Is Business School A Good Business Decision?

The best way to figure out whether that $100K+ Harvard MBA is going to pay off with a high salary, or for that matter a job, is to talk to business owners who do the hiring. Is hiring an MBA grad a good investment for the business owner? (After all it’s typically a more costly hire.) Some small business owners relish the structural and accounting knowledge an MBA offers, while others make a policy of not hiring MBAs because they’re wary of arrogance or a too-theoretical orientation. 

Traditionally, MBA programs prepare graduates to manage and grow big corporations, says Cary Carbonaro, a financial planner with an MBA. “They don’t actually teach you how to run a smaller start-up endeavor. The focus has been more on the large corporate level.” 

So what makes an MBA a good hire?

They offer something you don’t have. Most business owners aren’t accountants or analysts. Differentiating among revenue, margin, income, and contribution is critical in running a profitable business. And “being able to tell the difference between accrual-based and cash-based accounting is really important if you don’t want to run out of money,” says Jeffrey Stewart CEO of Urgent Career, who has started six businesses and employs around 600 people.  “An MBA has a high probability of understanding these concepts.”

Consider a small business like Inside Sports and Entertainment Group, a company providing sports and entertainment access to corporations and high-net worth individuals and run by four non-MBAs that netted $12 million last year. For them a little business structure and some new ideas would be advantageous. “We’ve all been out of school about ten years. It could be useful for us to learn from an MBA grad and see what we might be missing,” says Inside Sports’ senior vice president Matt Haines. “Their creativity and structural discipline could help further grow a business.”

Executive rapport. MBAs understand core business concepts, says Stewart. They have the ability to talk to senior level executives and confidently use the language those executives are used to dealing with.

Cross discipline. “I like how MBAs look not just at what they are doing but analyze why they are doing it,” says Stewart. “As a business owner I want people who are results-oriented. I like hiring someone who has the ability to learn. I’m less about skill, exposure, and experience and more interested in someone with the ability to take on new things.”

Expertise in a technological field. That double whammy of expertise and business acumen goes a long way.

“I like people who can succeed technically through engineering or science, and combine that rigorous technology background with an MBA. That is a very powerful hiring combo.”

And here’s what gives small business owners pause when dealing with an MBA.

They cost more.
For a young business like Inside Sports, it can be a matter of saving up to $30K by hiring a candidate without the MBA and training him or her.

“We look for people who can grow out of their positions by getting more clients and business,” says Haines. “If it came to two people and they have the same qualifications we’d probably hire the non-MBA because he or she will cost less. 

They’re less malleable.
That notorious MBA arrogance may make it harder for a business owner with a vision to mold an MBA grad into the kind of employee they are looking to work with.

“Our biz isn’t rocket science,” says Haines. “It’s a relationship-driven business. What drives our business is the connections and the people we know and the unparalleled customer service we offer. “

They know too much.
“Some business owners don’t want to hire people who question their approach. An MBA will looks at how businesses do things. Business owners want to hire people who don’t question the approach used,” says Stewart.

They may be too theortically-oriented.
It’s important for smaller companies to have a bias toward action. Business owners care more about whether someone has actually worked in a business rather than fresh out of academia. “An academic background doesn’t necessarily mean you have that bias toward action,” says Stewart who says seeing a passion for business out rules the MBA degree in his book. “Having an MBA doesn’t necessarily mean you have that passion for business,” echoes Haines. “An MBA comes out with a tight network and that is great, but we have that persistence: we cold call and call until they say yes too.”