MBA Teaching Urged to Move Away from Focus on Shareholder
If you’ve worked for a public company, you’ve probably used “Shareholders” as a dirty word. Stuck in short-term thinking? Thank your company’s focus on quick returns. Can’t get a raise while your company stock is sky high? Hey, the shareholders must be rewarded first. Fair or not, shareholders are the nameless, all-powerful boogeymen whom cube dwellers blame for their soul-crushing workload and evaporating benefits.
Question is: Do you blame the shareholders…or the business schools that train future leaders to indulge their excesses?
This week, The Financial Times ran a fascinating piece on why B-schools share blame for elevating shareholders over customers and employees. Colin Mayer, a management professor at Oxford’s Said Business School, sums it up best: “The prevailing view in business schools has been that a primary function of corporations is to further the interests of their shareholders.” More damning, Insead ethics professor Craig Smith notes, “Students come in with a more rounded view of what managers are supposed to do but when they go out, they think it’s all about maximising shareholder value.”
So how did this happen? During the 1970s, academics like Milton Friedman, Michael Jensen, and William Meckling began questioning the role of organizations as social and economic stewards. They proposed a different model: The main role of a company was to turn a profit and increase its value. As business courses became more financially-driven, this model provided a clear way to measure an organization’s effectiveness. According to Judith Samuelson, director of the Aspen Institute’s Business and Society program, “[the reason] a focus on shareholder return has so much currency is because it’s simple, elegant and easy to measure. But simple and measurable doesn’t mean it’s correct.”
Of course, changing this educational model won’t be easy. Many b-school professors were themselves trained in it. And tenured professors have little incentive to revise their course curricula. However, some experts believe emerging sustainability programs at leading companies like Pepsi and Starbucks could change that. Said’s Colin Mayer observes, “If one can demonstrate that companies that emphasise long-term shareholder performance overtake other corporations, that becomes persuasive evidence for rethinking the model.”
Even if business schools aren’t able to keep up with changes to shareholder value, Mayer believes another force could change this dynamic: Business school students. Students have traditionally challenged convention wisdom. And MBA students have an advantage most undergrads don’t: Real world experience.
It’ll be interesting to watch this conflict between shareholder primacy and sustainability play out in classrooms over the coming years.
Source: The Financial Times
Feeling Overwhelmed about Starting an MBA Program? Go to Boot Camp
School is only 5 weeks away. If you’ve been accepted into an MBA program, you’re probably a little nervous. You’re may be calculating just how much undergraduate knowledge you’ve lost. You might worry that you’re not as smart or seasoned as your peers. If you’re hail from another country, you’re wondering how you’ll navigate the nuances of foreign land. And that’s after you recovered from the sticker shock of a b-school education!
Ivan Kerbel believes he can help. A former director of career development at the Yale School of Management, Kerbel has launched an MBA Summer Forum, a boot camp for incoming MBAs. This on-campus program, which was launched in 2013 with 50 students, is designed to help students prepare for the academic and social rigors of a MBA program.
Costing from $2500-$4500, the Summer Forum begins with an online assessment, which helps Kerbel identify each student’s strengths and weaknesses. From there, students participate in courses and personal coaching sessions. Kerbel also offers professional development, along with language and cultural instruction for overseas students.
The 2013 program was shifted to online sessions, as enrollment fell short of projections due to lag times in students receiving visas. However, Kerbel expects to hold a three-week forum at the University of Washington in 2014. Despite the launch difficulties this year, India’s Nivriti Jaie, who starts at Minnesota Carlson this fall, felt these prep courses were a great help. Seeking an internship, Jaie believes the Summer Forum helped her ease the transition:
“I realize that my actions for internship recruiting will have to start within the first month of setting foot on campus, leaving me with a very short ramp-up period.” The [boot camp’s] career development and pre-MBA academic preparation options came as a solution to most of my worries.”
Source: Bloomberg Businessweek