The University of Chicago launched the first Executive MBA in 1943 to target executives who wanted to study for MBAs as they continued to work. Since then, EMBA programs have become “cash cows” in the business school portfolio—not only have schools been able to charge premium tuition rates, but many EMBA students have had their tuition fully sponsored by their companies. Most business schools haven’t even needed to offer career services to EMBA students, who traditionally have planned to stay in their current jobs after graduation.
But market trends have changed significantly from those that drove the original EMBA model, and it’s time for EMBA programs to evolve accordingly. If business schools are to serve the needs of 21st-century executives, they would be wise to rethink what they offer to better attract and serve this increasingly diverse and demanding demographic of students.
INDICATORS OF CHANGE
Over the last decade, the EMBA market has seen big changes in three major areas:
Decreased tuition support. Companies largely are no longer willing to pay full tuition to send their employees to EMBA programs. According to the Executive MBA Council (EMBAC), only 24.6 percent of students enrolled in EMBA programs in 2014 were fully supported by their organizations. That’s up slightly from 24 percent in 2013, but still down from 40 percent in 2003. The survey also indicated that 39.8 percent of EMBA students were self-funded—down from 41.2 percent in 2013, but still up from 25 percent in 2003.
In addition, many U.S. companies still swear by a tax credit, which allows them to provide a maximum annual tuition reimbursement of US$5,250 per employee tax free. That amount cannot buy much education in today’s market.
I have held discussions with many human resource professionals, corporate decision makers, and prospective students about what they see ahead for EMBA programs. Most have shared the same sentiment—that we shouldn’t expect a large increase in fully sponsored executive degree programs any time soon.
Increased student expectations. Many students now enroll in EMBA programs not to improve their skills for their current positions, but to change companies and careers. That means they expect career service offerings, and business schools are scrambling to deliver. But EMBA students also tend to earn high salaries—according to EMBAC’s 2014 Student Exit Benchmarking Survey, the average salary and bonus package for graduates is US$181,965, up from $159,963 in 2013. That means it can be difficult for business schools to satisfy EMBA students’ expectations of placement.
In addition, more EMBA students represent “new consumers” for business education, who are paying for tuition themselves. Often part of the millennial generation, these new consumers closely critique the entire EMBA experience, from the faculty to the facilities, from the dean’s vision to the catering. They expect a high degree of personalization, social connection, and brand identification; they want more for their investment; and they will be vocal about their expectations throughout their academic journey.
Negative market perceptions. Even as EMBA students develop higher expectations of their programs, some recruiters and HR professionals have begun to view the EMBA as inferior to a traditional MBA—as a kind of “MBA Lite”—in terms of workload and deliverables.
One factor driving this view is that it takes less time to complete an EMBA than a traditional MBA. In the U.S., for example, full-time students need 15 to 18 months to complete an MBA degree; part-time students need around 36 months. It is difficult for critics to fathom how busy EMBA students with intense work schedules can complete programs of equal rigor in just 20 months.
Detractors also suggest that EMBA programs aren’t as rigorous. Consultants and blogs like BeattheGMAT.com advise executives to apply to EMBA programs over MBA programs because the admissions criteria might not be as tough. They point to the fact that admissions offices often place more emphasis on professional experience and less on quantitative factors such as undergraduate GPA and GMAT scores. In fact, some schools have dropped the GMAT requirement altogether—only two of the six major EMBA programs in New York City still require the GMAT for admission.
Finally, some stakeholders believe that faculty might accommodate executive students too much, in terms of workload and deadlines, largely because of the revenue potential of EMBA programs. Whether or not this is true, any sense of a conflict of interest among faculty only reinforces the “MBA Lite” perception.
HOW SHOULD B-SCHOOLS RESPOND?
While I don’t think that the “MBA Lite” perception is justified, we can’t ignore the fact that other stakeholders hold this belief. It’s time for business schools to redirect people’s thinking and reposition the EMBA as an experience that’s not only of equal rigor to the MBA, but also one that students and companies alike believe is worth paying for. I see several ways to achieve this goal:
Analyze tuition and cost. When EMBA programs were first introduced, they largely followed a “business-to-business” model. Program directors sold the degree directly to corporate human resources officers, who would nominate members of their workforce for sponsorship. Some schools even would reserve a certain number of seats for employees from local companies. This B2B model allowed business schools to charge a premium. But today’s recruiting process follows more of a “business-to-consumer” model, with program directors selling the program directly to prospective students themselves.
Business schools can reconfigure their tuition and cost structures in ways that target a consumer audience. For example, many HR professionals have told me that they view the EMBA as a “luxury product,” because business schools provide executive students with so many amenities. One way for schools to lower tuition for self-sponsored students? Eliminate unnecessary amenities that do not impact the academic experience.
Offer blended programs. Blended EMBA programs not only allow students to complete much of their work online, but also can reduce long-term program costs for classroom space, food, and other on-campus amenities. When used effectively, in ways that do not compromise academic integrity, blended learning platforms can better serve millennials and future generations who will continue to demand more efficient, convenient, and cost-conscious educational options.
Remove “executive” from the title. While the average age of EMBA students has remained steady—between 36 and 37, according to EMBAC—the typical career goals of these students have changed dramatically. Rather than being future C-suite executives, more EMBA students are career changers, entrepreneurs, and functional and technical specialists with no direct reports. Such diversity has changed EMBA programs for the better.
But this shift raises questions. Given that many EMBA students do not hold executive positions, does the term “executive” fit anymore? Perhaps it’s time to consider removing the term “executive” from the product title, opting instead for more inclusive terms such as “MBA Program for Managers” or “MBA for Working Professionals.” Such an approach would acknowledge the elements that draw a wide range of prospective students to the product, while avoiding the implication that these programs are “for executives only.” That strategy could solve another problem: If some stakeholders think the EMBA has negative connotations, a name change could be part of a process to rebrand this important business school offering.
Appreciate the immeasurable benefits. EMBA programs certainly provide measurable benefits to business schools, including improved revenue and reputation. But business schools too often overlook their longterm immeasurable benefits, such as the professional capital and contacts that EMBA students bring to the table. For that reason, it’s important that business school deans and EMBA program directors not only appreciate such advantages, but also capture and capitalize on their value and communicate that value across the university.
GETTING THE EMBA RIGHT
While many business schools might not choose to follow all of these recommendations, some are already beginning to make changes. Ironically, one school that I’ve seen that seems most in step with today’s EMBA market has never offered a traditional EMBA: Babson College in Babson Park, Massachusetts. Even so, the school has tailored its Blended Learning MBA to executives in the ways mentioned above (see “The Great EMBA Expansion”
at the end of this page).
We can be sure that degree programs for executives always will be in high demand, but we also must recognize that executives and other working professionals today seek different options and outcomes than what most EMBA programs have offered in the past. For business schools, the implication of this shift in the market is clear: Keeping the status quo is not a good long-term strategy. If business schools are to ensure that demand will remain high for their EMBA programs, their deans and program directors need to examine closely the structural changes within the industry and continually rethink and adjust their EMBA offerings. These recommendations are just the start.
Francis Petit is the associate dean for academic programs at Fordham University’s Gabelli School of Business in New York City.
Out of 2,323 EMBA students surveyed in 2014*, 41 percent reported that they had received promotions during their programs, up from 38 percent in 2013. And when asked to rate the importance of an EMBA program’s attributes on a 5-point scale (5 being the highest), students placed greatest importance on program length (4.4); class size, school reputation, and compatibility of class and work schedules (all 4.2); and quality of other students and study groups (4.1).
*2014 Student Exit Benchmarking Survey from the Executive MBA Council