While the virus has had multiple effects on MBA students, it has also had a very real financial impact on the schools. Some schools are refunding student housing and meal payments, and some students are demanding tuition reduction since participating in an online class is a poor substitute for the real thing. But the programs’ lost revenues go way beyond that (such as canceled conferences, the loss of on-site executive education programs, and a lower number of MBA application fees), and the cost of running a business school hasn’t gone down at the same rate.
Provosts and deans are sitting around trying to decide how to make up for the loss of revenue. They can’t raise revenues unless they reach out to alumni donors, so they will be cutting costs. In other crises, the dot com bubble, the financial crash, and real estate crash – the deans made drastic cuts across the board to university staff and student services.
Hopefully, today’s deans will respond more strategically. Which areas drive value and which help make the school competitively distinctive? Future MBA applicants are going to look very closely at how each school responded to this crisis – how were the students treated and supported, and what services were cut. For years to come alums from the classes of 2020 and 2021 will remember whether these schools stepped up and did everything they could to help them get and keep their dream job, or whether the school cut the career services budget – especially since these schools have enormous endowments. But the schools will quickly argue that much of that money is restricted and can only be used for predesignated means.
NEXT VICTIM – School Rankings
What the schools do now will color the students’ total experience. If they feel they weren’t listened to, supported, or feel as if they’ve been had, they’ll graduate with a sour taste in their mouth and be less likely to be an active advocate and financial supporter of the school in the future. This is important because it will directly hurt the school’s rankings. All Best B-Schools rankings are based on the thoughts and experiences of graduating students, recent alumni, and companies that recruit MBAs. And rankings translate into dollars, both in the application fees, and more importantly alumni donations. Recruiters will also be looking at the way schools handle this crisis, and it may be cause to update their target school list, at this point we just don’t know.
Does it matter? Stanford refused to a tuition reduction. The provost knows that there will always be a demand for a Stanford MBA degree regardless of what they do or don’t do. He has a point, but I think it is short-sighted.
MAINTAIN STUDENT SERVICES – Particularly Career Services
We know that many companies are canceling internships, rescinding offers, freezing hiring, and delaying start dates for full-time hires. These same companies will be returning to campus next year having just delayed or altered at least one student’s future. How will they be received on campus? They will need the expertise and guidance of the career services office to ensure that their reputations are intact and they continue to get access to the best and the brightest. A misstep could hurt the schools ranking from a recruiter’s point-of-view.
The students, the school needs career services now more than ever. Let’s help the deans do the right thing and keep the career services budget intact, maybe even a small increase to maintain online services and Zoom workshops from outside experts. Contact your provost and dean and remind them that they have a responsibility to you, that a major reason you spent a quarter of a million dollars plus opportunity costs was to get a great job and launch your career. Demand the career support you need and expect, and remind them that you have the memory of an elephant.
At the very least, the schools should do the calculations. Take the number of graduates per class times two, times an ever-increasing alumni donation, times 40 years, then factor in the school’s rankings – this equals much more than a career services budget plus a new classroom building. After all, they trained you well, you’re going to be wildly successful – do they want that mega donation or not? The internal strategy of a top Wall Street bank is – “think long-term greed.” The schools should be thinking the same and not make short-sighted decisions. It’s not only the right thing to do, it’s the smart thing.
Marc P. Cosentino, CEO of CaseQuestions.com and author of Case in Point: Complete Case Interview Preparation