Europe’s shorter courses dent US MBA

Brian Scullin is a Washington DC-born, New Hampshire-educated executive and, by his own admission, an “all-American” guy. Except he does not hold that most American of qualifications, the MBA.

Mr Scullin, who works for Marsh, a New York insurance group, had started studying for the two-year postgraduate degree at the Smith School of Business, University of Maryland, a few years ago, but dropped out after one term.

A job transfer to Marsh’s Manhattan headquarters had made travelling to classes complicated. Having moved, however, Mr Scullin was persuaded by his new colleagues, many of who had studied overseas, to switch to the part-time masters in management programme at the London School of Economics.

“It was a matter of getting out of my comfort zone,” he recalls. “It was about becoming a more global citizen.”

Not only was this a cheaper option but by having to travel to London only for a few days every couple of months, Mr Scullin could keep his day job. A few months into the course he bagged a promotion and a salary rise — a direct result of what he had learnt, Mr Scullin says.

“I could see how I could get an edge, and I was able to put it into effect as soon as I got back to the office.”

The two-year MBA remains the most popular masters level degree course in the US. But applications are under pressure in 2016, according to figures published last week by the Graduate Management Admission Council, which runs GMAT, the graduate management admission test.

For the first time since 2012, fewer than half of all full-time two-year MBA courses globally experienced a growth in applications. This trend was more marked in the US, where only 40 per cent of schools reported a rise in applications for their two-year MBA programmes, compared with 43 per cent worldwide. More than half of US schools, 53 per cent, reported a decline.

There is a sense of a flight to quality. Globally, applications were up in 57 per cent of the MBA programmes with enrolment of more than 120 students, which tend to be judged as better in business school rankings, while only a third of the programmes with 53 or fewer places saw an increase.

The prejudice against lower-ranked schools was highlighted by a Financial Times reader, who wrote in response to our coverage of the GMAC data, that “nobody wants to go to a no-name programme in the middle of nowhere”.

The hope for US business schools is that the decline in applications which many have experienced is temporary. Demand for MBA places tends to bounce back when unemployment is high and people feel they have less to lose by increasing their skills.

The trouble is that GMAC’s data show that the rebound in MBA applications since the financial crisis has been far less pronounced than after previous recessions.

While some US business schools are struggling, many of their European counterparts, which offer 12-month courses for the same qualification, are seeing more applicants.

Shorter courses mean that European qualifications tend to be cheaper than a typical American MBA — although GMAC’s data suggest this is only part of the issue, since just 43 per cent of American business schools with one-year MBAs saw an increase in applications last year.

Riold Furtuna was a research scientist at Yale University when he decided to apply for a masters course. He wanted to improve his skills with the aim of working for a biotech start-up.

The obvious choice would have been Yale’s School of Management, which has one of the world’s highest-ranked MBA courses. Instead the 32-year-old chose the European School of Management and Technology in Berlin.

“I have two kids and being out of the workforce for two years would have been extremely costly,” he says. With the government subsidies he and his wife receive in Germany, monthly childcare costs are $200, compared with $1,700 while at Yale.

Mr Furtuna also believes the quality of teaching is a match for the US Ivy League schools and he likes the energy of what is a far younger school.

Javier Arias is another arrival at a European business school. He says friends and former colleagues in his native Costa Rica were surprised when he chose Nyenrode Business Universiteit near Utrecht , in the Netherlands. The attraction for him was the ease of securing a study visa compared with the US, and this also allows him to stay to work for a year after graduation. The mix of people was also a selling point. Mr Arias is the only Costa Rican in his class of 35, which contains 21 nationalities.

“For me, the MBA is about personal development,” he says. “There is such a diverse group of people on my course that I feel I develop as a person by just being around them.”