Getting value from executive MBA programs: select candidates and programs wisely for the best return on investment

HR Magazine, July, 2004 by Kathryn Tyler

Programs that enable executives to earn a master's degree in business administration (MBA)--by accommodating students' working hours and recognizing their individual needs and experiences--are the hottest product in the growing MBA market.

Students may find it grueling to juggle a demanding career with intensive classroom work and homework, but achieving the degree can make them qualified for more responsibility at their current organization--or a better position elsewhere. In turn, employers that reward such employees' efforts with increased responsibility and advancement opportunities will also benefit.

"One rough semester I slept about 11 hours a week," jokes L. David Mounts, CFO of UPS Supply Chain Solutions in Alpharetta, Ga. In May, he received his degree after completing the MBA program for executives at the University of Pennsylvania's Wharton School in Philadelphia. It took two years, with UPS paying part of his costs, but it paid off for Mounts as well as his employer. His education helped him develop new products for UPS that he is now introducing to customers, he says, and he moved up in the organization.

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"Between work and school, I was on my knees," Mounts says. "But I got through it. My family supported me; the other students on my team helped me. In a full-time MBA program, it's all about competition. But in an executive MBA program, it's all about collaboration," he says.

Jeffrey Pfeffer, a longtime professor in the Graduate School of Business at Stanford University in California, who has researched the value of MBAs, says executive MBA (EMBA) programs "are becoming more popular for the schools because they get more money per student and for the students because they do not cost as much in lost wages." Stanford does not offer an EMBA program.

Maury Kalnitz, managing director of the Executive MBA Council, a not-for-profit international association of universities based in Atlanta, says: "In the last three years, our membership has increased 35 percent. The bulk of new schools are international."

The number of programs has also multiplied.

The University of North Carolina at Chapel Hill offers "an evening format" as well as a weekend program and has "added a global program," says Penny Oslund, director of EMBA programs. "Schools are adding formats to meet specific niches."

Marci Armstrong, associate dean at the Cox School of Business at Southern Methodist University in Dallas, has also seen growth: "Over the last two years, the enrollment in our EMBA program has doubled."

Rachel Hale, HR generalist at the American Airlines Federal Credit Union, headquartered in Fort Worth, Texas, understands the growth. "Traditionally, managers without MBAs have not been as promotable as those with MBAs, particularly within the executive ranks."

While EMBA programs can provide a career boost for the employee and serve as a staff development tool for employers, there are some caveats. Before determining whether to fund--fully or partially--an employee's participation, you should understand the limitations of the program, examine its credibility, consider cost effectiveness, be aware of the potential for workplace disruption and temporary loss of productivity, and keep in mind that you may be making your best employees more marketable.

Nonetheless, experts say the programs can be valuable if you carefully select the students and the programs, plan the employees' career paths, and incorporate what they learn to benefit the company.

Differences of Approach

EMBA programs generally differ from traditional MBA programs in several ways. EMBA students are usually older, for example. All EMBA programs are geared to part-time rather than full-time students, and classes are offered in the evenings and on weekends.

"EMBAs are not traditional lecture course work. They are management collaboration exchanges and hands-on practice," says John J. Reardon, director of the College of Business, Denver Executive MBA, for Colorado State University.

Many EMBA programs allow students to use actual work projects in their courses. This amounts to getting a team of highly experienced consultants for free.

But EMBA programs are expensive. The average cost is about $60,000, but they can run as much as $112,000. "The cost is two to three times a normal MBA," says Reardon.

Who pays? According to Kalnitz, 44 percent of EMBA students are fully funded by their employers, down from 50 percent three years ago. He adds that "22 percent are self-funded, and the rest are partially funded" by employers.

Grants and loans are available for EMBA students through schools' financial aid offices, but such assistance is need-based and may not cover all of the tuition.

Whether EMBAs are worth their high price depends on the program.

Evaluating An EMBA Program

The degree of your company's involvement in selecting an EMBA program and the executives who will enroll depends on whether the company is willing to pay any or all of the tuition, and the amount of time the company will give the individual. The more you pay for executives' MBAs, the more you need to be involved in the selection process to receive sufficient return on investment. Some points to consider: