Another revolution

Still countering claims of irrelevance, Canadian business schools have been thrust into a new competitive environment

In the last five years, Canadian business schools have had to respond to the powerful, transformational forces of free-market economics.

The first major development was deregulation. Governments increasingly removed funding, and in exchange business schools began to charge whatever they could get for their services.

What began with deregulation in the mid-’90s was compounded by the explosion of technological advances, which rendered physical geography meaningless for much of the business world, including business education. Suddenly, Canadian business schools were playing on the global stage.

Business professors say the change was, for the most part, good. It’s basic free market economics: without government support, schools started thinking more about markets and customers and not just in Canada, but around the world.

“Business schools had to get better quick and if we didn’t do it we were dead,” says Murray Bryant, director of MBA programs at the Richard Ivey School of Business at the University of Western Ontario.

“The good thing about competition is that we have to provide greater value. We have to justify costs,” agrees Salman Mufti, program director of Queen’s University’s MBA for Science and Technology. Tuition for the 12-month program is now $42,000, and when foregone salary and other expenses are taken into account, students are looking at a cost of $120,000, says Mufti. Students want to know their return on investment will be worth it.

In the 120-year history of management education there has been three revolutionary changes, and two of those revolutions happened in the last decade, says Dezsö J. Horváth, dean of the Schulich School of Business at York University.

In the 1950s, the Ford Foundation sparked the first revolution with its support for a more rigorous, academic approach to the study of management but after that business education remained virtually unchanged for 30 years.

In the 1980s, when companies from Japan were running roughshod over North American organizations, people started asking questions about the business education model, says Horváth. This is what he calls the relevance revolution because business people complained MBA grads weren’t that useful. Business schools had lost touch with the real world and become too focused on the theoretical, he says. “They were learning more and more about less and less.”

This forced many schools to take a hard look at what they were doing and many overhauled programs in the first half of ’90s. But things hadn’t even calmed down and businesses had seen little of the effects of this transformation in business education when the next revolution hit — deregulation and the global shakeup.

Proof that the effects from these transformations are still working their way through the system was revealed in a study released late last year. The survey, conducted by Compass, found many employers feel MBA grads are no more valuable to an organization than people with other post-graduate degrees, with fully 52 per cent of respondents saying they felt an MBA was of equal or less value.

A common complaint about MBA grads was that they are skilled when it comes to things like mastering information technology but had a lot to learn when it came to interpersonal skills.

“Canadian business leaders appear to embrace the stereotypical satire of MBAs as Mediocre But Arrogant,” states the report MBAs, Business Schools, and Their Marketing Challenges. One respondent explained, “Generally, newly graduated MBAs lack understanding. They have dealt with theory and are not necessarily able to think in the practical world.”

And yet, so many MBA students have job offers before graduation (most others are working within a few months), and starting salaries are often in the $80,000 range (with six figures not uncommon), one could be forgiven for believing MBAs are still a highly sought commodity and some of the criticism about grads may be disingenuous.

“I have been in business education for 35 years and deans in three places,” says Jean-Louis Malouin, director of the MBA program at the University of Ottawa. “I have employers come and say they want well rounded rather than highly technical. But when the interviewers come on campus, they look at grades.”

Erin Adams, a senior HR services co-ordinator with The Dominion of Canada General Insurance Company, began to take her MBA part time at the University of Toronto’s Rotman School of Management this year. She too has heard the knocks about MBAs being overrated or too theoretical.

“That concerns me, but I don’t think I completely buy that,” she says. She spoke with some of the hiring managers at her company and they all were positive about the degree. Besides, at some point it has to be up to students to find the relevance in what they learn, she says.

At Schulich, they say they are addressing this problem in the student selection process by looking for students who have a history of demonstrating leadership and entrepreneurial capabilities in the workplace. These things can’t be taught, says Horváth. They can be refined and improved but the school can’t teach people to be something they are not.

Starting in 1990, York University began to experiment with courses that would improve soft skills and by 1994 had completely overhauled its program, launching what it called “an MBA for a changing world.” The first grads from this program only finished in 1996 so they are still a small fraction of the number of MBAs in the workforce, says Horváth.

The point is that if business schools aren’t producing in-demand grads who succeed in the workforce, market pressures will force them to make changes.

In the last three years, Queen’s has remodeled its program in response to what employers were saying, says Mufti. Three themes emerged. They wanted MBA grads to be more strategic, to have a better sense of the whole business. The second was that they wanted grads to be better leaders, with strong interpersonal skills and ability to demonstrate leadership in all roles and start new initiatives. The third was innovation and entrepreneurship.

“Employers are increasingly looking for students who can innovate. Not just coming in and keeping the status quo but really saying, ‘What can I do differently?’”

Now students in the Queen’s program spend four weeks developing a broad range of interpersonal skills. Basics like team building are taught but students also learn how to manage difficult people and how to network. The latter includes golf and tennis lessons.

“Last year, we tried out the new concept of power politics,” says Mufti. “Most students didn’t realize how important it is to understand the politics of an organization, to understand how things really get done.” In every organization there are political issues. Students must be aware of that and learn how to manage it.

The professor talked about how power is shared and how important it will be for the student — simply put — to be liked. It’s not easy to teach, but the professor’s job is to raise awareness of the reality, says Mufti.

The program at Queen’s also puts an emphasis on developing the ability to function successfully in team settings — an increasingly common characteristic of the modern workplace.

“If you don’t want to learn in a team-based environment, then you need not apply,” says Mufti.

In some cases half of the mark for a course is based on team performance. The school analyses learning and working styles of each student and chooses teams of six to ensure there is a diversity of styles and there is a “no-switch” policy. Team-building skills are imparted and facilitators made available but the teams are stuck together for the entire year.

“We have a curriculum renewal going on in our school addressing what employers and recruiters are telling us,” says Bryant of the Ivey program, widely regarded as one of the top programs in Canada. “What they are telling us is that they need more leadership skills.” But here too definitions are changing.

There is a growing awareness in the business world that leadership is not just about developing the best strategy in the world, it is about executing the strategy, says Bryant. The important thing is to get results. “We will trade off elegance for results,” he says. What’s more, there is a greater appreciation that good people management is critical in getting results.

This translates into a greater emphasis on soft skills in the MBA curriculum. For instance, as the business world moves toward flatter organizations, one of the greatest challenges for MBA grads is how to coach others and get the best from co-workers when there is no hierarchical relationship, says Bryant. Recommendations will be presented to the faculty next month and they will likely include suggestions for more content on peer counselling.

“We have to find better ways to deliver soft skills so that they have lasting impact and people don’t view them as soft.”

To produce grads who will excel throughout their careers, Ivey is teaching students the importance of life-long learning.

“You can’t teach a 28 year old everything that (he) will need to know for (his) entire career,” says Bryant. Students need to excel at the skills that will enable them to succeed in the first three to five years after graduation but after that they will need to be learning on their own. Students need to be taught how to keep learning, he says.

Meanwhile, the University of Toronto has just put the finishing touches on its most thorough curriculum review in some time, says Glen Whyte, associate dean of curriculum and professor of organizational behaviour.

Students and recruiters were asking for changes and U of T is attempting to address gaps identified. Five new courses will be introduced this fall.

“We traditionally had a very functional curriculum where we taught the silos but not the spaces between,” he says. For example, one course will focus on integrative thinking — taking perspectives from across organizations to solve problems. Another will hone students’ negotiation skills, while a course on managing from a global perspective will provide the tools to manage a diverse workforce.

To ensure students can apply their learning in a real-world setting, they will also take a new business simulation course. Working in teams, students will run a firm and to make the simulation as realistic as possible, Rotman will bring in actual business people from outside the school to act as the board of directors. Students won’t just be punching in numbers, they’ll have to negotiate labour agreements against real labour negotiators, says Whyte.

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