Why Australia is starting to embrace the MBA

Australian employers have been slow to embrace the Masters of Business Administration. Australia’s top business schools have been trying to change this for years. They may finally be having some success, as globalisation forces Australia to catch up to the world.

The MBA has a long history. It was launched at Harvard University in 1908, and other American universities quickly took up the scientific approach to management embedded in the degree. It soon spread to Europe, but wasn’t offered in Australia until 1964.

Local alternatives to the MBA filled the gap. Pete Manasantivongs, market insights manager at the Melbourne Business School, says the Australian business community “has always been focused on functional specialities”.

“We’ve had a Masters of Finance, for example, for much longer than other parts of the world, where the MBA has been the leading business degree,” he says.

Perhaps for this reason, Australian employers have rarely required the qualification. In 2010 Ed Cook, then an industry consultant with the Melbourne Business School, did some research on how much Australian employers valued an MBA. He found that it was specified as desirable in one out of 1000 jobs advertised in Melbourne. In New York, the ratio was 52 in every 1000 new jobs.

“Internal recruiters in Australia underestimate the depth of skills delivered by an MBA. As a result, they tend to focus more on experience rather than qualifications or future potential when recruiting,” he wrote.

There are costs to this attitude. In 2009 the government commissioned a report into Australian management practices. It found Australian managers excelled at operational management, but were lacking when it came to dealing with their workers. In his introduction to the report, professor Roy Green of the University of Technology Sydney wrote of the “clear link between the quality of management… and enterprise productivity.”

But if you look through the courses of the 40-odd business schools across Australia, almost all of them offer an MBA. Many of them have only added the degree in the past decade. More students than ever are studying the degree.

Part of the trend is driven by international education. Usually 40% of the Australian Graduate School of Management’s MBA students are from overseas. In this year’s intake, the figure is 65%.

They chose Australia for a number of reasons, but all the MBA graduates interviewed for this piece mentioned the diversity of their cohort as a key attraction. Today many MBA programs overseas offer a global education, at campuses across several continents over the course of the MBA.

Manasantivongs, however, says Australian employers are also increasing their understanding and awareness of the qualification out of necessity.

“I don’t think that Australian organisations can sit back and assume they don’t have to compete in war for talent worldwide, a lot of which is highly-skilled MBA grads,” he says.

Part of this education of employers is being carried out by business schools themselves. Matt Logan, director of careers services at the Australian Graduate School of Business (AGSM), says he does a lot of work connecting with its alumni as they go through their careers.

“It’s almost about creating the MBA alumni communities in organisations,” he says. “If you have a handful of alumni in the one place, you would leverage that.”

Juliana Schmuke is an MBA graduate who gained her executive role at the Commonwealth Bank through one such connection.

“If I hadn’t done the MBA I wouldn’t be here,” she says. “It was a great experience for me to take time out from working and build on everything I’d gained in my career.”

The broadness of the qualification in Australia was part of the attraction. Apart from knowing she wanted to go into an established company, Schmuke had few definite ideas about her ideal career.

“No one would have guessed I would go to financial services, but it’s been a really good move for me.”

The challenge, according to Logan, is the small number of companies that have structured MBA graduate programs.

“There’s some, but it’s a small percentage when compared to overseas,” he says. “But it is improving.”

Logan says most companies that do have a structured MBA intake are consultancy firms. However, as many students who do an MBA are seeking a career transition, consultancy is often a useful stepping stone.

Shelby Coyne, a senior account manager at Google who completed an MBA at AGSM in 2010, says despite a lack of more formal avenues companies were receptive to her qualification.

“I think because a higher percentage of the population is doing an MBA in the US, there’s a talent shortage here. Most companies were really excited about my MBA; it was one of the key points of the interview.”

Others have different experiences. MBA grad Valerio Parisi targeted consultancies upon graduation, but his experiences with other companies left something to be desired.

“The feeling was that it’s still not completely clear to businesses what an MBA is here in Australia,” he says.

Now an associate at AT Kearney, Valerio was an aerospace engineer before he began his MBA. Stories like his are part of what drive Logan to push the benefits of the degree.

“I’m dealing with such an array of career aspirations. I see people going from a high-tech background into marketing or finance. One of our people went from financial services to the Red Cross,” he says.

“What the MBA is all about is that it’s producing future leaders…That’s what I find really fascinating.”