Pedro Nueno, professor of entrepreneurship at Iese Business School, argued in Soapbox (Financial Times, January 10, “How much will you pay? The growing culture of consulting for money”) that companies’ use of business school professors, directly or through consultants, was analogous to a consultant in a management development company bidding privately for the contract, cutting out the parent company.
He suggested that some faculty bypass their business schools, deflecting a client away from the school to his or her own private account. And that some professors will only teach on the basis of ‘how much will you pay me?’
But in my experience nothing could be further from the truth. In 25 years of working with business schools and individual professors, I have always found that their business school comes first. In fact, I would go so far as to argue that those schools that encourage their faculty to work as teachers and consultants benefit from the practice.
The professors I see who teach outside as well as within their business schools create highly energetic two-way discussions, giving them considerable insight into the workings of the client company, which enriches their research. Such faculty may also test new teaching materials within the company, which will in time enrich their own classes.
As well as these academic benefits, allowing faculty time to consult on their private account gives them the opportunity to bring their earnings closer to the sums they might earn if they chose to work outside academia, such as within a global consulting company. If business schools allow their faculty leeway in this way, schools are more likely to be in a position to attract top talent. This is as important for schools as it is for companies.
Second, while it is true that companies can save money by hiring professors directly, business school courses are not cheap. Fees for public programmes can range from €1,500 to €1,800 per participant per day. A unit with 20 senior people requiring the same education, for example, may need to find €200,000 for fees alone. Not every company can pay this. And those companies that cannot pay may well be the ones who need this education the most. Obtaining the services of top-quality faculty by employing them privately – with the agreement of the school – for a lower cost is not immoral.
Third, the service desired by a company may not be available from the leading business schools. When demand for in-company courses is high, business schools will rightly give priority to existing clients and to courses for top management. They may not have the capacity to offer middle management courses to other companies. If a company is faced with the choice of selecting a business school that is not highly ranked or hiring faculty directly from leading business schools, one cannot be surprised if it selects the latter option.
Finally, an underlying problem that may drive some of the behaviour of those companies and faculty who might be tempted to strike a private deal is the perceived shortage of first-class, experienced teachers.
Even business schools are forced to hire faculty from other schools, from other countries. Is a company’s motivation to save money or to hire the best?
The solution to this problem is obvious. If leading business schools themselves want to attract more clients, rather than leaving it up to their individual faculty to do so, business schools have to increase the quality, quantity and relevance of their services. This will require an increased investment in PhD or DBA courses and selecting candidates who have the potential to become top teachers as well as top researchers.
That professors teach in companies is not immoral per se, unless of course they are deliberately siphoning business away from their employers, when obviously their employment should be terminated.
If there is a real problem, imposing more controls is not the answer. Perhaps it should be up to the business schools themselves to devise entrepreneurial strategies to address these problems.
George Mann is a consultant specialising in executive development