A paltry decade for business degrees

Recruiters see the Bachelor of Commerce as the new Arts degree when it comes to job prospects.

This might explain the decline in graduates studying the degree over the past decade, according to figures released by the Group of Eight, the Australian universities ranked in among the best in the world by research results.

In the decade to 2011, the number of places at Australian universities grew by 17.8%. Nonetheless, the number of students studying management or commerce fell by 15.4%, with students increasingly choosing degrees in health, society or engineering instead.

This could have ramifications for Australian businesses, but not everyone is worried.

Research has repeatedly shown trained managers are better able to drive productivity in their workplaces, but too few receive the support and education they need to get to this level.

In 2009, the Government commissioned a report into Australian management practices, called Management Matters. It found that while Australian managers excelled at operational management, they lacked many “soft skills”, the type often taught in general business degrees like the Bachelor of Commerce. The report said there was a clear link between the quality of management and business productivity.

Roy Green, dean of the UTS business school and project director of the Australian Business Deans Council’s future of management education project – commissioned in response to the findings of the Management Matters report – says there is nothing counter-productive in the tapering off of enrollments in the past decade.

“A lot of students are taking up disciplines which also have an important contribution to make, such as engineering, or to quality of life such as nursing and health,” he says.

He stresses the quality of business degrees is more important than the quantity of students studying them. He says the slowdown in business enrollments came from a very high base, with business schools having grown very rapidly until 2007, when the current fall in enrolments began.

“Now we’re seeing some tapering off, but that’s not an unhealthy sign. Business degrees couldn’t grow forever.”

Brian Gardner, managing director at Donington Group, tells LeadingCompany students may be shunning business degrees because they don’t lead clearly to jobs.

“My perspective would be that all that a business and commerce degree would get you is the fact that you’ve got a degree,” he says. “It just says you have a general level of intelligence or ability.”

Andrew Northcott, managing director of LSA Recruitment Group, says business graduates need experience before they have useful, saleable skills.

“What I look for is that real experience… and with degrees like engineering, or IT, at least there’s a specific skills set that they’re learning.”

“With management, yes there are core competencies, but really, hands-on experience in the real world can’t be matched, and I think that’s probably why there’s a longer wait-time for business graduates completing their studies and utilising them in the workplace.”

“I think tertiary education of some description shows there’s an ability to learn and complete that process,” he says. “I would want them to be tertiary educated, but from a management sense I would place more value on experience than a degree.”

There is a silver lining. It appears the downturn in business education hasn’t occurred across the board.

Pete Mansantivongs is the market insights manager at the Melbourne Business School. When it comes to his area of expertise, post-graduate business education, he says the years 2007 to 2011 have not seen a drop-off. In fact, applications to the General Management Admissions Test in Australia have risen from 857 to 1016 over the period, an increase of 18.5%. With MBA programs in particular, there has been some mild growth over the past five years, Mansantivongs says.

Demand for post-graduate business degrees is counter-cyclical, he adds.

“One of the things we historically see with applications to MBA programs, is when the economy tanks, people think it’s a good time to go back to study at university.”

But if the downturn persists, the opposite occurs, with people becoming too anxious to leave their jobs.

Starting this year, universities are no longer bound by caps on the number of places they can offer students in demanded degrees. In 2012, this has seen business enrolments go up 2.9%, making up some of the ground they lost in the decade to 2011, according to the Australian Financial Review.

However, the rise was still well below the increases in fields like health (10.2%) and science (7%).

This article first appeared on LeadingCompany.