Are CEOs with MBAs good for business?
Every year, hundreds of students enroll in MBA programs to excel and reach higher in the corporate hierarchy. But do they need this? The debate for the same is continuing. In 1908, Edwin Gay, Dean of Harvard Business School, conveyed that the department aims to help scholars in such a way that leads them to make decent profits from their work. Generally, people from MBA programs serve businesses more effectively and efficiently. On the contrary, many believe that it has more to do with the knowledge and training that help leaders make enterprises to productive and efficient.
A recently concluded research may be helpful in ascertaining clarity on the above-voiced question. Companies from Denmark and the United States were the subject of this research. The study aimed at ascertaining and analyzing the impact on businesses when run by persons with and without an MBA degree. The results were really shocking as they found no concrete evidence that Chief Officers with degrees aid in increasing the sales or profits or let’s say the overall productivity of the business. Their companies made almost the same level of profits that they made before.
The researcher found companies run by CEOs with MBA degrees paid less to their workers less. In the United States, the wages were six percent, whereas, in Denmark, it was three percent, lower than usual. Moreover, such actions in one way or the other, tend to encourage highly skilled employees to leave the company. Also, while analyzing the data of the companies, there found no such outperforming evidence which proves the facts that the newly appointed CEOs with MBA degrees are contributing to the sales and profits of the company. Instead, statistics were quite the same as that of the time of earlier CEOs without a state’s degree.
On the contrary, a shocking revelation was noticed by the researchers that companies which the Chief Executive officer led without business degrees are more likely to retain in the markets and they in a real sense are making good profits. Also, it was observed in both locations that companies being run by Chief Officers without business degrees, share their increased profits as well as revenues with their workforce and hence helping the companies retain their talented and skilled workforce. This sums up the fact that revenues of the companies face a decline in the long run when they are run by degree-oriented leaders whereas the same goes contrary with the Chief executive officers running without degrees.
There can be various reasons associated with the concern as to why the business degree holders are not becoming successful Chief Officers of the company as those who do not have the same qualification. Here, one of the most influential reasons can be the doctrine of Milton Friedman, which is being taught in business schools as the primary responsibility of the business is to increase its profits. As this idea being too common encourages the newly appointed CEOs to implement the same where they focus more on increasing their profitability rather than sharing the same with their workforce. By this they fail in touching the practical aspects of the business which also leads to decreasing overall long-term profitability of the business.
Similarly, another factor may be the newly appointed business scholars being less social in their working environment while restricting their interaction within their respective groups. As a result, they fail to consider the outlook of their workers and other stakeholders. The need to look after the loopholes increase day by day and hence the start of the same must be done by the business schools themselves. It is required on their part to emphasize the way the concepts are taught, as they must be backed by practical approaches as well. Also, scholars need to be aware of the responsibilities businesses owe to their workforce and the general public rather than just focusing on maximizing profits and revenues.
