,” Cook says. “Some are more highly regarded than the others. You get branded by the university that you do it through.”

One way of assessing MBA schools is through ranking tables, which are compiled based on questionnaires completed by the universities. In the Asia-Pacific, six schools made it into the Financial Times 2007 top 100 full-time degrees. Insead, which has a campus in Singapore, was ranked seventh, China’s Ceibs was ranked llth, the AGSM in Sydney came in at 49th, Nanyang Business School in Singapore was 67th, Melbourne Business School (MBS) was 79th and the National University of Singapore was 81st on the list.

Last year, when the Financial Times last compiled its top 100 executive MBAs, it placed Kellogg/Hong Kong UST Business School third. Other schools in the region to make the grade were Washington University: Olin in China at eighth, the Chinese University of Hong Kong at 15th, Ceibs in China at 17th and the AGSM at 23rd. The Helsinki School of Economics, which has a campus in South Korea, was ranked 80th.

No Asia-Pacific schools made it into The Economist 2006 top 10. The IESE Business School at the University of Navarra in Spain occupied the No.1 spot, followed by Dartmouth College-Tuck School of Business, Stanford Graduate School of Business, the University of Chicago Graduate School of Business and the International Institute for Management Development in Switzerland.

Part-time MBS student Venkatesh Rao considered a variety of criteria when deciding which course to choose. He weighed up the school’s ranking, the quality of its faculty and its international reputation. “When I was in India, MBS was a school that was very well regarded,” Rao says.

Although business schools often market MBAs as a means of changing career, Cook says this does not always come about. “A finance executive who has completed an MBA and is looking to leverage out of finance into a general management role, a sales and marketing role, a CEO or managing director-type role, often finds it challenging in that their core skill sets are very much around finance and accounting,” Cook says. “Nine times out of 10 the job will go to someone who actually has a core skill set in that particular area, whether it be general management or a CEO’s role, an MD’s role or the like.

“That’s a little bit controversial because the MBA schools will tell you if you do an MBA you can go on to do anything. What we find is if someone is looking to recruit a general manager of a division, they will source someone who has already got general management experience. That handson practical day-to-day experience is far stronger than an MBA.”

Liossis agrees. “There were a lot of very naive people thinking that by doing the course they could double their salary and become a CEO tomorrow,” she says. “You’ve got to remain realistic through the whole process and say that in doing [an MBA] you gain skills and gain access to a different way of thinking, and challenge the way you do your work and structure your thinking. If out of that you can get a better job, then great, but it doesn’t mean it qualifies you to get out there.”

A year after finishing their studies, some of Liossis’ classmates were still looking for jobs. “They were perhaps waiting for the big role to come along,” Liossis explains, “rather than thinking of it as a stepping stone, or that it might take another one or two roles to get there.”

However, according to a survey of full-time MBAs who graduated from the AGSM in 2006, 44 per cent of the respondents did make a complete career change. All respondents to the survey (74 per cent of the class) had secured employment within six months of finishing their studies. Onethird found roles through their personal networks or previous work experience.

At MBS, the class of 2006 reported that the 81 per cent of survey respondents who were employed had secured a 44 per cent increase on their average pre-degree salary packages after the MBA, from $79,031 to $114,265. Almost two-thirds of graduates gained jobs that were not advertised.

Cook says the MBA can be quite powerful for someone who has 10- 12 years’ experience, is an expert in a particular area, and is looking at a broader commercial role within a business. It’s at that stage that doing or having done an MBA will pay off, because it complements what’s happening in your career naturally.

“It’s the people who have five or six years’ experience who do an MBA to try and fast-track – they become a little bit disappointed,” Cook says.

Recent AGSM EMBA graduate Anita Quay picked the right time to study. In her early 30s, Quay switched from a business consultant to a strategy manager for AMP Capital Investors while she was studying part time. “The MBA for me was an amazing experience,” she says. “Other than being able to develop different frames of reference, the networking was amazing. I had an opportunity to work with some very intelligent people.” Derwent Executive principal and practice leader in Singapore Andrew Kendall says an MBA “is definitely a great thing to have on your CV”. However, it will be judged alongside your technical skills, emotional intelligence and cultural fit.

And depending on your career plans, it may make more sense to consider a specialist postgraduate degree, such as a master of finance. “An MBA is great but it’s more of a general business overview,” Kendall says. “But within [some fields such as] finance you probably want to be up to date with all the new trends and the new legislation.”

MBS student Venkatesh Rao felt that he had already gained plenty of technical skills, but wanted to branch out. “The MBA exposes you to things that … you [otherwise] wouldn’t get exposed to, such as marketing, organisational behaviour, leadership and a whole lot of economics,” he says.

At 28, Chinese-born Harry Zheng CPA is just about to finish studying his EMBA at the AGSM. He chose the degree because he wants to be a generalist rather than a specialist.

Zheng, who works as a business analyst for a federal government agency, is studying one subject a semester so that he can focus on the learning, rather than rushing to the finish line.

MBAs cost about $50,000. Australian residents studying at Australian universities may qualify for an interest-free loan from the federal government, and many universities also offer substantial scholarships.

Rao, who works as a management accountant for AIG Life (Insurance), says it’s worth asking your employer whether it will cover the fees. Rao’s employer agreed to fund his studies.

“A lot of my batch mates are having their MBAs funded by their employers,” Rao says. “Perhaps this is a reflection of the extremely tight labour market that we’re in now.”

Another advantage is given that a company has invested $50,000 in you, there is a good chance it will be very keen to put your skills to use, and will allow you to gain valuable experience that builds on your theoretical knowledge.

FINANCIAL TIMES TOP 5 MBA SCHOOLS IN THE ASIA-PACIFIC

* China Europe International Business School (Ceibs)

* Australian Graduate School of Management

* Nanyang Business School

* Melbourne Business School

* National University of Singapore

FINANCIAL TIMES

TOP 5 MBA SCHOOLS

* University of Pennsylvania: Wharton

* Columbia Business School

* Harvard Business School

* Stanford University GSB

* London Business School

THE CPA PROGRAM AND MASTERS CREDITS

Over 50 universities offer credits to CPA Program graduates in more than 100 specialist masters and MBA degrees.

Demonstrating recognition of the quality of the CPA Program, these credits enable members to leverage off their completed CPA Program studies, making these postgraduate degrees a quicker and better value alternative.

The programs offering credits are provided by some of Australia’s most respected universities, and there are a range of flexible learning models.

For more information visit the postgraduate courses pages of the CPA Australia website at www.cpaaustralia.com.au.

‘There were a lot of very naive people thinking … they could double their salary and become a CEO tomorrow’

Helen Liossis, investor relations manager, completed an MBA at the Macquarie Graduate School of Management, Sydney

‘A lot of my batch mates are having their MBAs funded by their employers. Perhaps this is a reflection of the extremely tight labour market…’

MBS student Venkatesh Rao

FURTHER READING

E-hancing the Master of Business Administration (MBA) managerial accounting course by Fern H Zabriskie and David E McNabb, Journal of Education (or Business, March/April 2007; Infinite opportunity awaits MBA grads by Christine Ferez, National Real Estate Investor, May 2007; Just the ticket? by Peter Crush, Human Resources, May 2007; Teaching and learning in internationalized MBA programs by Linda E. Parry and Robert Wharton, Journal of American Academy of Business, March 2007; The trouble with MBAs by Anne Fisher, Fortune, 30 April 2007

All available from the CPA Library. Ph: 1300 73 73 73

Email: cpalibrary@cpaaustralia.com.au

Online: Search for and request items at www.cpaaustralia.com.au/ links?library

Copyright CPA Australia Oct 2007

(c) 2007 Australian CPA. Provided by ProQuest Information and Learning. All rights Reserved.