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My question may look naive, but I'm wondering why people who have a prestigious professional background (like in investment banking or strategy consulting) are undertaking a MBA. Most of the time, the MBA is presented as the way to get a position within a prestigious institution at an associate level. Though, once you managed to get in such a prestigious institution, there's no need to get a MBA in order to get promoted to the associate level. I rather see the MBA as a career switching degree, or a second chance in some way. What do you think, Alex?
If you read through the forums, you'll see that the employees in the 'prestigious institutions' take up the MBA to get to the associate level from the analyst level. It's a must and only exceptional analysts make it to the associate role without an MBA.
Plus there are a lot of reasons to get an MBA - career switching is just one of them.
In the land of the night, the chariot of the sun is drawn by the grateful dead
The reasons go beyond the traditional "I want to move up the ladder."
A lot of those working in the so-called "prestigious" institutions in banking and consulting do so because:
(1) They want a break -- analyst work is a real grind; for bankers/PE/whatever types, it's the long hours you do for 3+ years non-stop; for consultants it's the horrendous travel; after a few years, most of these kids just want to go back to reclaim their youth to some degree. Remember that most of these kids are in their early 20s, and spend all this time being surrounded by a bunch of 40+ year old executives and MDs. They are expected to be more "grown up" than they are. As an analyst, you are working with people who are closer to your parent's generation than yours. So the only peers you have are your fellow analysts. Moreover, because of the demands of the job and not being able to really connect with people your own age (not to mention trying to be with a girlfriend/boyfriend), they simply want a break without "a gap in their resume" so to speak. The work is a grind, but your personal life can be real lonely - it kills your personal life. So you are expected to have the experience/maturity to interact with the 40+ executive, but you have zero time outside of work to get that life experience in the first place - you live in a bubble that is your work even moreso than many other post-college jobs. Having been an analyst before, I can say that it does take at least a few months (and for some up to 9+ months or a year) to really decompress from that lifestyle. Yes, it's "prestigious" but it comes at a cost as well and it's easy to lose perspective at such a young age. So they go back to simply decompress, learn something, and meet people (read: make friends with) their own age but folks who they wouldn't have met in their jobs. And to simply recharge and live a life that they had no time for pre-MBA - and in the process gain some perspective about their own priorities (which may guide their career or life decisions going forward - and as one gets older one's career and life decisions become intertwined). For some the "personal value" of going back may not be worth the money, but for others it is worth it.
(2) They are hoping or seriously contemplating switching careers. A good number of these folks are looking to switch careers. A large chunk of the MBA class historically go into consulting or banking -- but a healthy majority are first-timers, not folks who were bankers/consultants pre-MBA. A lot of these ex-analysts are hoping to explore other career paths while in school -- even if some of them end up going back to banking/consulting. But they are looking at b-school as an opportunity to do that. At places like HBS, Stanford, and Wharton -- a good number of the "non-traditional jobs" whether it's entrepreneurship, startups, VC, nonprofit, etc. are taken by those who used to work at Goldman or BCG. Part of it is that they already have the blue chip resume so they have more confidence in taking the risk to do something different. The folks who covet the "brand names" in b-school are those who didn't have it pre-MBA. For the ex-Bain guy, he really doesn't care about "brand" as much as say the engineer who is looking to break into consulting.
(3) They are sponsored by their firms - at least for consulting. A good number of consultants are sponsored by their firms - usually McKinsey, Bain and BCG. In banking, you don't need to be an "exceptional analyst" to get promoted to associate. You just have to choose to stay. If you're sure about staying in banking, you don't need an MBA to progress (at least half the MDs at any bank don't have MBAs and are a hodgepodge of academic backgrounds). For consulting, they were far more hardcore about wanting MBAs, but in the last few years it's not quite as important. Consulting firms have broadened their associate hiring to include JDs and PhDs. Again, an MBA isn't essential to get promoted if you already have the experience. But quite a number still go anyway for various reasons.
For the "real reasons" why people want an MBA, you have to think beyond just "career" or "recruiting".
Thanks, Alex, for your detailed and very interesting answer.
I know that analysts work very hard in "prestigious" areas, particularly in M&A, but I didn't know that MBAs could be seen as a way to decompress and to meet people. About strategy consulting firms sponsorship, I honestly always wondered why they invested so much in their analysts. Only a handful of companies worldwide are able to do that. And as regards consulting firms only hiring MBAs as associates, it really depends on the countries' culture. I recall that MBAs are typically American and aren't so much valued in every country. American people usually start working with an undergraduate degree while in many other countries people already start with graduate degree so a MBA doesn't look so pertinent.
As for switching careers, I totally agree with you since I consider it's the most important role of a MBA. But I thought that most participants had a previous consulting or banking experience. This can seem reassuring for adcoms, at least they know that the candidate won't have difficulty in being successful in those prestigious areas. Now that I'm in, I wanted to ask you another question about the MBA perspectives. Why do future entrepreneurs feel the need to undertake a MBA? I mean, if I ever aimed at setting up a business, I'd just buy an accounting book, or even pay professionals to take care of the administrative parts. I've also got the feeling that it's typically American to feel the need study to create one's company.
I wouldn't say it's typically American to go to school for business (not sure where you got that from) -- you seem to have some strong preconceptions about what is "typical" of Americans versus what is "typical" of other countries. Avoid generalizing (i.e. it's not true that non-Americans "typically" have a masters before working full-time; maybe in your case or in your culture, but not necessarily in other countries or cultures).
Anyhow, as I've said before people go back to b-school for many reasons - and often not the same reason. Some go back to b-school not because they need it, but because they are looking for an insurance policy (i.e. it makes them employable while they are looking for a job). Some go back because they genuinely feel the education and contacts are worthwhile. And yet others go back because they are too risk averse to go at it alone, and feel that an MBA will give them some credibility. And yet others won't bother going back at all, feeling b-school is a waste of time if they want to start a business. They are all right because there isn't a clear cut answer. Everyone has their own individual reasons - some of which you may agree with, and others you may not agree with.
I haven't generalized anything, I just compared the US system to other ones. I just said that American people usually started working with an undergraduate degree and it's true. Of course, I'm talking about executive positions. And I just said that it could be different in other countries, which is also true. I'm French and I know the education system rather well. Over here, prestigious executive positions are only offered to graduates of business schools (roughly equivalent to MBAs) of engineering schools (equivalent to American/British MSc in engineering). You'll never find a junior trader, a junior consultant of a junior M&A analyst being hired with an undergraduate diploma. As regards investment bankers featured on IB websites in the US or in the UK, most of them hold a bachelor's degree. So, our systems appear to be quite different on that point and that's a reality.
As for getting a diploma prior to setting up a business, yes, I've never heard of such a thing here. Once again, our graduates already have a grasp of business, so they don't usually feel the need to complete their curriculum, especially if it's as costly as a MBA. And most entrepreneurs didn't graduate from a business degree. Maybe a future entrepreneur on this forum can give us details about the reasons that motivated his/her choice of undertaking a MBA.