Older and maybe just a lit­tle bit wiser…

Finweek English Edition - - COVER STORY -

Ma­ri­etjie Wepener, the Deputy Di­rec­tor: Busi­ness De­vel­op­ment, Mar­ket­ing and Com­mu­ni­ca­tion at the Univer­sity of Stel­len­bosch Busi­ness School (USB), makes an im­por­tant dis­tinc­tion about the stu­dents they see com­ing through their doors: “No­tably, in South Africa, peo­ple en­rol for their MBA de­gree later than in other parts of the world (like Europe and Asia). There­fore they have more work ex­pe­ri­ence than their Euro­pean or Asian coun­ter­parts. The av­er­age age of our dif­fer­ent MBA groups varies be­tween 34 and 38 years, and 73% of stu­dents al­ready have more than seven years of work ex­pe­ri­ence (mostly man­age­rial) when they en­ter the MBA.”

This is fairly ref lected in the re­search we con­ducted, which showed that sur­vey re­spon­dents were be­tween 30 and 39 years old and on its own tells an in­ter­est­ing story. If you are con­sid­er­ing do­ing an MBA in your mid-twen­ties, you may want post­pone that de­ci­sion for a bit to en­sure you get the max­i­mum re­turn on in­vest­ment.

IS THE MBA THE SIL­VER BUL­LET TO FI­NAN­CIAL IN­DE­PEN­DENCE?

One MBA grad­u­ate from UKZN (2010) told our re­searchers: “The MBA de­gree can best be de­scribed us­ing the anal­ogy of a sol­dier go­ing to war: it equips all those that grad­u­ate with the same tools and skill set (weaponry and ar­mour in the case of the sol­dier); and some use th­ese more suc­cess­fully than oth­ers, and are able to ef­fect change, not only in their own per­sonal and pro­fes­sional lives, but in­spire those around them to do so as well (sur­vival and death in the case of a sol­dier).”

SHOW US THE COLD, HARD CASH

While there may be a per­cep­tion that the MBA adds ma­te­ri­ally to a salary, it only came sev­enth in our re­search in terms of mo­ti­va­tions for do­ing the qual­i­fi­ca­tion. Thirty two per­cent of re­spon­dents se­lected this as a rea­son to do the qualif ica­tion. By far the main rea­son for study­ing an MBA de­gree is the at­tain­ment of busi­ness knowl­edge (se­lected by 79% of re­spon­dents). This is fol­lowed by ‘Im­prove­ment in Soft Skills’ (51%) and ‘Con­fi­dence in a Busi­ness Set­ting’ (49%).

A fas­ci­nat­ing ex­er­cise f rom the Fin­week per­spec­tive was chat­ting to rep­re­sen­ta­tives from the var­i­ous busi­ness schools about what the im­pact of the MBA was on the earn­ing power post the achieve­ment of the MBA qual­i­fi­ca­tion.

“Fig­ures for South African stu­dents are dif­fi­cult to come by, how­ever, in­ter­na­tional stud­ies would sug­gest that MBA grad­u­ates from top US schools dou­ble their pre-MBA salaries within about three years of com­plet­ing the de­gree. Many South African stu­dents use the MBA to make a ca­reer move, of­ten into con­sult­ing or in­vest­ment bank­ing, and thus such moves hold marked im­pact on the MBA grad­u­ates’ salary pack­age,” ex­plained Conrad Viedge, MBA Di­rec­tor at Wits Busi­ness School.

“Re­cent re­search shows that more than 85% of em­ploy­ers value the ‘strate­gic plan­ning abil­ity’ and ‘strate­gic insight’ of MBA grad­u­ates. Fifty t wo per­cent of em­ploy­ers in­di­cated that they pay MBA grad­u­ates more than other em­ploy­ees. At USB, 77% of our MBA grad­u­ates, who com­pleted their stud­ies in the last three years, now earn R600k (TCTC) and more, while a mere 31% of the same group earned the same amount prior to start­ing their MBA stud­ies,” adds Ma­ri­etjie Wepener, Deputy Di­rec­tor: Busi­ness De­vel­op­ment, Mar­ket­ing and Com­mu­ni­ca­tion at the Univer­sity of Stel­len­bosch Busi­ness School (USB).

Kevin Raf­ferty, a se­nior lec­turer at the Rhodes Busi­ness School, pointed to the 2011/12 sur­vey con­ducted by Feed­back­rocket.com and Fin­week, and used the

16.5% f ig­ure. How­ever, lead re­searcher Gavin Sy­manowitz is quick to point out: “Last year, the over­all an­nual salary growth of an MBA grad­u­ate was cal­cu­lated to be 16.5% per an­num. How­ever, the an­nual salary growth of the same in­di­vid­ual be­fore get­ting the MBA was 11%. So the im­pact of the MBA was to add an ex­tra 5.5% to the grad­u­ate’s ex­pected fu­ture salary growth.”

In terms of our re­search for 2013, we con­clude that:

On av­er­age, the an­nual rate of salary growth dur­ing the pe­riod of MBA study was 9.1%.

On av­er­age, the an­nual rate of salary growth af­ter the MBA was 11.2%.

In essence, the MBA adds an ex­tra 2.1% to ex­pected an­nual salary growth postMBA qual­i­fi­ca­tion.

The MBA pre­mium is only 0.3% per an­num for fe­males (com­pared to 2.8% per an­num for males). So it would ap­pear that the MBA does not add sig­nif­i­cantly to fu­ture earn­ing tra­jec­tory of fe­males.

The MBA has the ef­fect of adding an ex­tra 6.6% per an­num to the av­er­age salary growth rate of black MBA grad­u­ates, which is much higher than for the MBA group as a whole. This is not un­ex­pected, due to the ef­fect of the BEE (black eco­nomic em­pow­er­ment) codes and the need for cor­po­rates to ap­point black se­nior man­agers.

The im­pact of the MBA is par­tic­u­larly strong for mid­dle man­agers – th­ese re­spon­dents ex­pe­ri­enced a 4.8% boost to their av­er­age an­nual salary growth as a re­sult of the MBA.

Those who left South Africa af­ter com­plet­ing the MBA ex­pe­ri­enced an ad­di­tional boost of 4.6% to their av­er­age an­nual salary growth. This is more than dou­ble those that stayed to work in this coun­try.

Those who paid for the MBA them- selves (as op­posed to their com­pa­nies pay­ing for it) ex­pe­ri­enced a higher rate of ad­di­tional salary growth af­ter the MBA (MBA pre­mium of 3.3% vs 1.1%).

Jon Fos­ter-Ped­ley, dean and di­rec­tor at Hen­ley Busi­ness School, how­ever cau­tions: “But salary pay­back, while im­por­tant to an in­di­vid­ual, is a rel­a­tively poor and su­per­fi­cial way to eval­u­ate the ben­e­fit of an MBA. If an MBA is any good it will trans­form the way a per­son works, thinks and de­liv­ers value. It will pro­vide skills – rich, high-level skills. The real out­come of a good MBA will show up in fol­low­ing years as the per­son ap­plies new knowl­edge and skills into build­ing bet­ter busi­nesses and or­gan­i­sa­tions that con­trib­ute to their clients and to so­ci­ety by pro­vid­ing so­lu­tions and value that are su­pe­rior and val­ued. They will use re­sources bet­ter, ap­ply their imag­i­na­tion and cre­ativ­ity more ef­fec­tively, and dare to trans­form and make progress. This is the only rea­son that MBAs should re­sult in higher salaries – be­cause they cre­ate value.”

Ma­ri­etjie Wepener

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