Getting value from Executive MBA Programs

By Kathryn Tyler Jul 1, 2004

July 2004 HR Magazine Select candidates and programs wisely for the best return on investment.

Programs that enable executives to earn a master’s degree in business administration (MBA)—by accommodating students’ working hours and recognizing their individual needs and experiences—are the hottest product in the growing MBA market. Students may find it grueling to juggle a demanding career with intensive classroom work and homework, but achieving the degree can make them qualified for more responsibility at their current organization—or a better position elsewhere. In turn, employers that reward such employees’ efforts with increased responsibility and advancement opportunities will also benefit.

“One rough semester I slept about 11 hours a week,” jokes L. David Mounts, CFO of UPS Supply Chain Solutions in Alpharetta, Ga. In May, he received his degree after completing the MBA program for executives at the University of Pennsylvania’s Wharton School in Philadelphia. It took two years, with UPS paying part of his costs, but it paid off for Mounts as well as his employer. His education helped him develop new products for UPS that he is now introducing to customers, he says, and he moved up in the organization.

“Between work and school, I was on my knees,” Mounts says. “But I got through it. My family supported me; the other students on my team helped me. In a full-time MBA program, it’s all about competition. But in an executive MBA program, it’s all about collaboration,” he says.

Jeffrey Pfeffer, a longtime professor in the Graduate School of Business at Stanford University in California, who has researched the value of MBAs, says executive MBA (EMBA) programs “are becoming more popular for the schools because they get more money per student and for the students because they do not cost as much in lost wages.” Stanford does not offer an EMBA program. Maury Kalnitz, managing director of the of the Executive MBA Council, a not-for-profit international association of universities based in Atlanta, says: "In the last three years, our membership has increased 35 percent. The bulk of new schools are international."

The number of programs has also multiplied.

The University of North Carolina at Chapel Hill offers "an evening format" as well as a weekend program and has "added a global program," says Penny Oslund, director of EMBA programs. "Schools are adding formats to meet specific niches."

Marci Armstrong, associate dean at the Cox School of Business at Southern Methodist University in Dallas, has also seen growth: "Over the last two years, the enrollment in our EMBA program has doubled."

Rachel Hale, HR generalist at the American Airlines Federal Credit Union, headquartered in Fort Worth, Texas, understands the growth. "Traditionally, managers without MBAs have not been as promotable as those with MBAs, particularly within the executive ranks."

While EMBA programs can provide a career boost for the employee and serve as a staff development tool for employers, there are some caveats. Before determining whether to fund -- fully or partially -- an employee's participation, you should understand the limitations of the program, examine its credibility, consider cost effectiveness, be aware of the potential for workplace disruption and temporary loss of productivity, and keep in mind that you may be making your best employees more marketable.

Nonetheless, experts say the programs can be valuable if you carefully select the students and the programs, plan the employees' career paths, and incorporate what they learn to benefit the company.

Differences of Approach

EMBA programs generally differ from traditional MBA programs in several ways. EMBA students are usually older, for example. All EMBA programs are geared to part-time rather than full-time students, and classes are offered in the evenings and on weekends. "EMBAs are not traditional lecture course work. They are management collaboration exchanges and hands-on practice," says John J. Reardon, director of the College of Business, Denver Executive MBA, for Colorado State University.

Many EMBA programs allow students to use actual work projects in their courses. This amounts to getting a team of highly experienced consultants for free.

But EMBA programs are expensive. The average cost is about $60,000, but they can run as high as $112,000. "The cost is two to three times a normal MBA," says Reardon.

Who pays? According to Kalnitz, 44 percent of EMBA students are fully funded by their employers, down from 50 percent three years ago. He adds that "22 percent are self-funded, and the rest are partially funded" by employers.

Grants and loans are available for EMBA students through schools' financial aid offices, but such assistance is need-based and may not cover all of the tuition.

Whether EMBAs are worth their high price depends on the program.

Evaluating an EMBA Program

The degree of your company's involvement in selecting an EMBA program and the executives who will enroll depends on whether the company is willing to pay any or all of the tuition, and the amount of time the company will give the individual. The more you for executives’ MBAs, the more you need to be involved in the selection process to receive sufficient return on investment. Some points to consider:

  • The required time commitment. EMBA programs typically last 15 to 24 months; the average is 21 months. EMBA students commonly meet two evenings per week or all day on Friday and Saturday twice a month.

    EMBA students are required to spend large amounts of time in their programs—at least eight hours per week in class and 10 additional hours studying and working on group projects— plus commuting and residency time.

    Already overburdened professionals who undertake an EMBA program can expect to make serious concessions in their work and personal lives. Schools say this imbalance is short term and therefore feasible. However, two years can seem like a long time to a manager waiting for maximum productivity, a co-worker picking up the slack or a spouse managing four kids alone.

    “Employers are giving up one day per week, on average,” says Kalnitz. Kent Ash, regional director for the American Airlines credit union, and a May 2004 graduate of the EMBA program at Fort Worth’s Texas Christian University, says his academic load “did not negatively impact my work performance. But it totally affected my home life. Something had to give. I missed all of my teenagers’ sporting events. But, hopefully, at 13 and 15, they understand.”

    Says Kalnitz: “Work is No. 1 because it pays the bills. School is No. 2, and, unfortunately, family is No. 3. I couldn't go to every baseball game or recital. You give up things. My wife picked up the load."

    To minimize the stress, Mounts says, "employers need to give people time flexibility to manage all the things that are important-family, work and school. I had an agreement for an additional four weeks off per year."

  • The student body. The average EMBA student is a 38-year-old male working in a highly demanding middle- or upper-management position with about 15 years of work experience. "You learn as much from the other students as you do from the professors," says Ash.

    Mounts says: "People in the program alongside of your employees are providing insight about their industry. It helps your executive understand the industry better and how to help product offerings to that industry. The single largest value is networking."

  • Campus residency. Residency may mean staying overnight on campus every other weekend, living for a week on campus at the beginning of each semester or traveling abroad for several weeks. Residency is a plus, Mounts says. "You want people to go overnight. Relationships don't develop when sitting in class. That happens after you finish all of your homework and you're unwinding and catching up. That's where those relationships are fortified."

  • Travel abroad. An international partnership between universities is a hot trend. Trips abroad, especially to expanding markets such as China, can be a huge bonus if employees travel to countries where their company wants to grow.

    On the other hand, such trips can be superfluous. Says Ash: "We went on a 10-day trip to Germany and England. We could have done what we did there, here in Fort Worth."

  • Academic requirements -- and stature. The academic requirements for EMBAs at some universities are less stringent than those for traditional full-time MBA programs at other schools or even at the same school, according to some observers.

"Whatever academic standards are enforced in the regular day programs, there are few academic standards enforced in the EMBA programs [at some schools]," says Stanford's Pfeffer. "That does not mean that no one works hard or learns anything. It means it is possible to sell-and buy-a credential. Not everyone is doing this, but clearly some are. Neither Stanford nor Harvard has an EMBA program. In our case, we believe it would 'dilute the brand' of our full-time MBA program."

The University of Pennsylvania's Wharton School, which does offer an EMBA, also staunchly protects its standards. "Our philosophy is that [the EMBA] is the same as an MBA. We have the same admissions standards, same number of contact [classroom] hours and the same faculty," says Catherine Molony, director of admissions and senior associate director of the MBA program for executives.

Not all programs are as rigorous, however. Some schools shorten the number of credit hours required for an EMBA, with the rationale that EMBA students have "life experience" that counts toward the degree.

"[Many] EMBA programs are closer to executive development programs than MBA programs," says Allan Conway, a professor at the Haskayne School of Business at the University of Calgary in Alberta. "EMBAs and MBAs are not necessarily the same degree."

Conway, director of the MBA Roundtable, an international organization of business schools-encompassing both MBA and EMBA programs-says: "Many people who enroll in executive MBA programs have demanding jobs. They don't want to make time concessions and can't take a rigorous program. The schools have a choice: Keep this program similar to a traditional 800-contact-hour MBA program with certain requirements for individual performance, or cut those things back. There is real pressure to provide what the customer wants."

Organizations such as the Association of MBAs and the Association to Advance Collegiate Schools of Business accredit business schools but not the EMBA programs within those schools. Consequently, observers say, there can be significant differences between an accredited school's EMBA program and its full-time MBA program. However, the EMBA program would have to meet some minimum standard for the business school to be reaccredited.

Employers should compare the required classroom hours in an EMBA program with the requirements for the regular full-time MBA program at the same school. If there is a huge discrepancy, the EMBA may not be as valuable. (See "Another Option: Corporate EMBA Programs.")

Kalnitz strongly disagrees with this characterization of EMBA programs. "The EMBAs are degreed programs. The product is the same, even if the process by which it is delivered is different. Contact hours are not the only criteria [of a program's value]." He adds that "an EMBA is as rigorous as the regular MBA program. Any program offered from an accredited school requires at least the number of contact hours" dictated by the accrediting body. "I would look at the course content and the method of delivery” to determine the value of the program, he says.

The Retention Challenge

Many EMBA students receive their degrees— often at the company’s expense— and move on to new positions at other companies. If you don’t plan to increase advancement opportunities for your EMBA graduates, you will lose them.

“You’ve created a person who is more salable and knows it,” says Conway. “Now they know a lot of people in different industries. It’s easier for them to find new jobs.”

Says George Bobinski, associate dean at the School of Management at Binghamton University in Binghamton, N.Y.: “Don’t wait until graduation weekend to think about how you plan to increase this person’s responsibility.” It’s important that you “keep an open line of communication,” Oslund says. “Be clear about the expectations. Do long-term career planning together.”

Molony advises employers to keep up with what the student is doing. For example, Wharton has Sponsors Day Open House. “It’s like a PTA meeting. We discuss the challenges of managing an employee in this type of program, and retention strategies.”

Attaching strings to the funding you provide can also boost retention. Kalnitz’s recommendation: “Instead of giving them the money to go to school, lend them the money and forgive onethird of the loan [each year] for three years. If you lend them $60,000 and they stay with you one year after graduation, then they owe $40,000. If they stay for three years, the entire loan is forgiven. It minimizes losses.”

Such arrangements have become commonplace. “It’s quite reasonable, and I encourage companies to do this,” Armstrong says.

Kalnitz says, “Companies that plan for what to do with the students when they come out of the program are the ones [that] retain their employees.”

Kathryn Tyler, M.A., is a freelance writer and former HR generalist and trainer in Wixom, Mich.

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