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What Happened to all the Executive M.B.A.s?

Executive M.B.A. programs have been growing in popularity in the United States since its inception at the University of Chicago in 1943. Traditionally, they have been used by companies to advance promising internal employees whom they want to develop into their future leaders.

Over the past several decades, it was quite popular for a company to identify pools of “rising talent” and sponsor them as candidates for Executive M.B.A. degrees at various higher level educational institutions. If candidates were admitted to the program, a tripartite relationship would be established between the sponsoring employer, the prospective student, and the university.

For a while, the benefits of an executive M.B.A. have seemed quite clear. Employees can continue working in their present organizations while obtaining a degree similar to an M.B.A. at a fraction of the normal cost and time. Additionally, the practical skills they attain from the program can be applied to their positions immediately as well as after program completion.

Subsequent to completing the degree, employees aim to rise faster within their organizations and increase their salaries. Likewise, many companies are content sponsoring employees who return to the company with increased loyalty, thereby helping the company with long-term succession planning. The degree has thus served as a promising strategy for leadership development and retention.

However, a recent article from the Wall Street Journal highlights changes in sponsorship trends for executive M.B.A. programs. With tighter budgets companies have been cutting back their investments in educational sponsorship. This results in more students taking it upon themselves to finance their executive M.B.A. educations, leading to more mixed outcomes upon program completion.

According to a survey of about 290 member schools by the Executive M.B.A. Council, only 27% of executive M.B.A. students received full financial sponsorship from their employers last year, down from 34% in 2007. In response to fewer sponsorships, more and more students are using career services offered by their schools in order to open alternate doors for them, rather than simply returning to their previous or current companies.

In response to increasing demand, many schools are offering greater career-coaching services to assist their executive M.B.A. students find new job opportunities. The article sites The Anderson School of Management at UCLA and the Johnson Graduate School of Management at Cornell University as prime examples of schools that have invested in personalized coaching services.

But does the decrease in executive M.B.A. sponsorships and the emergence of more career-coaching programs indicate a trend we should be concerned with?

While such trends could seem indicative of companies being less interested in investing in their own human capital, the answer to this question really depends on what glasses you are wearing. From the vantage point of companies, it could just be that they have not found executive M.B.A. degrees quite as useful in practice as they seemed in theory. From the perspective of schools, it could be that they are simply responding to students who have been urging for them to provide more options of post-graduate work. Or students may now be more are willing to finance their own degrees knowing that they will be less obligated to return to a previous employer. The best we can do for now is to keep a keen eye on the trajectories of our most recent executive M.B.A students to see what paths they follow.

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Leadership Link Round-Up: June 29-July 3

Happy 4th of July everyone. Have a good weekend and enjoy the fine weather we’re sure to have.