MBAs Take HR to a Higher Level

Imagine you’re sitting in the conference room with your CEO and the board of directors. This is the first closed-door executive meeting to which you’ve been invited. You quickly learn that your company may merge with a 20,000-employee firm overseas. But just as you’re biting into a sugar-glazed donut, the CEO turns to you and asks, “What do you think are the financial and HR issues at stake?” Instead of responding, you shake your head to signal that speaking with food in your mouth is impolite. The truth? You have no idea what to say.

“If you want to be taken seriously by senior management, then you must play at their level,” says Doug Stirling, an employee development consultant at Frazer, Pennsylvania-based DecisionOne Corporation, a provider of technology services. “Anyone with a desire to move into an HR management position, or move outside, should pursue an MBA,” Stirling insists.

Sure, the thought of grad school is daunting—not to mention the extra time and costs of completing a demanding academic program. However, the payoff can be big and there are a number of options to choose from. Pursuing an MBA will guarantee you the skill set needed to function in HR’s new strategic role.

Although most MBA programs were at one time perceived as exclusive havens for CEO and investment-banker wannabes, according to the MBA faculty interviewed by Workforce, they’re slowly attracting HR professionals who want to upgrade their competencies and expand their career options.

Why an MBA?
Stirling has obtained both his senior HR professional (SPHR) certification and his MBA. He believes they’re complementary and round out his human resources and business skills. His purpose in getting the former was to gain credibility and provide verification that he possessed basic HR knowledge. The certificate indicates that an individual passed the HR exam awarded by Alexandria, Virginia-based Human Resource Certification Institute. “It’s good enough for the HR world, but not for the general business world,” he says. “I didn’t have an undergraduate business degree, so I was still unfamiliar with many business processes.” However, after attending Oklahoma State University for four and a half years, he completed his MBA in 1993.

The business competencies he says he acquired were financial processes, basic economics, forecasting, marketing, statistical analysis, labor relations, organizational design and development, and strategic planning to address external factors (such as mergers and acquisitions, globalization and downsizings). He recommends that upwardly mobile HR professionals consider getting both the HR certificate and MBA degree because it rounds out one’s hard and soft business skills.

Although most HR professionals pursue an MBA to gain basic business fundamentals, it’s also valuable to know that MBA programs are becoming more “HR wise.” Today, you can find programs that increasingly value the HR discipline—they integrate practical HR management skills with core business competencies.

In fact, many MBA programs have undergone a significant metamorphosis—expanding and modifying their curriculum to better meet today’s business needs. “Survey after survey of alumni, recruiters and executives found recurring criticism that graduate schools were not preparing MBAs for the real world of business. MBAs were seen as technically brilliant, but lacking in social skills,” according to Terence Hancock, chairman of the MBA program at the University of Louisville in Kentucky.

Thus, after years of criticism, academia is finally bending its ears to the needs of today’s corporate challenges. Not only are MBA students learning business fundamentals, they’re able to enroll in an emerging cluster of HR-related courses, such as “Power, Persuasion, Influence and Negotiation” and “Legal Issues in HRM: Health, Family and Privacy.”

Whereas in the past, HR may have veered more toward master’s programs in organizational development, leadership or HR management, today’s MBA programs not only offer traditional curricula about finance and marketing issues, but change management, including how to get things done and the people side of business. At some institutions, students can major in HR management. At others, HR-related courses, such as team building, are offered as first-semester requirements or as electives.

“Our biggest challenge is moving from management education to management development. We want to develop the full person,” says Susan Ashford, associate dean at the University of Michigan Business School in Ann Arbor. “We may debate the balance, but we don’t debate the goal of developing [well-rounded] graduates.”

So if you’re stuck in corporate limbo, consider seeking your MBA—but not for the short-term dream of a six-digit salary. It’s not that you won’t get a return on your educational investment. If you remain in the HR field, you may be qualified for a promotion and a 15 to 20 percent increase in your current salary, according to Stirling. But keep in mind, general MBA salaries can still be as low as $39,600, according to The Official MBA Guide, issued by Orlando-based Unicorn Research Association. Not every MBA student can expect to yield a starting salary of $102,630, which is par for Harvard University graduates who enter non-HR fields, such as investment banking and marketing. And according to Fortune, 1999 MBA graduates will likely get an average annual salary of $84,828, up 16 percent from two years ago.

So first and foremost, pursue your MBA for long-term development and professional credentials. If you want to be a strategic player, you’ll have to understand budgets, strategic planning, economic forecasts and change management. Indeed, an MBA isn’t just for CEOs. It’s increasingly valuable for HR leaders.

And the winners are… ?
Each year, Business Week ranks the top 25 business schools in the country. Based on student and employer responses to a questionnaire, MBA programs either move up, down—or off the list. For example, Cornell University’s Johnson Graduate School of Management vaulted 10 spots, to No. 8, after instituting a new approach to the curriculum and an administration more inclusive of students. “We had been experiencing a steady decline in our ranking. It was a wake-up call,” says Bonalyn J. Nelsen, assistant professor of organization studies at the S.C. Johnson Graduate School of Management at Ithaca, New York-based Cornell University. Today, Cornell’s MBA students are offered immersion courses in their second semester that target a particular industry, such as manufacturing, financing or marketing. All classes—15 credits worth—are geared toward the chosen area.

“The activities include field trips, seminars, guest speakers and onsite visits to local businesses,” explains Nelsen. “The thrust of our change was to make the coursework shorter, more concentrated and focused.” Based on such changes Cornell improved its ranking this year, doubling its admissions. The magazine’s rankings, she adds, can make or break an institution’s academic standing and quality of recruits. However, for HR professionals, it’s one form of benchmarking when you’re shopping around for the right program.

In terms of providing useful data, Business Week solicits the customer’s point of view to rate the quality of business education. The results come from asking students and the companies that hire them to rate their experiences. Extensive questionnaires for this year’s rankings were sent to 9,598 graduating MBA students at 61 schools—the magazine’s largest survey ever—as well as to 350 companies that actively recruit. The magazine heard back from 6,020 students and 259 companies. (Visit http://www.businessweek.com/1998/42/b3600003.htm for the survey results.)

Graduates—who judge only their own schools—were asked to give their views on such issues as teaching quality, program content and career placement. Recruiters were asked to assess the skills of the students and rank the schools on their overall quality and the success rate of graduates in their organizations.

Ranked this year as schools with the most innovative curricula were:

• University of Michigan
• University of Pennsylvania (The Wharton School)
• Northwestern University (Kellogg Graduate School of Management)
• Harvard University
• University of Chicago.

MBA schools, such as those listed above, have evolved over the years. They’re the most visible pacesetters influencing curricula at state universities and colleges across the country—many, at lower costs. Clearly, the old model of producing either general managers or functional specialists is no longer sufficient in today’s global environment. What’s needed are leaders with broad experience, says Dr. Thomas P. Gerrity, dean of the Wharton School at Philadelphia-based University of Pennsylvania. Individuals can discuss the nuts and bolts of operations with an employee on the line, and a few hours later talk corporate strategy with the board of directors. They can review marketing plans over breakfast and discuss an organizational design plan over dinner.

Given today’s business demands, many MBA programs have undergone their own versions of reengineering. There are several significant trends that should be of interest to HR. They pertain to the areas of MBA course work, program design and corporate partnerships.

MBA curriculum begins to acknowledge people skills.
George W. Hettenhouse refers to the new MBA as “a journey just begun.” Many MBA programs, he says, began their change process in the early 1990s, driven by blunt feedback from the business community. Top management says they want individuals with a broad understanding of the business world and strong leadership skills, says Hettenhouse, professor of finance at Bloomington-based Indiana University. “We’ve tried to be different in our approach,” he says.

Indiana University’s MBA students can declare human resources management as a major or minor through the Department of Management. In addition to core courses, such as “Staffing Systems” and “Analyzing Entrepreneurial Opportunities,” students can select any six credit hours from the HRM major list. For example: “Technology and Tools for Managing HR Systems,” provides hands-on experience with functional and integrative techniques. “Aligning Business and Human Resource Strategy” covers how to formulate selection, reward and development systems that reinforce the behaviors required for implementing a company’s primary business focus and strategy. The curriculum, Hettenhouse explains, is applied and grounded in examples from major companies and case analysis.

At other MBA programs, such as The Wharton School, students are only required to take two HR-related courses during their first year: “Teamwork Skills” and “Managing People.” At most business schools, management is only one part of the MBA program, and HRM is still viewed as a smaller part of that. “It’s always been a relatively small part of any curriculum,” says Peter Cappelli, professor of management at The Wharton School. But MBA programs around the country are slowly coming around.

Whether MBA programs provide HR coursework as a major, requirement or elective depends on several factors, he explains. Business schools are political institutions with competition among every functional area and discipline. Much of that depends on faculty support, student receptivity and interest. “It’s a tough road. HR is still viewed as a problem area, rather than a vibrant, stimulating area,” says Cappelli. As one MBA professor put it: “HR is still perceived as an administrative ‘ghetto.’”

Nevertheless, what HR professionals should know is that MBA programs are beginning to acknowledge and provide some HR-related coursework. For example, every MBA student at the Kellogg Graduate School of Management (Northwestern University) is required to take a practical course called “Strategies for Managing Organizations.” The course teaches people skills such as how to lead teams, motivate people, handle cross-cultural issues and negotiate labor contracts. “It’s a very popular required course,” says Bob Duncan, the Richard Thomas professor of leadership and organizational change at Kellogg. “Our students are known for their ability to implement change, to make things happen in their organizations.”

As few or far between as these courses may be, they’re becoming more standard. But those courses alone shouldn’t be the sole basis for selecting a particular MBA program. Keep in mind that the value of a current HR professional obtaining an MBA is not to learn HR fundamentals. The main reason for pursuing an MBA should still be to learn basic business fundamentals, such as financing, marketing and systems management—key knowledge areas that aren’t provided through current HR certification programs.

Team concepts drive program designs.
At the University of Michigan Business School, MBA students are offered a multi-dimensional approach to learning called MAP (Multidisciplinary Action Project). It’s a new, in-company teaching model that integrates the Business School and the business world.

For example, the school partners with companies such as Citibank, Boeing, Whirlpool and Medtronic to identify areas of need that yield education-enhancing assignments for seven weeks. Through MAP, groups of students work with a team of six, cross-functional faculty members, who serve as subject-area experts, advisors and coaches. “The students have to go out to companies to analyze [a problem] and recommend the changes,” says Ashford. The students also receive support from an experienced team-effectiveness expert who instructs each team on state-of-the-art techniques in team building, conflict management and problem solving. Additional training and development focuses on communication and presentations, process mapping and project scoping. Michigan faculty experts and practitioners from major consulting firms lead the workshops.

At Indiana University’s Kelley School of Business, MBA students also participate in teams, says Hettenhouse. Not only do teams carry out a variety of projects, some have even experimented with team-based examinations: Members pick up the marketing midterm, for example, at 8 a.m. and are required to turn in a word-processed, Excel®-analyzed solution by 5 p.m.

Performance evaluations are also team-based. “Peer feedback on teams is crucial to their success,” says Hettenhouse. The Kelley School focuses on two types. The first teaches and encourages students to give feedback to one another on team processes and functioning independent of the faculty member. In other words, there is no grading element involved. Secondly, faculty at the Kelley School of Business meets with the teams at the end of each semester to learn the relative contribution of each member during team assignments. Based on the positive and negative feedback the faculty receives, students are given their appropriate ratings. Therefore, the process yields higher evaluations and grades for the most active team players.

In summary, the new MBA models for learning arm students with more applied knowledge, rather than abstract business theories. The challenges for students, faculty and administrators are substantially greater than in the past because it requires more interface between the business, psychology and HR management departments and faculty. “The coordinated and integrated approach is clearly the way to go,” says Hettenhouse. “What’s not so clear at the moment is how to get there.” As MBA programs continue to experiment with the best forms of aligning higher education with practical business needs, HR’s participation and feedback is critical.

For example, Stirling has no regrets over his decision to obtain an MBA. Although it took him four and a half years to complete his coursework, he was able to apply the knowledge immediately at his full-time job. When the American Disabilities Act was signed into law, Stirling was still in graduate school. As a result, he wrote a school paper on the ADA and its effect on organizations. “This research and knowledge was used to develop training programs for management,” says Stirling.

Adds Susan Kennedy, director of human resources at New York City-based New York Academy of Sciences: “I was in a career change mode. With no corporate HR experience, I thought the MBA would help me catch up. It did. My concentration at [New York City-based] Pace University was in HR. The management courses familiarized me with employment law, which would’ve taken a long time to get through experience alone. I gained skills and confidence in the training course I’ve [developed].”

So whether you look for an MBA program on Business Week’s Top 25 list or a less expensive program at a local college, assess your individual career goals first. If they align with your company’s business goals, you’re more likely to get management support: tuition reimbursement, time off for study, possible promotion or a salary increase upon graduation.

But don’t expect any or all of the above. Your decision to pursue an MBA is really up to you. Employer support is icing on the cake. In fact, many of your colleagues have pursued MBAs without employer support. Why? The benefits to one’s career are so far-reaching: a solid grounding in business fundamentals, state-of-the-art knowledge in HR management, improved self-confidence, greater ability to influence change, respect from your peers and senior executives. Most of all, you’ll have the satisfaction of knowing you rose to the academic challenge. Now isn’t that better than sitting clueless with a donut in your mouth?