Why An MBA Degree Isn't As Prestigious As It Once Was

Business.com / Education / Last Modified: February 22, 2017

An MBA is without a doubt still valuable. But does it still hold the same clout as it once did? Not exactly—and here's why.

Historically, the MBA has been the business degree to get. Everyone wants one because all of the high earners and Chief Executive Officers (CEOs) in the biggest companies have all done postgraduate work and earned their Master of Business Administration.

As such, you can understand why it’s such a popular degree. Recently, however, there has been a different turn of events and the MBA is not as prestigious as it once was. Yes, of course, employers still would rather hire someone with an MBA than without.

But that's the problem. Everybody wants one. So, here are 5 reasons why the MBA degree isn’t as prestigious as it once was. 

Related Article: The Value of a Degree: Why Silicon Valley Startups Need More MBAs

Saturation

Meeting someone with an MBA used to be a novelty. MBA graduates commanded a lot of respect with their arcane knowledge of business. There are so many variations now on programs for earning an MBA, like online, distance and modular, that there no longer exists a work-study-life balancing issue.

Due to the number of people entering and completing these programs, there is only competition within the programs themselves. 

You compete against others while applying for the program, and while in the program, you compete against the other students for higher grades. If you’re depending on an MBA to separate you from the pack, you’re taking a long shot. 

In the pack of MBAs, you have to have something other than the degree that differentiates you from the others. However, many educators feel that because of the mushrooming of so many MBA programs, the quality of faculty for these programs have declined and students are not receiving the quality of education that is enabling them to get jobs after graduation.

Suresh Chitturi, Vice-Chairman and Managing Director, Srinivasa Hatcheries, says, “There is a huge gap between what they learn in business schools and what the industry needs. Quite a few of them are out of sync with reality, get fascinated by an MBA degree and think that they’re something special, which they’re not,” he opines bluntly.

Related Article: 7 Tech Jobs You Can Get Without a Degree

Rise of Specialized MS Degrees

Many schools typically offer specialized MS degrees in Master of Finance, Master of Accounting or Master of Management, and some schools even offer additional options such as Master of Medical Management. These degrees usually cost less than MBAs and take only one year to complete.

Younger students who have little to no work experience, who want to specialize in accounting or finance are often drawn to these degrees. These MS degrees do lack the scope and breadth of general management knowledge, so earning an MBA is advantageous to those who want to focus on general management.

Competition on a Global Scale

The above point is only compounded by the fact that once upon a time, only American graduates would have been seeking to get a master’s degree in business administration. With the rise of the economy in other countries, first Japan and now China, Southeast Asian countries, as well as countries in Europe, more students are being sent abroad to earn these qualifications.

According to a study of those who took the GMAT, 33 percent of students registered to take the exam in 2011 were from Asian countries. The pack of MBA graduates just got bigger on an international scale.

Related Article: School's Out Forever: 6 Notable Dropouts Who Left School to Pursue Their Passion

Slipping Economy

A slipping economy means that employers simply can’t afford to hire the best and brightest minds if they request a higher salary to pay for their expensive business degrees. Companies also can’t afford to fund the MBAs for their current employees.

It’s a Catch-22 situation because a highly qualified employee can pay for themselves in the long run. However, it’s easier to hire someone less qualified and train them as they go, which is where many companies practice internal promotions to gain more education in the employee's specific field.

Gavin Cooper, director of Marketing for Taconic Biosciences says, “Even when hiring the best candidates, we recognize that many new starters have skill gaps. An Individual Development Plan (IDP) forms part of our new employee induction program.  We recognize the importance of developing our employees right from when they walk in the door.”  

Changing Marketplace Needs

We used to have a very stable and hierarchical business system. You started in an entry-level position, gained experience, moved to better management positions, and eventually ended at executive level positions by the time you retire.

It’s different now.

Companies and jobs are temporary which in turn makes the structure more hectic and less predictable. If you spend years of your life studying and spending money on courses, there’s no guarantee that you will get your money back.

Great employers have heeded all the information above. Whilst an MBA is desirable, employers are starting to recognize other qualifications as being equally valid. Not only that, but they are recognizing that education isn’t the only way to be good at something valuable to a business. Internships, alternative experience and alternative qualifications are all being considered. Essentially, there are better ways to get to the places you want to go than an MBA.

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