An MBA no use for women?

2009

Not only are MBAs expensive and at risk of losing their gold-standard status as more courses are launched every year, but now researchers have suggested they are also a bit of a waste of time for women. So what is the MBA really good for?

The latest blow to the MBA's reputation has been dealt by academics at the University of Chicago Booth School of Business and Harvard University who studied why female MBA graduates don't tend to do as well as their male counterparts in the jobs' market.

With a good MBA from a top university now costing many thousands of dollars –tuition fees alone at Harvard are now more than $44,000 – and an explosion in the number of business schools and universities around the world offering ever more diverse and specialist MBAs, this is not a trivial question.

An MBA has always been thought of a substantial investment in your future, with the payback being a fast-track career, greater opportunities, enhanced earning potential and more chance of success if or when you decide to go it alone and start your own business.

But this latest research, led by Marianne Bertrand, Professor of Economics at Booth School of Business, makes potentially grim reading for women thinking of taking the plunge.

The researchers studied the careers of MBAs who graduated between 1990 and 2006 from the University of Chicago Graduate School of Business and how their career dynamics differed by gender.

They found three proximate reasons for a large and rising gender gap in earnings.

These were: differences in training prior to MBA graduation, differences in career interruptions and differences in weekly hours.

These three reasons could explain the bulk of gender differences in earnings across the years following MBA completion, the study argued.

And the gap is a substantial one. Just last week the UK Association of MBAs published its annual survey of MBA salaries and post-graduation careers and found clear evidence of a gender salary gap.

While the average salary for a male MBA graduate was £74,441 plus a bonus (or other variable earnings) of £27,179, for women it was just £59,309, with variable earnings of £11,230.

At the outset of their careers, male and female MBAs have nearly identical incomes, the Chicago/Harvard research concluded.

But their earnings soon diverged with the male annual earnings advantage reaching 30 "log points" five years after completing their MBA completion and almost 60 log points at ten to 16 years afterwards.

The share of female MBAs not working at all also rose substantially in the decade following MBA completion, with 13 per cent of the women not working at all at nine years after MBA completion, against just one per cent of the men.

The findings match a similar Harvard study published this month that suggested women MBA graduates were more likely to drop out of the workforce than female doctors and lawyers.

The study, Opt-out Patterns Across Careers, look at the experiences of 1,000 women Harvard graduates 15 years after graduation.

It found that more than a quarter – 28 per cent – of MBA graduates were stay-at-home mothers, compared with six per cent of those with medical degrees and 21 per cent for female lawyers.

The Chicago Booth/Harvard research also found that while there gender differences in terms of grades achieved and course selection, these were not large.

More important perhaps was the fact that women tended to suffer more career interruptions and work shorter hours.

About a decade following MBA completion, the actual job experience of men and women differed by as much as six months, with women working on average 52 hours a week against 58 hours a week for men.

The presence of children was also the main contributor to the lesser job experience, greater career discontinuity and shorter work hours experienced by female MBAs.

Across the first 15 years following the MBA, women with children had about an eight month deficit in actual post-MBA experience compared with the average man.

For woman without children, by comparison, the deficit was just one and a half months. Mothers also seemed actively to choose jobs that were family friendly and therefore avoid jobs with long hours and greater career advancement possibilities, Bertrand argued.

Many MBA mothers, especially those with well-off spouses, simply decided to slow down within a few years following their first birth, she added. Women with children typically worked nearly a quarter fewer weekly hours than the average male, while women without children work just 3.3 per cent fewer hours, she concluded.

Whether this is because women are inherently less ambitious than men, or just have a much more down-to-earth view on the merits of slogging your guts out for forty years just to get a clock and a warm wine farewell, is a moot point.

Two bits of research from three years ago appear to suggest it's a bit of a combination of both.

A study by management consultancy Hay Group in 2006, for example, concluded that women were generally less ambitious and motivated than men and had completely different priorities when it comes to the world of work.

There were also significant gaps in motivation and ambition levels between men and women as well as fundamental differences in what drove both sexes in the workplace.

And in the same year, research by UK recruitment company Praxis Executive Resourcing argued that it wasn't discrimination stopping women getting into the boardroom, it was that they just aren't prepared to make the sacrifices needed to get there.

The poll of 105 female directors in the UK found nearly two thirds thought breaking their careers to have a family was a key factor putting them at a disadvantage, while 48 per cent believed that putting family before career did the same.

More than half felt women self-selected out, presuming that they would not reach the boardroom.