Thunderbird: A Case Study In Organizational Decline

by Taylor Ellis on

Thunderbird

The Thunderbird campus in Glendale, Arizona

To Larry Penley, the president of the Thunderbird School of Global Management, the deal is pretty much a no-brainer. With the school’s 2012 fiscal budget $4 million in the red, he has agreed to sell the Arizona campus to a for-profit education company in exchange for sorely needed cash that would allow the business school to survive.

But to many alumni and several board members, the partnership with Laureate Education Inc. is nothing less than a sell out. At least two board members have resigned in protest and nearly 2,000 of the school’s alumni have signed a petition contending that the agreement with Laureate Education Inc. would “cheapen the value of the (Thunderbird) degree.”

Penley, who only took over the job as president last November, believes their concerns are understandable yet invalid. “That intimate nostalgia for what we experience causes us to be resistant to change,” added Penley. “And then the bias that Americans especially have because of what’s been discovered about for-profits causes resistance. However, the facts don’t line up with Laureate behaving like these other for-profits.”

EVIDENCE OF WANING INTEREST IN THE MBA OR SELF-INFLICTED TROUBLE?

Many enraged alums, however, aren’t buying it. “This is the end of Thunderbird as we have known it,” wrote Merle Hinrich, a director and alumnus, in his resignation letter. “The Laureate transaction is a tragedy for Thunderbird and a total windfall for Laureate.” Thomas Greer Jr., another board member who resigned, called the decision to sell Laureate a campus built with tuition funds and donations “unconscionable.” Greer vowed to no longer contribute either his time or his money to the school.

Some observers say the deal is evidence of waning interest in the MBA degree. In fact, many of the institution’s troubles have been long lasting and self-inflicted, making it a quintessential case study in organizational decline. The new partnership reflects years of deterioration due to increased competition from rivals, lackluster fundraising, insufficient resources devoted to getting jobs for students, and overly generous compensation for some of its faculty.

The school’s endowment, which in recent years has been below $20 million, is meager compared to many of its business school competitors. It didn’t help that a $60 million naming gift, at the time in 2004 the largest pledge ever made to a business school, never fully materialized.

ONE PROFESSOR AT THUNDERBIRD IS MAKING MORE THAN $700,000 A YEAR

Yet, even though the school lacks a significant endowment, several of its professors have been paid extraordinarily well. Kannan Ramaswamy, a global strategy professor who teaches in Thunderbird’s executive education programs, had a total compensation package with benefits of $700,096 in fiscal 2011. That is munificent pay for an academic who is not known as a superstar outside his school in Glendale, Arizona. It even exceeded the total pay of then Thunderbird President Angel Cabrera whose compensation totaled $584,749, a sum that included a housing and auto allowance and a country club membership. The Thunderbird academic, for that matter, makes even more than Harvard Business School Dean Nitin Nohria whose compensation package came to $662,054 in 2011.

While Ramaswamy is the highest paid employee at Thunderbird, according to the school’s government filings, he is hardly alone in being so highly compensated. Andrew Inkpen, another global strategy professor, was paid $565,457 with benefits in the same year. Graham Rankine, an associate professor of accounting, was paid $492,908. The compensation for three other faculty members—Robert Hisrich, a professor of global entrepreneurship; William Youngdahl, associate professor of operations management, and Mansour Javidan, dean of research—all easily topped $400,000 a year.

It’s not unusual for world class faculty to be paid so generously, but the most highly compensated business school professors tend to be more widely known and publicly visible figures at universities that can afford them—not at a troubled school that has been in a long-term fight for its very survival. Indeed, the compensation of the top ten most highly paid professors at Thunderbird–$4.3 million in all–exceeded the school’s $4 million deficit last year (see The $4.3 Million Bunch At Thunderbird).

The school’s full-time MBA enrollment has been steadily declining for years, falling to just 380 from more than 1,500 in 1990. Last fall, its entering class totaled only 140 students. The placement stats for last year’s graduating class, meantime, were among the worst reported by any business school in the U.S. Some 76.1% of Thunderbird’s Class of 2012 were without jobs at commencement.

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  • NoPEHFVCforTBirdgrads

    You mean my Wharton undergrad and soon to be Stanford GSB MBA? Sure. I’ve also worked at top BB IBD and PE shops and made more money than probably 99% of TBird grads will in their entire life.

  • TBird=MangerofJanitors

    Can’t get individual results if you can’t the opportunity….that’s the TBird disadvantage. They scrap for crappy back office jobs.

  • RubicxIsRight

    Let’s not count the Exec MBA but only full time. How many got top consulting or banking jobs….probably none!

  • rubicx

    I have met scores and scores of T-bird alums. 40,000 alums since it’s inception? It’s even a bigger mill than I feared. It’s a pity, because it’s a school that had so much potential, but I predicted its demise when they moved away from the IM degree to the MBA degree, then to about 7 other plus MBA-like degrees. Pick your flavor, they’ll sell it to you. The International Management niche was its comparative advantage, why they set that aside to be yet another American MBA program was the beginning of the end. You can focus on international business in almost any MBA program in the country, that’s what the second year is often about – a focus. Thunderbird got unfocused.
    Anyone can get into Thunderbird, anyone can graduate from it, anyone whoever worked an entry level job in retail has business insight. No advanced degree needed.

  • rubicx

    My 20th ranked school? How did you score in reading comprehension?
    UC Berkely has over 40,000 students most of whom transferred from CA community colleges their junior year at much lower standards of admissions than the entering freshman class. No prestige in that, just pretense. If they reported the scores of their graduates, the real UC Berekley would be revealed. Besides, it’s no better than UCSD, UCSB or UCLA. Indeed, that latter are thriving with their current reputations whie UC Berkely is just relying on its reputation from the 1960s. At any rate, we were discussing B-schools, including that thing called Haas.

    I did more than go to a Haas info session in NYC. I also visited the campus. Most of the professors were more into research than teaching. Most of the students were disappointed they didn’t get into a better B-school. Most of the undergrads were protesting the Vietnan War and petitioning for an indictment of President Nixon. Will you please tell them he’s dead. Retards heal thyselves.

  • WeToddDid

    Ehhhhhhhhhhhhhhh I wen 2 dis skool

  • proudtbird

    At thunderbird, we have over 60% internationals who are the top leaders of there countries. We are also not racist like Michigan Ross and we place better than Georgetown in banking and consulting.

  • BusSchoolProf

    As a business school professor, I am *shocked* by the intellectual level of this discussion. Quite frankly, I don’t see poets nor quants. Nobody who needs to put down other people has earned the right to carry a “Master” title, whether G7, Top10, Ivy League.

  • CalUndergradWhartonMBA

    This is most uniformed non-sense I’ve heard.

    First, UC Berkeley is not made up of over 50% community college transfers. In fact, that number is 29% and as the top UC, we get the best ones. The CC system in California places students into CSU and UC system and transfer are not guaranteed to transfer to top schools such as UC Berkeley.

    Second, UVA, Michigan, UNC are all public schools as well and have many community college student transfers as well. Are you saying that these are not prestigious Universities as well? While those schools are the top school in its respective state like Berkeley is, with more schools to accommodate those transfers, UC Berkeley does not have to take unqualified transfer because they have no where to go.

    Third, the school is liberal, much like the Bay Area but protests don’t happen as daily as you are making it out to be. Most of the school is Asian and with a high percentage of STEM undergrads who are apathetic to those issues.

    Fourth, you can say that Haas MBAs wanted to go to HBS/Stanford…well you can say the same with any other top graduates of Kellogg, Michigan, Duke, Wharton,Columbia, MIT, Booth, etc…The reality that most are upset with the Haas alumni network in NYC because it’s very West Coast based much like Stanford’s. You would probably get the same thing from Tuck, Darden, NYU, or any other East Coast school complaining about the West Coast alumni network besides Wharton or HBS who have a large alumni presence based on the fact that they have 800+ class size to offset the low West Coast job placement.

  • Kory tbird sucks

    Comparing T-bird to an M7 is ludicrous. Unlikely EVER chosen over M7 program.

  • RightBro

    Right…and you are up there with HSW in international business ranking but failing to get the elite jobs they get with ease, while you mental masturbate to the thought of a McKinsey partner fondling you.

  • Absurd

    Ridiculous statements haha.

  • Mexitwist

    I think the article raises several good points regarding the overall “business” of higher education. Undoubtedly, there seems to be many explicit and implicit factors behind the distress of Thunderbird and its financial woes, many similar to those of Grand Canyon University and Ashford University, both of whom too, at one point, were struggling institutions that were eventually undertaken and revitalized financially.

    Having said that, it is a slippery slope when mingling academia and shareholder interest. It brings forth many pros and sometimes many cons; however, can be managed and spearheaded correctly if, I believe, the educational institution does not lose sight of its overall theme – students, building solid business thinkers, innovative graduates, and providing a unique educational experience!

    The value one places on institutional ranking should be far less than the particular value the academic institution will play in their role in becoming a well versed business thinker and strategist.

    I would also argue that one’s salary median does not necessarily define the overall prestige of a degree granting institution. I would argue that “institutional prestige” and “rankings” are oblique and only fog our lenses when assessing todays educational landscape.

    Is the business of advanced learning a BUSINESS! Yes! Hence, my concern for Thunderbird is not necessarily the merge of for profit help, rather staying true in ‘institutional identity’ now that it potentially sold its ‘soul.’

  • Stats

    Top-Ranked Business Schools With The Worst Placement Stats of 2012

    School
    Unemployed At 2012 Graduation
    Unemployed 3 Months Later

    Claremont (Drucker)
    87.5%
    25.0%

    Thunderbird
    76.1%
    54.6%

    Rensselaer Polytechnic
    66.7%
    33.3%

    University of Oregon
    65.3%
    26.5%

    Pepperdine University (Graziadio)
    62.4%
    39.3%

    UC-San Diego
    62.2%
    28.9%

    Syracuse University (Whitman)
    62.1%
    37.9%

    University of San Diego
    60.9%
    30.4%

    St. Louis University
    59.3%
    22.2%

    Fordham University
    55.5%
    45.0%

    American University (Kogod)
    55.3%
    23.4%

    State University of NY at Buffalo
    50.8%
    18.5%

    University of Colorado
    50.0%
    31.8%

    University of Texas at Dallas
    50.0%
    10.4%
    TBird ranks among the worst in placemen stats. Many TBuird females resort to adult entertainment in Vegas to pay off MBA loans.The men become bouncers at Phoenix night clubs where they can advantage of drunk rich ASU females in hopes of knocking one up and having her rich daddy pay.

  • carpediem

    you are misinformed! Thunderbird IS the school for Global Business. You probably will never achieve that awareness.

  • SoSorryTBirds

    Lo siento Thunderbird grads. You wait time and money on a useless degree. That’s like dating someone who has no personality, fat, stupid, and ugly.

  • Successful-TBird-Alum

    I am a T-bird grad and chose T-bird OVER Harvard, Stanford, Haas and Wharton because of the international business focus and track record. Looking back, this was the best decision I ever made. I have had a successful career in Silicon Valley ever since, traveled the world professionally and made an immense impact improving the lives of hundreds of millions of people around the globe. I’ve also made plenty of $ in the process. T-birds go to T-bird in part because they don’t aspire to go into in I-Banking on Wall St. in hopes of becoming the next Gordon Gecko, like so many Wharton and Harvard MBA grads do. (So boring!) Anyone who knows T-birds personally and professionally knows they (in general) are some of the most interesting, well rounded, well traveled, intelligent people you’ll ever find to work in your global organization. There are some who are less stellar in their accomplishments, but that is true of every school on the planet.

    The lower rate of employment post graduation is higher than other US MBA programs driven by several reasons including 1) VISA issues for non-US students wishing to stay in the USA 2) more limited number of international business focused opportunities at companies – it takes longer to find those amazing internationally focused or international location jobs 3) Many choose to take time off after graduation to travel before re-entering the workforce. Who needs to be in such a hurry to start working for the rest of our professional lives? Most T-birds are an adventurous bunch, and fitting in some travel before getting back to work is a great way to recharge after the grueling MBA program. I did so as did many of my peers. Thereafter we all had amazing jobs lined up that started 3 or 6 months after graduation. Why such a hurry? T-birds realize there is more to life than just starting a job on Wall St. the day after graduation, which is partly why T-birds are T-birds. Meet one, hire more than one and you’ll learn how amazing T-birds are.

  • Not Obsessed With Status

    Wow…nice to see that your success in the world is solely based on money. Hear that??? Nobody cares.

    BTW–I have no affiliation with Thunderbird and agree it’s an odd choice for an MBA.

  • Rob Stilwell

    Ramaswarmy is spelled wrong – DOOH

  • HAHAHA

    This post reeks of a 550 GMAT liar….btw….most MBAs travel after Bschool before starting new jobs. I doubt you got into HSW or let alone Georgetown…maybe University of Phoenix at best.

    BTW — Silicon Valley tech loves HAAS and Stanford way more than TBird unless they are applying to clean toilets.

  • rubicx

    Thunderbird’s competitors are the University of Phoenix and other schools without standards. Thunderbird is not in the same league as the top-20 MBA programs. Just because Thunderbird changed the name of its degree from International Managment to MBA does not make it a competitor of serious, hiqh quality, bona fide MBA programs.

  • rubicx

    Nothing gruelling about a one-year MBA program where classes are broken down to two classes per six weeks. Of course, they can take time off to goof off after graduation, especiallly when they had it so easy while they were studying. You were a fool not to go to Harvard, Stanford or Wharton. Then again, I suspect you work in public relations and excel in spin.

  • rubicx

    Everyone whoever applied to Thunderbird got in.

  • LeftyTheTesticle

    My left testicle with a 370 GMAT not only got in, but received a full ride merit scholarship to Thunderbird. My nut wrote about being in the top 1% of nuts being overworked from all the fellatio females give it and overcoming that adversity to one day before a top rated semen strategist for McKinsey adult film practice.

  • global or not

    oh I would be ticked, if I was in the 2011 or 2012 class, going to school for 2 years and paying $ 20,000 more than the 2013-2014 class.

  • MBAguy

    I know several T-Birds, and they are nothing like you describe. Unfortunately, they all went to Thunderbird because it was the only school they could get into. Thunderbird is only a tier above the University of Phoenix. When I the a Thunderbird MBA on someone’s resume, I immediately ask myself, why didn’t they go somewhere else? Did they not have the grades/GMAT? In all honest, seeing a T-Bird MBA on a resume is almost a negative. Going to Thunderbird is a cop-out. If you can’t get into a real MBA program and your job isn’t sponsoring you, just work hard to get to where you want to go. Does a piece of paper that people other than T-Birds will most likely look questionably on worth the tuition?

  • Successful-TBird-Alum

    Well, we obviously haven’t met yet then. :) T-birds are a diverse set in background and education and experience as well as what they do afterwards. When I looked at Wharton and Haas, I met mostly white male students who aspired into finance and tech (respectively) and only few had traveled outside the USA. The curriculum I saw at Haas and Wharton at the time focused mostly on domestic business with a brief focus on international. For anyone who aspires to work in MNCs, this is not really enough unless you want to work at US HQ. I think Thunderbird is amazing for those who want a real global career whereas some of the other programs are definitely top notch and may apply greater rigor on business topics but focus more on domestic business (or at least did so when I was considering my MBA options a few years ago). My cohort peers are senior foreign service officers for US Dept of State, leaders in many tech and finance companies in Silicon Valley and elsewhere. Perhaps you haven’t been lucky enough to meet / work with the right set of T-birds yet.

  • YouJustWereNotGoodEnough

    A successful T-Bird is like finding a morally stout pornstar. You are still an idiot to not go to Wharton or Haas but the reality is that you never good enough to get in….you go to bschool not for education but for pedigree and access to elite jobs. Even with wharton being a finance school, they have so many alumni and so well regarded that you could get any international job from there anyways. Same with Berkeley.

  • MBAguy

    How long ago did you go to b-school? Haas and Wharton are far from majority white. Over 40% of Wharton’s class is female and of the people that I have talked to, a significant portion are doing something other than banking. If you were truly interested in an MBA with a global focus, you should have looked at the Wharton Lauder program (provided you speak a second language).

    P.S. The T-Birds I have met do zero internationally and have mostly been in finance.

  • ProofofSuckage

    w w w. usnews dot com / education/best-graduate-schools/the-short-list-grad-school/articles/2013/07/23/10-MBA-programs-that-lead-to-the-most-student-debt

    Show’s TBird as a top ten in debt but not even top 20 in ranking…..

  • yesorroo!

    M7 only exist in the mind of CBS.

  • JohnAByrne

    In fact, the only reason Thunderbird made the top ten list by U.S. News is because some schools decline to provide this information to the magazine. If they did, Thunderbird would not rank in the top ten on total student debt burden. We published a similar but more inclusive list several months before this U.S. News list. You can see it here:

    http://poetsandquants.com/2013/03/19/mba-debt-burden-rises-again/

  • Richard Baca

    To one and all reading the P&Q Thunderbird thread, Thunderbird started the whole “international, multinational and global” genre of B schools. Thunderbird was, until recently, rated No. 1 in international business programs Worldwide. It is the most copied international B school model in history! With that kind of track record and success and from a student body of only 1,200 max at a time 40,000+ alumni Worldwide I’d say it’s most definitely successful, so why all the negative comments? I think it all stems from just plain jealousy and maybe even the unwillingness to take on a second language and area study. Yes, it takes more effort!

  • Old T-bird

    why are people such haters of other schools? Seriously, there are plenty of excellent leaders who come out of non top 20 b-schools. People shouldn’t be so snobby and high and mighty. History has shown that just because you come from a certain lineage, background, ethnicity, religion, or whatever (including a school) doesn’t make you a better leader or manager. What makes you a good leader or business person is talent, skill, humility, people skills and determination to name a few. A good business degree can help you get your foot in the door to good companies but you have to still prove yourself.

  • Old T-bird

    Wow, I really feel sad for you that you have to bash others to make yourself feel better? I mean why else are you wasting time bashing others? You need to not be such a hater.

  • Old T-bird

    While I appreciate many of the intelligent postings on here, I continue to be amazed at the people who repeatedly post rather rude and even “hater” type comments. Why must you be so angry and hateful? Can’t you post a civilized comment without attacking another school or the students? How sad for you. Posting your opinions (even critical opinions) can be done in a way that is civilized and not so rude and disrespectful. Many of you who write these hateful comments say you are from top schools, but you do your school and yourselves a discredit by your attitude of hate and snobbery. The mark of great people and civilizations are tolerance, acceptance, understanding and appreciation for differences including choice of business schools.

  • guest who is tired of bashing

    it’s good to know that snobs like you are still around in the world. If you are a representative of schools like Wharton or Haas then I wouldn’t want to be a part of your school or alumni and would shun it like I’d shun a leper’s colony. Did you even go to one of the top MBA schools or are you just a bitter complainer who likes to bring everyone down? If you can’t say anything nice, maybe you should shut your mouth.

  • m7sympathetictotbird

    I attend an m7 on a scholarship, was admitted to multiple top schools, have a Wall St job offer, and I can say that while I didn’t apply to Thunderbird, more than one close, well-respected adviser (people with income streams several multiples of mine, more experience, with strong educational and corporate brands on their resumes) recommended I consider T-Bird. I’m fond of the school, though I didn’t think it was right for me. Let me explain: I think that T-Bird, overall, is a different value proposition. If you are a top 15 kind of candidate i.e. 3-6 years of strong work experience, you have a track record that showcases intellectual ability and professional aggressiveness, etc, then T-Bird won’t serve your needs. However, there are plenty other able people out there who can be well-served by T-Bird. I have clever friends who went to T-Bird, and what they shared were smarts (explicitly, some very solid GMATs), ability to speak more than one language (they’d be in the minority in the m7), and usually coming from a completely non-business academic and professional background. They were trying to get their first bits of exposure to international business and in that sense, T-Bird was a good platform for them to do it. Not all, but plenty of these folks end up having great careers later on. And in that sense, I think it’s awful that 1. it’s getting shat on so much and 2. the school has been so awfully mismanaged.

  • Michael Flannery

    One would hope that these over-paid, non-performing, global nobodies would have the good grace to pocket their ill-earned salaries and disappear. These are parasites who have drained Thunderbird of its financial and moral capital. Mssrs. Penley, Ramaswamy and co., kindly take your hats off the nail and head for the hills. You’ve done enough (possibly irredeeable) damage to our Alma Mater. For you to linger is embarassing to all of us.

    You, and the inept, vastly-overpaid former president, have compromised a unique educational institution with your shallow posturing. Sadly,none of you ever grasped what Thunderbird is all about – thus waffled on about global greatness, while engineering a fire-sale. Shame on you!

    A bitter member of the
    Class of ’66

  • Bill Mullane

    You hit the nail on the head my friend. The year and a half I spent at Tbird in the mid 80’s was the best. Living and learning among students with such high AQs (adventure quotient) led to memorable experiences and lifelong friendships around the world.

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