Thereis a clear link between people development and business success, but many MBAcourses are failing to include this vital subject. Philip Whiteley examinesexclusive research from the Work Foundation and highlights some of the keyfindingsLast month, the HR consultancy Hewitt/Bacon & Woodrow published a surveyshowing that managers spend around 45 per cent of their time on personnelissues. In 2000, Hay Group researchers discovered that most business leadersare unprepared for promotion, and handling people was the main area ofweakness. It would be reasonable to suppose that the Masters in BusinessAdministration, the standard-bearer for management development, would reflectthese pressing needs. However, a study by the Work Foundation, due to bepublished later this year, comes to the disturbing conclusion that many MBAcourses in the UK remain obsessed with accountancy, marketing and strategicpositioning. Most treat management of people as an optional extra. It is the equivalent of expecting someone who has studied musical theoryintensively, but rarely actually picked up a violin to be a concert violinist.Given that corporate collapses are common and that most mergers andrestructurings fail to add value (according to numerous reports – notably the1999 KPMG study Unlocking Shareholder Value) serious scrutiny of thedevelopment of our business leaders is long overdue. The Work Foundation study also uncovers strong indications that employers donot use MBAs in a strategic way, and make little effort to evaluate itseffectiveness. There are two areas of interest to the personnel manager here. First thepressing need for them to understand the closeness of the links between peopledevelopment and business success, so as better to show these to board members.Second, that as the custodians of the training of future executives, personnelmanagers need to look more critically at the management courses they arrangefor them. Whether these necessary changes can come about by reforming the MBA, or byscrapping the qualification, is the subject of fierce debate among managementthinkers. Author and business analyst Henry Mintzberg, for example, is a fierce criticof the MBA, in which the case study method treats all organisations as beingthe same. “Execution [of business strategy] is about context; about depthof understanding of the specific business or industry in question. That ismissing in MBA education,” he wrote in Fortune magazine last year. Mintzberg has set up a rival to the MBA, the International Masters inPractising Management. Running since 1996, through a university network, theIMPM is not based on departmental subject matters, but on core behaviouralabilities. Conversely, Lynda Gratton, HR author and professor of organisationalbehaviour at the London Business School, argues that there is scope forinnovations within the MBA. “At the London Business School we have alwaysput a big emphasis on leadership and people management skills,” she says.”We have a detailed first-year portfolio that includes interviewing andpresentational skills.” And this can be done within the MBA or separately, she contends. “There are all sorts of different ways of learning,” she says.”It is great that people have set up alternatives, so that individuals canchoose the one that suits them.” These exclusive extracts which follow demonstrate some of the problemsfacing MBA providers and the companies who ultimately pay for thequalification. Key findings– Only nine modules out of the 20 courses offered training on personaldevelopment and leadership skills When senior executives set strategy, raise capital or deal with the mediathey are communicating, persuading, delegating. They are dealing with peoplealmost the whole time. It could be argued that ‘management’ and ‘peoplemanagement’ are one and the same thing. Susan Bloch, head of the executive coaching practice at Hay, says:”Most managers are technically prepared – they have all the right skillsin operations, finance or marketing – but on the way up they have had verylittle coaching or training on how to manage relationships. So when they get tothe top they are unprepared, not only on how to manage relationshipsinternally, but also externally – with shareholders, investors and the media. “What they find is that around 40-50 per cent of their time is taken upmanaging and working together in teams; managing across countries and regions;and handling different cultures. Most of their ‘training’ will have focused onlearning their specialist expertise… very little would have focused onhelping them to understand the importance of managing relationships.” The Hay Group study in 2000 found that only 55 per cent of business leadersfelt adequately prepared for their promotion. When asked for the skills theyneeded to develop, the same group cited ‘influencing across organisationalboundaries’ and ‘top team development’. – Out of 20 courses there were 29 compulsory modules on accounting andfinance, and 22 on strategic positioning. This compares with eight on HRmanagement On the 12 courses without a compulsory HR module, there was typically oneavailable as an option. This could be seen to qualify the finding, but equallyit could be argued that there is something quite surreal about the notion ofpeople management as an option for a managerial course. Where are all theseorganisations that are not run by people? Personnel managers are accustomed to hearing the accusation that they lacksufficient knowledge of the business objectives and how the organisation makesits money. The corollary is that many accountancy-trained managers need tolearn about how the recruitment, skills and team development of theorganisation are the means to their strategic ends. Ewart Keep, principal research fellow at Warwick Business School and aco-author of the Work Foundation report, comments: “One of the moststriking things about many UK MBAs is that people management is not part of thecore curriculum. Too often it is an optional extra. We are in danger ofcreating a cadre of future senior managers who know a lot about finance,accounting, marketing and strategy, but know next to nothing about how to getthe best out of people.” The Work Foundation study did uncover one MBA course that has struck abalance and an analysis more attuned to 21st century management than most ofthe rest. Its compulsory modules on people management and strategy respectivelyread: People at Work module: “Taking the link between business strategy andthe management of people as its starting point, this module focuses on HRstrategies and the importance of the function to organisationaleffectiveness.” Strategic Learning Workshop: “This module develops and integrates keythemes of the programme such as team development and the management of changewith a focus on collaborative problem-solving, strategic learning and makingmeaningful connections in your thinking.” The cross-references both ways indicate recognition that strategy and peoplecannot be neatly separated; nor one regarded as an option. Such an approach isstill the minority view, however. – There were two compulsory modules on ethics, one of which incorporatedsocial responsibility and corporate governance Although it is heartening that the matter of business ethics has appeared onthe agenda, it is still far from mainstream. The presence of a separate moduleon ethics is not the only yardstick, however, and the Work Foundation researchindicates that the subject is also being taught within accountancy and generalmanagement modules. Ashridge College, for example, insists that it is integratedinto all disciplines and not treated as a separate subject, while LondonBusiness School has appointed a professor of business ethics. Teaching ranges from fairly ‘narrow’ subjects such as the importance ofaccuracy and good faith in accounting, to the broader corporate socialresponsibility matters of avoiding pollution or the exploitation of workers. Ethical matters have become of more pressing concern to business in the wakeof the Enron scandal. With greater media exposure of many companies, and theimportance of brand and reputation, the hidden cost of unethical behaviour isbecoming more evident. Although there is still progress to be made, it seemscourse providers are waking up to the importance of ethical teaching. – At least £10m is spent by British employers each year on MBAparticipants who leave the company within 12 months of graduating This finding is the one that strikes at the heart of the personnelprofession. The most recent annual report of the Association of MBAs shows thatjust over half of MBA graduates stay with their employer for a full year aftergraduating. This correlates to the £10m estimate made by the Work Foundation.This does not necessarily translate as a net loss to the economy, but it doesseem that little or no return on a considerable investment in training isrealised by large numbers of employers sending managers on MBAs. Thequalification is not cheap, costing between £8,000 and £60,000. This indicates extremely poor management development programmes and a lackof thought as to what the MBA is for. Rather than forming a part of a programmeto strengthen the managerial capacity of an organisation, in which a series ofdevelopment exercises, integrated into succession planning, are placed at theheart of the business, it seems that doing an MBA is a perk or an afterthought.There is a link here with the findings on individual personal leadershipskills. If the typical MBA does not address how to lead, and the personnel ortraining department is not looking for it to do so, it calls both thequalification and the priorities of the HR profession into question. Sending someone on expensive courses, with an unknown impact on theirperformance, and being indifferent as to whether they stay, is hardly a recipefor success. In the course of its research, the Work Foundation came across onemajor US-based multinational, which requested not to be named, which isquestioning whether it will continue to spend ‘tens of millions of dollars’sending its European managers on MBA courses, because it is unsure whether itis getting value for money. – Nearly a quarter of MBA graduates are in consulting; of this group just6 per cent were in consulting prior to the MBA – One third of the total MBA-qualified population is in generalmanagement or consulting. Only five per cent are in the public sector These two findings can be taken together and indicate that the MBA is aroute out of ‘boring’ parochial jobs into the international world ofconsulting. A major slice of the expenditure on MBAs is therefore not used as ameans of improving managerial capacity of the service, manufacturing and publicsector organisations – even though these often pay for the courses. Work Foundation co-author and MBA lecturer Ewart Keep says: “Many MBAstudents want the qualification in order to change jobs or earn more, notbecause they want to hone their skills and knowledge. Too often students wantto minimise the learning and do the least necessary to pass. This may well be arational strategy, given the fact that students on ‘executive’ – that is, notfull-time – MBAs are trying to hold down very demanding and time-consuming jobswhile they are studying.” Conclusion The MBA industry is vibrant, but it is being kept alive by the innovationsof some course providers, and by the strength of the MBA as a brand, ratherthan by the concept per se, which is beginning to look anachronistic in thisday and age. Many individuals do an MBA course for the badge, not in order to become moreeffective business leaders.There has been little or no work done on gauging thequalification’s true effectiveness. The bulk of MBA teaching is on accountancy, marketing and strategicpositioning; whereas people management, awareness of technology, and personalleadership skills are equally as important but still remain neglected. The point of the Work Foundation study is not to bury the MBA, but to issuea warning: unless course providers and the personnel and training professionsaddress the real purpose of management development, they will continue todevote resources to an unproven qualification in an unplanned way. Case study: Ian Carlisle, AutoglassSenior executive roles involve a combination of analytical ability,knowledge of the industry and inter-personal skills. The first of these threehas been prioritised in much conventional management preparation, but it isincreasingly recognised that all are needed.Ian Carlisle, managing director of leading windscreen providerAutoglass, employed all three in a dramatic turnaround of his business justover two years ago.Carlisle was promoted from operations director in late 1999,just as a new logistics and computer system came on line that threw upunexpected teething problems and led to serious problems with suppliers andcustomers. Debt increased and staff morale plummeted. Carlisle, who had used a coach for three years, called on hersupport in his first major test of leadership.The coach helped him focus on the impact that the leader has onthe team. She also gave an objective perspective on the matter, helping him toanalyse the options, rather than get caught up in the drama.Most of the solutions were of a technical and industry-specificnature, and Carlisle drew heavily on his own technical expertise to map outsolutions; but coaching played a role. “There was no magic formula,” he says. “My coachgave me advice about my demeanour and confidence. The best advice was when shesaid: ‘If your head goes down then the business will follow. You have to stayoutwardly positive and show tenacity and confidence in overcoming thechallenge.’ “We finished 1999 with a bad year. My honest feeling atthe time was one of total isolation because the higher up the organisation yougo the smaller the peer group,” he adds.The company began to recover in 2000. Carlisle “learnedmore in nine months than he would have in five years in easier times”.This gave him the confidence to expand aggressively once the problems wereironed out.In 2000 the company showed record results. Market shareimproved from 35 to 39 per cent, despite the fact that the RAC and Kwik Fitentered the market. In 2001 the company record customer and staff satisfaction.Work foundation researchersexamined the curricula of 20 MBA course providers in the UK, supplemented withinterviews with lecturers, training professionals and with the Association ofMBAs, and a literature review. The research will be published in late summer orearly autumn. Previous Article Next Article What about the people?On 25 Jun 2002 in Personnel Today Comments are closed. Related posts:No related photos.