MBAs Gain in Popularity
by Ieva Augstums
November 3, 2005
Young professionals are hitting the books once again, but for reasons unfamiliar to their older office counterparts.
Today, a master’s degree in business administration ”“ for both career and personal reasons ”“ is becoming the new bachelor’s degree.
“I hate to say that, in some ways, it has become an almost basic requirement if students are going to improve in their careers,” said Steve Perkins, associate dean for graduate programs in the School of Management at the University of Texas at Dallas.
Like a growing number of graduates already settled in the workplace, many Gen Xers (ages 25-39) and Millennials (24 and under) easily become restless.
Three to five years into their careers, some start longing for a promotion or raise, others may want new experiences, and still others simply want to become more educated to position themselves for the future.
It’s this perception among our generation that the completion of an MBA means something,” said Robert Paugh, 32, who started the professional MBA program at Southern Methodist University this fall. “The master’s is the new undergrad. We are all here for different reasons.”
After nine years of consulting experience, Mr. Paugh admits the changing face of today’s workforce helped with his decision.
“I don’t want to be 50 and not have job options as a professional because I did not plan or think ahead,” he said. “There is a human capital aspect in returning to school and completing my graduate degree: to help ensure both my future and my family’s future.”
The way business schools and other graduate programs attract students has changed with the Millennial generation.
“Attitudes and values are different than they were 20 years ago,” said Bob Ludwig, spokesman for the Graduate Management Admission Council, a nonprofit educational organization. “A lot of it has to do with the economy and the personal situations of these generations.”
For baby boomers (ages 40 to 59) who earned a bachelor’s degree in the 1970s, career paths were clearer.
A younger Gen Xer with a bachelor’s degree today faces roadblocks that include increased competition, outsourcing and a growing global workforce.
“The more you know today, the further you can go,” said Mel Fugate, assistant professor at SMU’s Cox School of Business. “These young professionals want jobs and employers who see them as valuable and give them opportunities, much more than previous generations.”
Today’s young adults have seen their parents plan financially for the future only to have pensions and jobs taken away.
For the most part, Gen Xers and Millennials don’t expect loyalty from their employers and believe their employers shouldn’t expect loyalty from them.
“It’s not that they are not going to respect their employers ”“ they just want more from them,” said David Morrison, president of Twentysomething Inc., a Philadelphia-based young adult marketing consultancy. “If they are challenged, they are having fun. The minute they get diminishing returns on the knowledge ”“ i.e., they’re getting bored ”“ they are going to leave.”
And that’s one reason Gen Xers such as 26-year-old Carla Rosenberg returned to school and Stephen Marley, 28, wants to go back.
Sure, the potential of earning a six-figure salary didn’t deter their decisions, but for these two, earning more money wasn’t part of the equation.
For starters, no longer can an MBA ensure a six-digit salary. In 2005, the average annual base salary anticipated by new MBAs who accepted a job offer was $90,652, according to the admission council, which sponsors the Graduate Management Admission Test, or GMAT.
Instead, they are going back for themselves.
“Do I need this for my job now? I don’t think it hurts,” said Ms. Rosenberg, community marketing director for the Dallas Stars.
Ms. Rosenberg will receive her MBA from the University of Dallas next month.
“I wanted to make sure I had all the necessary tools in my toolbox to enjoy and live my life to its fullest,” she said.
Mr. Marley, on the other hand, is still trying to figure out his career path. He’s in the process of applying to several schools.
“Engineering is a good background, but it’s also a good springboard if I want to do something else,” said Mr. Marley, a project manager for MRI Management in Dallas. “Right now, I’m deciding to go back to school because it’s a way for me to get more exposure to today’s business climate.”
Experts note that young adults today are a very highly motivated and educated generation that grasps opportunities. Many are putting their personal lives on the back burner and focusing on themselves and their careers.
“If you looked at 10 years ago and today, Generation X and Y, the reasons why they do some things are different,” said the admission council’s Mr. Ludwig. “These people ”“ it’s almost like they are not leaving anything to chance.”
Yes, Gen Xers and Millennials are returning to school, particularly in part-time programs.
The admission council said that 46 percent of part-time programs saw an application increase in 2005, nearly twice as many as last year. Twenty percent of full-time programs saw an application increase in 2005.
Experts say full-time programs should see a jump in volume as more twentysomethings return to school in the years to come. The older age groups targeted by graduate business programs ”“ 30 to 34 and 35 to 39 ”“ are shrinking in relation to the younger age groups ”“ 20 to 24 and 25 to 29.
But there’s a catch ”“ prospective students have to be accepted into the programs. Over the last few years, competition for top-tier business school slots has become increasingly fierce.
“The quality of the pool is getting better, and average GMAT scores are getting higher,” said Stacy Blackman, an MBA consultant who helps prospective business school students with the application process.
And once they’re in, they still need to set themselves apart.
“Nationwide, we’ve got more than 100,000 people a year who graduate with an MBA, so to some extent, we are reaching a saturation point where the MBA is not very unique,” said UTD’s Dr. Perkins. “It may be useful for these incoming classes to gain expertise in a particular area.”
That’s what Ms. Rosenberg did. Her MBA is in sports and entertainment management.
Mr. Marley is thinking about focusing on finance or marketing.
And Mr. Paugh is wavering between a concentration in entrepreneurship or strategy and leadership.
“The whole idea is to set yourself up for the next step in life, and the step after that,” Mr. Paugh said. “The goal is not what I’m going to be doing when I’m 33. It’s what do I want to be doing when I’m 35, 40 and 50 and 60.”