06 AUGUST 2010
Value of the MBA to the employer
The MBA - is it worth it? More importantly, is it worth the investment made by companies in sponsoring developing leaders on the programme? It can be argued that underdeveloped managers are a greater cost to a company than the once-off investment of a qualification such as the MBA. However, such a statement needs some substance - therefore one has to look at “What value can an MBA graduate add to your company?”
The fact is, we are operating in an ever-changing, fast-paced, highly competitive and global world of work, but how does one respond to this environment. According to Dr Charlene Lew, the first step would be to gain an understanding of this distraught business world. “It all starts with an understanding of the economy and how businesses can contribute to the invention of products that will increase the country’s resources. With that is an understanding of economic concepts, such as ‘inflation’ and ‘consumer price index’. A simple insight into managerial economics, such as supply and demand and opportunity costs assists MBA graduates understand the role of profit maximisation endeavours in the firm and how economics inform organisational decision-making,” says Dr Lew.
“In aligning the company with the government’s economic policies, the manager with an MBA can then oversee the financial management of the firm. And, by understanding the company accounts, the manager can assess the performance of the business. With the well-acclaimed holistic viewpoint of MBA graduates, productivity is seen in terms of the input that all the role-players in the firm must play. Of course the MBA also equips the manager, as a strategist, with analytical tools to assess profitability, through, for example, indicators of return on investment (ROI) or residual income (RI), to mention but two illustrations.”
Up to this point it is clear that the manager with an MBA understands the economic pressures on the company and has a firm grip on the financial condition of the firm. The MBA manager also understands to what extent the current financial situation is aligned with the strategy for profitability. The next logical step is for the MBA manager to know how to discover, predict and fulfil customers’ needs, so the company can show true profits. It is all about knowing how to compete. And it is about that winning relationship with customers and other stakeholders and, through marketing research skills, finding out what the customer wants - a true value-add to the company.
In the quest for productivity, top managers need to consistently determine whether the company is capable of surpassing problems in the process of successfully delivering products or services to the customer, and is the customer prepared to pay for these. If not, management needs to know when to introduce drastic actions. Productivity is clearly dependent on the decision-making ability of the leaders of the firm. Leaders with a purely financial or marketing background are not sufficiently knowledgeable regarding the decisions required for a productivity and competitive analysis.
Now, with the company riding the waves of the economy, forecasting its financial needs, controlling its funds and adding to its bottom line by getting the right product at the right price to the right place for the right person, while promoting all this in the most effective manner, the MBA manager can also do a bit of healthy introspection. “It is now when the MBA manager can have an intelligible look at how the company has been put together, how effectively communication flows among the various elements and how valuable the learning is that is taking place. Here the top manager with the MBA is equipped to forecast trends and developments in the organisational design and use techniques to improve the performance of the organisation as a whole. Based on that, intelligent actions can then be taken in terms of the people in the company and how their performance and development are managed,” says Dr Lew.
“With the organisation designed to run like clockwork, and where the delicate balance has been reached between giving to employees and gaining from their skills and endeavours, the MBA manager can evaluate the degree to which operation management is contributing to the competitiveness and profitability of the company. It is accepted that the MBA qualification will have given the individual the ability to have a strategic outlook on how operations can adhere to world-class standards and how they can operate in synergy with the other business functions.”
The manager must then also be able to turn technological advancement to the benefit of the company, rather than seeing it as a threat. An understanding of information systems and knowledge technology then underpins the success of the MBA manager in this regard. This produces information that is useful to the company.
Clearly each element of value that the MBA adds builds on the others, but these values reach a different level when the skills of international business strategy are included. Consider just a few of the skills that the MBA manager has in this regard: He/she can manage the strategic options for the company, implement an effective team process, formulate strategies for the various business functions, gauge product-market demand and competitive interdependencies, including the scope of proposed businesses strategies, show flexibility and creativity in response to changing markets, identify and balance any competing forces for localisation or globalisation for the business and its functions such as marketing and production. These are only few of the very convincing arguments of the value that the MBA holds for the employer.
“Yet, there is more,” says Dr Lew. “The MBA manager can also tackle complex research endeavours to bring specific solutions to the company. The power of this lies in that the MBA manager does not only have extensive management knowledge, but also unusual insight into the firm he/she is operating in. With that combined knowledge, and with access to appropriate secondary data and newly gained primary data, the research yields recommendations and plans that could not be generated in any other way.
“Overall, there is one key as to how the MBA programme facilitates improved company performance and increases managerial effectiveness and efficiency. The key lies in the new way of thinking that the MBA programme provides to its students. It is accomplished by developing a holistic understanding of business, leading to the detection of business problems and the recognition of opportunities. Through such insights, students can then creatively define and analyse alternatives before deciding on an appropriate course of action. This is the essence of the strategic MBA outlook,” says Dr Lew.
Convincing. The MBA manager can truly add value to any firm. And the value is added where it really matters – in improved performance of the manager and in increased profitability of the company. “But, a principle condition to this increased value-add needs to be clearly stated - the value added is proportional to the degree to which the MBA knowledge is applied,” concludes Dr Lew.
The conclusion? The MBA qualification that manifests in applied skills is of immense worth to the employer.