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Thursday, May 17, 2012
Special Report: August 2007
Grooming the Next Risk-Takers
It may not be cheap, but it’s getting more popular.
Story by Bill Romanelli
In the past 15 years, the number of executive master’s degree programs in business administration has almost tripled to 220 nationwide, according to the Executive MBA Council, and employers are footing some or all of the bill more than 60 percent of the time. At an average cost of around $50,000, that’s good news for professionals looking to upgrade their skill set, but is it worth it? Here in Sacramento, where our region is once again a microcosm of what’s happening on the national stage, several local companies and recent graduates say the answer is an unequivocal yes.
This growth, coupled with and driven by the importation of so much talent from the Bay Area and Los Angeles over the past decade, has fueled the region’s ongoing metamorphosis from a mere government town into a potpourri of high tech, clean energy, healthcare and service industries.
There’s no universal definition of an executive MBA program, other than to say that the program is designed for people who work. Most are cohort-based, meaning the students all start and end at the same time, and progress together through the coursework. The average program is completed in less than two years; some programs can be completed in as little as 18 months.
The short duration has inspired some traditional educators to dub the programs “MBA Lite,” but most of these programs are fully accredited and are just as rigorous as their traditional MBA counterparts.
“I’d say homework and class work amounted to 20 hours a week, on top of my regular job,” says Michael Obermire, who works at USS-POSCO Industries and earned an MBA from Sacramento State in January 2007. “It takes a real commitment — not just from you, but from your family and your employer — to make it work.”
All executive MBA programs are designed to accommodate working professionals so they can work, study, attend class and still have something that resembles a life. But by necessity, whatever life they have will be a structured one.
31% of CFOs say integrity is the most important quality
for tomorrow’s business leaders.
For working professionals, earning an MBA can be a fast track to the executive washroom, meaning promotions and pay raises are often in the cards after graduation. It’s not the only way to become a leader in a company, of course, but it’s certainly one way to make corporate leadership a greater possibility.
“In 2006, the percentage of students [nationally] who received promotions after graduating was 43 percent, up from 34 percent just a year earlier,” says Maury Kalnitz, who was the managing director of the Executive MBA Council until June of this year. “At the same time, average salaries for new graduates went up 20 percent.”
Sanjay Varshney, dean of the College of Business Administration at Sacramento State, agrees.
“The MBA really opens the door to advancement opportunities because it teaches students to be more strategic in their decision-making,” he says “and the cohort process offers a really valuable networking benefit that our students consistently rate as one of the most valuable outcomes of the program.”
There’s an attraction for employers too, as the added value and increased responsibilities borne by graduates with MBAs often yields a healthy return on investment. Kalnitz says the average company sees a full return on its investment in just 23 months, and many see benefits before their employees even graduate.
“With our program, we would examine real-world problems facing actual companies, sometimes the companies we worked for,” says Otuko John-Teye, a manager with Hewlett-Packard who received her MBA from Sacramento State this year. “We had multiple groups working on the same problems, so in the end, the class as a whole would develop 20 or 30 possible solutions to the same problem, which employees could then share immediately with their companies.”
Although Sacramento has benefited from the presence of so many government jobs, there has been a dynamic shift over the past few years to a much broader employment market. Government, once the driving force in employment here, is now more of a safety net that buffers the region against unpredictable economic forces. Private industry has become the new vanguard.
“It takes a real commitment — not just from you, but from your family and your employer — to make it work.”
— Michael Obermire, USS-POSCO Industries
The problem is, the Sacramento market is still fairly small-time compared to markets like San Francisco and, as any business association leader or local politician will tell you, we need more big companies here to be more competitive. Luring those companies from other markets is important, but perhaps no more so than growing those businesses from the ground up.
“Our program is designed to create the next generation of risk-takers,” Varshney says. “We need more entrepreneurs in this region; people who can attract more capital investment in the region and make strategic decisions that will create a more vibrant and diversified business sector.”
That means more jobs, a more recession-proof local economy, and myriad trickle-down benefits from greater consumer spending to more and better pubic services. There’s just one problem: Many of these would-be entrepreneurs are taking their freshly minted MBAs and heading for the door.
“The wage disparity between Sacramento and San Francisco is substantial, as much as 20 percent,’ says Nicole Woolsey Biggart, dean of the Graduate School of Management at UC Davis. “Money isn’t the only thing that dictates what MBA grads do, but if the opportunities are equal in either market, except that one pays better, it’s obvious what they’ll do. If we can’t pay as much as the market next door, we’re going to lose people.”
Varshney agrees, saying the opportunities in Sacramento are few in comparison to our neighbor to the west.
“There are only about 30 companies here that have more than 1,000 employees. Advancement opportunities for MBAs are limited in this area,” he says. “There are limited options for huge pay raises or executive-level positions.”
Certainly the quality of life in this region and reasonable housing prices keep many people here, but one of the most important backstops against an emigration of MBA earners is the role employers play in funding their employees’ educations. It’s in a company’s best interest to have employees who bring critical decision-making skills and other value to the table, so there’s already an incentive for companies like Intel, Raleys, Genentech, HP, Aerojet and others to encourage MBA degrees by investing in them.
$106,000 was the average salary for MBA graduates in 2005.
Some companies cover the complete cost, including books and materials, while others contribute a portion, up to a certain dollar amount based on a variety of factors. The one thing they all have in common is that they expect a return on their investment, and it’s often written into the deal.
“If I leave the company before a certain amount of time passes, I have to pay them back for everything,” Obermire says.
It almost sounds like indentured servitude, but that commitment is usually accompanied by a big trade-off.
“It locks in employees, but it also does something good for them,” Biggart says. “It definitely leads to an increase in opportunities, frequently attached to increased pay and titles.”
Professionals in the Sacramento region have plenty of variety to choose from in selecting an executive MBA program, thanks in part to new offerings that have come on line in just the past few years.
One of the newer programs is at Sacramento State, which is now beginning its third cohort. The program, which was designed in response to extensive market research of what business leaders need from today’s MBAs, is comprised of 12 courses and a project component. Each course spans four weekends, starting with four hours on Friday afternoons and then running for six hours on Saturday. The whole program takes 14 months. The $33,000 tuition covers everything, including meals during class.
“We need more entrepreneurs in this region.”
— Sanjay Varshney, dean, College of Business, Administration at Sacramento State
Support from the local business community is what drives the program, Varshney says. Classes are held on-site at local businesses, such as Pride Industries and Intel. The program also features several high-profile guest speakers who are business and community leaders.
UC Davis offers a part-time MBA program for working professionals in addition to its full-time MBA for those who’d prefer to earn degrees in two years instead of three. Described as the “full bore” MBA, the only difference between the full- and part-time programs is how often students attend class. Part-timers go two nights a week but learn the same material, from the same faculty and staff, as the full-time crowd.
“It’s a rigorous program designed for people who are intellectually curious,” Biggart says, “and prepared to take on advanced management training.”
Golden Gate University offers a 12-month intensive executive MBA program broken into six different modules covering everything from basic preparation to a weeklong international study trip. Like Sacramento State, the Golden Gate program is cohort-based and focuses on students working together in groups as well as on individual tasks. Classes meet for two alternating weekends each month, from 8 a.m. to 6 p.m. Saturday and Sunday, although coursework requires extensive extracurricular dialogue among project teams, approximately 30 to 40 hours per week of studying, and a yearlong class project.
The program integrates strategic planning into each learning module, but also builds in personal executive coaching to help students develop an individually tailored career-development plan.
St. Mary’s College, which established the first executive MBA program in Northern California in 1975, offers a program that meets every other weekend in Sacramento and can be completed in 18 months. Cohort-based, the program combines theory and practice in a way that allows students to study their own industries and gain perspective and insight from classmates and instructors that can be applied immediately to their jobs.
The University of Phoenix offers an executive MBA program exclusively online. Like most other executive MBA programs, there are requirements for admission, such as a minimum number of years of professional experience, employer commitment to the program, and references. Students enrolled in these courses take about 14 months to complete them.
With so much variety, today’s executive is likely to find a program that’s a good fit in terms of cost, geography, flexibility, and relevancy to his or her job and career needs. Add to that the speculation by the Executive MBA Council that the current growth trend in executive MBA programs is showing no signs of slowing, and it’s reasonable to expect that within the next five to 10 years, there will be even more programs available. Given the Capital Region’s thirst for continued growth and prominence, it’s an easy bet that any new programs — and students — will be welcomed with open arms.
