Wisconsin’s B-School’s Sacred Cow

The sacred cow of academia: The PhD program

The decision today (Oct. 25) to backpedal on a non-sensical proposal to shut down the full-time MBA program at Wisconsin’s School of Business is a welcome relief to many students, alumni and company recruiters of the school’s graduates. The mea culpa couldn’t have been clearer.

“We moved too quickly without the broad consultation and discussion that our stakeholders can and should expect,” conceded Dean Anne Massey in a statement. “We will move forward with discussions on how to grow the undergraduate program and expand the graduate portfolio while simultaneously strengthening the full-time MBA experience (see Wisconsin Backpedals On Plan To Suspend MBA Program.”

Yet, the decision to advance such a proposal at one of America’s premier public universities has been one of the more shocking developments in management education.In the short space of seven days, the school went from telling its students in an email that it was seriously considering a suspension of the full-time to reversing course after mounting opposition from alumni, students and other stakeholders. When faculty go back to the drawing board, it would be a good idea for those professors to take a long, hard look at the sacred cow of academia: The PhD program.

Instead of putting its full-time MBA program on the chopping block, Wisconsin should have proposed to toss its costly, money-draining PhD program under the axe. The annual losses racked up in this hidden cost center vastly exceeds whatever red ink is flowing from Wisconsin’s MBA program. Any truly dispassionate analysis would lead one to this conclusion.

THE $7 MILLION ANNUAL FREE RIDE FOR PHD STUDENTS

For one thing, every one of the currently enrolled 63 PhD students at Wisconsin is on a free ride for four to five years, with full tuition waivers, monthly living stipends, comprehensive family health insurance, reimbursements for travel to conferences, and scholarship support to supplement these already generous academic packages. And that doesn’t factor in the cost of high-priced tenured faculty being paid $300K a year to lead seminars with fewer than a handful of PhDs at a time, the administrative costs of support staff, building space, and tech support, among other costs. The money pit continues with still more payments for those who raise their hands for summer teaching and research appointments.

All in, the cost to Wisconsin’s School of Business for its PhD program may very well approach $7 million a year, with no tangible benefit to the business school, the profession, or society at large. PhD graduates are rarely, if ever, hired by the schools from which they graduate. Their research contributions are scarcely helptul to business managers, especially in the short term. And they hardly ever contribute scholarship that directly benefits society.

Still, those estimated losses are absorbing more than 10% of the school’s annual $69 million budget and are easily more than three times the losses in the MBA program. The gross tuition and fees paid by MBAs at Wisconsin totals nearly $5.9 million a year. Subtract the scholarship discounts on that total of an estimated  $1.2 million and you find that MBA students are pouring something like $4.5 million into the school’s coffers every year. The only reason the program is in the red to the tune of an estimated $1.5 million to $2 million a year–the school has been mum about these financial details–is because the faculty is essentially overpaid.

Yet, none of these short-term numbers can come close to capturing the less tangible benefits of a program producing highly talented MBA graduates. Unlike PhD graduates who tend to disappear with no loyalty to the institution whatsoever, MBA grads routinely give back to the school, contributing to the institution and the community. After all, it was 13 alumni who gave $85 million to the school only ten years ago in what could best be called an “un-naming gift” to retain the Wisconsin School of Business name. MBAs also work for employers that often provide support to the school. They start companies locally. They are far more likely to participate in alumni fundraising campaigns. They are more likely to recommend the school to undergraduate and graduate applicants for years on end. They will eagerly mentor and hire future graduates.

WISCONSIN PHDS: UNDERACHIEVERS COMPARED TO ITS MBA GRADUATES

In fact, the class profile for Wisconsin’s Phd students shows that seven of every ten students is international. Translation: The school and the state are fully funding the doctoral education largely of non-U.S. citizens, and the faculty appears eager to protect that funding at the cost of eliminating an MBA program where only 18% of the students—not 71%—are international.

Beyond the obvious cost benefits of shutting down the Phd program, you can easily make the argument that the school’s PhD graduates have been classic underachievers, especially when compared to the school’s most recent crop of MBAs.

Of the 48 “selected PhD placements” since 2010 cited by the business school, presumably the most prestigious jobs gained by its Phds, only three landed at schools with higher U.S. News ranks than Wisconsin. Some 13 went to business schools ranked lower than Wisconsin’s current 34th place finish, while the vast majority—28—gained jobs at schools that couldn’t even break the U.S. News’ Top 100. Only two of them work within the state of Wisconsin where taxpayers helped to pay for their degrees.

WISCONSIN MBAS ARE ANNUALLY HIRED BY SOME OF THE MOST HIGHLY ADMIRED COMPANIES IN AMERICA

In contrast, the top ten full-time employers of MBA graduates last year were all highly admired, world class companies: Amazon, Dell, Deloitte Consulting, General Mills, Intuit, Johnson & Johnson, Kimberly-Clark, Lands End, PepsiCo and SC Johnson. Other highly respected and influential companies hiring members of the Class of 2016 included Starbucks, Hershey, General Electric, 3M, Microsoft, Citi, Kraft-Heinz, Eli Lilly, and United Technologies.

Compare that lineup to such Wisconsin PhD employers such as Clark University, Drake University, Florida Atlantic University, Portland State, Quinnipiac University and the University of Wisconsin branches in Whitewater and Milwaukee. Sorry. That is no comparision, whatsoever.

Yet, even the notion of killing the PhD program in favor of reinvesting in the MBA program was at unthinkable to faculty who were willing to put the MBA on the chopping block.  Why? That is because the 80 or so tenure and tenure-track professors with a vote are too deeply invested in this antiquated system to examine it more rationally. A more prudent move would have been to cut the PhD program in half and reinvent in the MBA offering, a move that would have at best a neutral cousin’s budget if not a positive impact.

Thank goodness the school’s stakeholders rose up in protest and stopped this self-interested move by faculty who should know better.

Author John A. Byrne is founder and editor-in-chief of Poets&Quants.

DON’T MISS: WILL WISCONSIN’S SCHOOL OF BUSINESS BE THE NEXT MBA CASUALTY? or THE BACKLASH AT WISCONSIN BEGINS

  • Hope the cow reference is a WI cheese joke 🧀

  • I hope the ‘sacred cow’ bit is a WI cheese joke 🧀

  • Guess

    Charlie_CA. You say, “If you want good business education, we need to produce good business faculty”.

    That is some platitude that is FALSE when looking at specifics because Wisconsin does not educate PhDs that end up teaching in its faculty (based on where they end up). If what you say were true, then Wisconsin need only educate 1 to 3 PhDs a year to keep its faculty roster fresh.

    Dis Wisconsin taxpayers agree to their flagship educating a majority of PhDs from China so that they all can work at other Universities afterwards? Add to this your claim that PhD candidates are a burden to professors, why the heck then is Wisconsin in the business of creating PhDs? There is zero benefit to the school since they are not eventually emploeyd by the school. They are an unproductive time sink to professors, per your claim. And the taxpayers are paying for foreign nationals who do not stay back and help the state of Wisconsin at all.

    I see no upside here. Do you?

  • ivyfrommadcity

    The recent reversal should speak volumes of the power of a tight knit community and the generosity of its members. Let’s not confuse it with irrational or primitive behavior.

  • halo

    MBAs view it as a ticket to employment because, let’s face it, it’s sold as such. Recruiters don’t care about the rigours of an MBA program. I also have an MBA and, academically it was easier than my 7th grade chemistry class. It just isn’t academically rigorous.

  • charlie_CA

    I have an MBA. I’m also a tenured research professor in a business school. I tend to like MBA students since they bring more work experience to bear on problems than the typical undergrad does. An MBA program is only a waste of time if the school can’t make the program competitive enough to generate positive revenue flows and enhance the reputation of the institution while doing so. Interest in the MBA is declining, so some MBA programs are going to go away simply because there aren’t enough students to justify all of them anymore. That’s a fact. A great many people who would’ve sought out an MBA 20 years ago are now heading to business MS programs that offer deeper education in a narrower field, something that’s probably more appropriate for many of them. Generalist graduate business training is relevant for a diminishing set of professionals (e.g., engineers and technical people who are being asked to step into management roles), but MBAs are not the best choice anymore for lots of people. B-schools’ own MS programs have cannibalized their MBA programs…and that’s a net positive.

  • charlie_CA

    PhD students very rarely teach MBA classes; they are relegated to teaching undergrad core classes most of the time. Maybe you’d know that if you actually had one of these graduate business degrees you’re so fond of pontificating about.

  • charlie_CA

    Those who don’t understand business theory are going to have nothing to guide them when they encounter new situations other than gut instinct, and that is usually a rather poor substitute for a systematic understanding of the lessons learned by generations that came before. Thoughtful MBAs value theory because they understand its role in guiding critical thinking. MBAs who are basically middle-management drones-in-the-making dismiss it as something unessential to doing their jobs or getting new jobs. And, honestly, that’s a big part of why the MBA is becoming less and less relevant to business — a great many MBA students regard it as an undergrad+ “ticket to employment” rather than the upgrade to thinking skills it was meant to be (and still is in some classrooms).

    To quote Kurt Lewin, one of the founders of social psychology (which is the basis of a lot of modern business education), “There’s nothing so practical as good theory.” Or, to quote Deming, “There is no knowledge without theory.”

  • halo

    My comment placed no value on the merits of such thinking, but rather that it clashes with an MBA curriculum and purpose as a practical professional degree.

  • Here is what the school says on its website about reaching requirements for PhD students: “Students usually teach one course in which they are the professor in charge.” If they teach more, they are paid more money for their class time. It also should be pointed out that PhD teaching is often some of the worst teaching in a business school. I could argue that PhD who are learning to teach and who generally prefer to do their research should pay to practice before students.

  • jebediahjones

    This “archaic obsession with theory” as you call it is due to researchers attempting to create knowledge through new ways of thinking rather than mere “puzzle-solving”.

  • Let’sNotBeRidiculous

    I’m not commenting on whether it’s better or worse to take one or the other. I’m simply critiquing the use of asinine observations (PhD students are underachievers) to further his point.

    FYI, I’m in favor of keeping the MBA program, it is a worthy one. Doesn’t mean that the PhD program deserves unfair criticism.

  • Eric Walden

    I don’t think PhD students really get free rides. Generally, they teach some classes, even if just a lab section. Using the article’s $300,000 professor salary as a baseline, and assuming a professor teaches 3 classes per year, then the cost is $100,000 per class. If you can pay a PhD student $50,000 per year including salary and tuition benefits, then you are getting half cost labor, which is great for the school. Of course, if PhD students teach one class per semester (rather than just one per year), then you are getting quarter cost labor. Even at one course a year 63 people saving $50,000 per year is over $3 million into the school’s coffers, not $7 million out.

  • Grace

    MBAs have absolutely none of the skills required to assist faculty with research, and since they are only around for 2 years, compared to 4 or 5 like a PhD student, it is not worth faculty’s time to train them. Not to mention, the skills required are not things that MBA students typically have an interest in learning. Good professors are attracted by money, yes, and for productive faculty tenure takes care of itself (except, I guess, if you’re at a state school in Wisconsin where the tenure system is under attack from the legislature), but “influence”? Absolutely not. Faculty want to be left alone to do their research, and many of them enjoy mentoring PhD students.

    I can’t fathom how someone could call for reinvesting in an MBA program while, at the same time, deriding the faculty of the program as lazy and overpaid. What do you think makes an MBA program good or bad?

  • halo

    While John’s analysis might be heavily biased against Business PhDs, you’re heavily biased in favor of them. Business Professor and/or PhD Students, and/or recently minted PhDs for the most part view MBA students and MBA programs in itself as a waste of time. Reasons: a.) Research publications count toward tenure and/or prestige, b.) Archaic obsession with theory, rather than practice.

  • DoubleJ

    The article only focuses on the costs associated with a PhD program, and doesn’t take into account the PhD students also teach at the undergraduate level. When you take that into account, the cost of a couple of PhD students teaching is probably not all that different than that of a faculty member teaching a similar load.

  • charlie_CA

    Tribalism isn’t usually a good justification.

  • charlie_CA

    Spoken like someone who knows literally nothing about how higher education works, but instead relies entirely on (bad) assumptions and rumors.

    PhD students tend to be net time sinks for faculty; advising them and mentoring them takes up far more time than is made up by whatever research productivity they might contribute. This is why junior faculty aren’t typically given access to PhD students until they’ve been out a few years…their productivity couldn’t survive the hit a doctoral student relationship represents.

    If you want good business education, we need to produce good business faculty, and excellent business PhD programs are an essential part of that supply chain. Are there mediocre PhD programs out there? Yes, but that’s more due to the difficulty of measuring knowledge and learning (and assessing an applicant’s drive and intellect) than it is an indictment of PhD programs fundamentally.

  • charlie_CA

    No real evidence, John?? Spoken like someone who doesn’t have any actual business education (English and Journalism degrees) and really doesn’t understand business academia. A PhD program is essential to attracting high-quality research faculty (this is a fact undisputed by everyone who knows what they’re talking about). And high-quality research faculty are essential to a business school’s overall reputation.

    To see what I mean, how many top-30 business schools have PhD programs? All of them? Compare that to any random sample of b-schools in the unranked category and it’ll likely be far less than 1/4th.

    PhD programs are investments in the scholarship of the field. If you don’t understand business scholarship to begin with, then you’ll discount their value. But that says more about you than it does about PhD programs.

  • You could be right but still..

    Then what’s wrong with cutting the PhD program in half or by two-thirds to balance the budget?

    Does Wisconsin need to produce that many PhDs? Does the school have to subsidize so many? If the MBA program has to justify its existence despite being profitable, why does the PhD program get to not have to deal with proving its ROI despite it being a massive money sinkhole?

  • Guess

    These lazy Wisconsin faculty want PhDs because PhDs work for them – doing their research, doing odd jobs, assisting teaching – for free, and they get to keep all the publication credit.

    On the other hand, they are forced to work for MBAs because MBAs want to learn from professors and not teaching assistants. MBAs pay for their tuition so they demand time from professors.

    This is simply faculty killing the MBA program so that they dont have to work hard,,,,, and protecting the PhD program so that they dont have to work at all.

    Must be nice to be a Wisconsin professor.

  • Hahaha

    They get full rides with only 702 GMAT?

    The MBAs with 700+ GMAT at Wisconsin should complain because they should also get full rides.

  • hmm

    That is BS. Good professors are attracted by money, tenure, influence at the school (a “center”, a publication or a discipline to lead), a community of other experts. None of these are made better by lackluster PhD candidates at Wisconsin. If their value is by being low-paid teaching assistants, then MBAs can do those too – in fact, that would probably improve the MBA experience of some.

  • Tony

    helpful, not helptul….

  • There’s no real evidence that a PhD program is absolutely necessary to attract superior faculty. And today, more than ever, attracting Phds from disciplines other than business in math, engineering, psychology, sociology, statistics and other social sciences are important in creating a more multi-disciplinary approach to business education.

  • Let’sNotBeRidiculous

    The point that the PhD program placements are lower in rank than Wisconsin shows a total lack of knowledge of the PhD process. The vast majority of business PhD students place at schools ranked 10-15 spots below where they do their PhD. It is quite common, for example, for a Wharton PhD to be a professor at Emory University or USC, or something along those lines.

    It also doesn’t show understanding of one fundamental basic of Business PhD programs: Specialization rankings are far more important at the PhD level. For example, Minnesota has historically had a top 10 Strategy Faculty, whereas it’s MBA program is no where near the top 10. Similarly, Texas has a top 5 Accounting program and yet is ranked in MBAs around 15 (these are based on research productivity rankings, not hokey US News). If, say, a Chicago Accounting PhD got a Texas faculty position, this would be a good placement, but according to John Byrne this would be “underachieving” because he went down based on US News MBA rankings.

  • Intangibles

    PhD programs are a key factor in attracting good faculty. Eliminating the PhD program would make it harder to attract faculty who do interesting and relevant research. Much of the research that PhD students do would need to be substituted with MBA students or new staff to support research. Also, PhD students do teach as part of their ‘free ride’. It would not be saving ‘$7 million’, as a number of tangible and intangible costs were completely missed in this analysis.

  • NULL NULL

    Well that’s a very harsh statement towards the PhD program. I believe that this article portrays only one side of the story, and PhD students are definitely not sub-par.
    1. Academia is a hard place. Being international adds an extra layer of hardship to find the gainful employment as well. The comparison with the industry is merely an apple-to-orange one.
    2. Average GMAT (PhD): 702; Average GMAT(MBA): 678
    3. Undergrad GPA (PhD): 3.64.
    Both (2) and (3) numbers are respectable enough. One thing for sure, without PhD programs, it is impossible for a school ( and later multinationals) to produce quality researches that could change the world.

  • RAMI

    I think Wisconsin is the only school that its alumni donated a gift just to keep the school name Wisconsin School of Business instead of giving its name to someone else. This shows how loyal they are.