Does executive education really improve business performance?

Jan 03 2002 by Brian Amble Print This Article

Executive education is perceived by some to be too theoretical. Others express scepticism when it comes to proof that management development actually works. But lack of evidence does not imply that executive education, including MBA programmes, does not improve business performance.

If you accept the fact that leadership development is part of executive education, there is plenty of research that can support benefits of executive education. One problem, however, is that business schools have long been criticised for turning out managers who are not also effective leaders.

In the UK, few MBA programmes include a course on leadership, and, even if they do, it is usually an elective rather than a required course. An exception is Strathclyde and The Leadership Trust Foundation, which jointly created the UKs first (and only) MBA with a specialism in leadership studies, which started in October 2000.

This programme incorporates the core curriculum of the standard MBA programme and blends an inter-disciplinary understanding of business functions, strategy and strategic thinking with an awareness of the leadership process and the practical development of leadership skills. It enhances self-awareness, self-control and self-confidence through personal experience of practical leadership and teamwork situations. This is done through a combination of distance learning, experiential workshops and leadership project work.

Robert Owen who manages accreditation services at the Association of MBAs, of which Strathclyde is an accredited member, believes that business schools have an important role to play and that MBA programmes need to help managers develop softer skills in tandem with rigorous business discipline. He believes that this area often only receives lip service.

At the moment only a select number of the leading business schools offer modules on leadership. However, schools are starting to respond to pressure from businesses that now consider strong leadership skills a pre-requisite.

There is no point in teaching MBAs about the theory if they lack the leadership ability to implement this learning. This is certainly a trend that the Association of MBAs is keen to encourage, says Robert.

Christopher Young, a recent Cranfield School of Management MBA, is now Chief Executive of The IMPACT Programme, a personal development network for senior IT Executives. He draws the distinction between theory and practice: "Education tends to be theoretical and is really useful for giving people ways to structure thinking. What formal education struggles to give is knowledge about execution.

One reason why executive education can sometimes fail is that they do not transfer their learning to the workplace. The many barriers in the transfer of learning are well known. They include both intrinsic and extrinsic motivation to learn and apply learning, lack of opportunity and encouragement to put it into practice and the resources to do so.

Organisational context is also an important component of effective leadership development. Organisational culture and systems must provide support for leadership development by linking it to business goals, feedback systems, and rewards and recognition for learning and for coaching others. Learning should not only be individual but a shared and collective experience, with the necessary facilitating systems.

What is needed to prove the case for executive education is more comprehensive research. John Quelch, former Dean of London Business School, says that the focus should be on macro studies that relate executive education to measures of business performance such as shareholder value.

Evidence that companies with an inclusive, empowering, principled leadership outperform those that focus purely on shareholder value is beginning to mount up.

Leaders of corporations are increasingly under scrutiny of shareholders. According to Roddy Gow of the head-hunters Odgers Ray & Berndtson institutional investors are increasingly scrutinising the performance of the leadership of companies. Analysts watch for and are keen to measure how management reacts and how the impact of leadership can be measured.

Odgers Ray & Berndtson have conducted research with Harvard Business School which shows that leadership accounts for at least 15-20% of the total variance in a company's performance. A decline in performance is likely to result in turnover at CEO level

"People are widely recognised as being the greatest asset in any company. If we accept this to be the case, then it follows that the effective leadership of those people must be the most important activity of all. Until now there has not been an accepted means of measuring the return a company receives on its leadership. What is the payback? We have developed a methodology with the Harvard Business School, which measures this aspect called the ROL - the Odgers Ray & Berndtson Return on Leadership.

Understanding the nature of leadership is one of the key challenges facing executives today. Organisations prosper or decline based upon the capabilities and vision of their leaders, says Roddy.

According to Jane Fiona Cumming of Article 13, a consultancy which helps to create sustainable businesses and brands by advising on social, corporate responsibility and ethics believes that companies run by charismatic, principled people are prospering because they create the right value systems that are in touch with the way people are thinking today.

"Organisations prosper or decline based upon the capabilities and vision of their leaders. In fact, a consistent theme is the concept of charismatic and principled leadership. Two characteristics are key; an ability to create a strong sense of direction for the organisation and the people in it and the vision to create the values that need to go along side this direction. Managers can also be internal leaders creating the systems and processes that enable these values to be delivered as practical competitive edge."


Older Comments

I observe that in the UK most MBA focus on strategic issues - analysis and change - rather than 'management'. Most people do not deal with these issues: in small businesses these are informal and implicit, in large businesses even senior managers are dealing with the tactical issues of implementing programmes and delivering 'the plan'. with strategy set at board level in conjunction with consultants and investors. Furthermore in the Uk we operate in silo's, encouraged by the rise of the recruitment consultant, where specialism (marketing, sales, finance) counts for more than a broad management skill set For me, taking an MBA post the age of 40 resulted in in two years without work being told I lacked seniority, was over qualified, or more specialist enough, and two more years on a salary substantially below that I had earned before the MBA. After ten years I am back where I was in income terms but over ten years I have earned 20% less than simply staying in my previous role. For older employees I would really advise that they think twice about a full time MBA, and also that they consider a more specialist masters degree (finance, market research, marketing, regulation, IT) instead. So my question is: do we have too many business schools? too many MBAs now, making many low in value?

Graham UK

I agree that , 'executive education (by business schools) is perceived to be too theoretical'. Business executive education can show evidence of making a difference if coursework is designed to enhance participant problem-solving abilities to be more persistent, strategic, creative and resourceful. In addition to developing these problem-solving skills, a functionally broad curriculum will best serve students and employers best knowing:

  • Today’s college graduates will average seven to eight different jobs during their lifetime and these positions may involve several different careers.
  • 50% of their college education will be obsolete in five years.
I am a huge advocate of casework at the undergraduate level. Typical graduate business school (MBA) programs rely primarily on the case approach in most of their courses; however, why do we find little, if any, casework in the curriculum at most undergraduate business schools? There is a real-world application gap between most undergraduate and graduate business programs. The benefits of casework at the undergraduate level are significant, including:

  • Creating true engagement and interest by applying academic content to real-world application.
  • Enhancing problem solving skills to become more strategic, creative, and resourceful.
  • Enhancing written presentation skills, including effective consolidation of information using summary tables along with developing computer application skills in spreadsheets, databases and graphing.
Therefore in selecting business courses key criteria should include casework with rigorous problem solving along with a functionally broad curriculum to prepare one for a dynamic career.

See my postings entitled, “Enhancing Strategic, Creative and Resourceful Problem Solving”, “Undergraduates Deserve Case Work with Shorter and Topic-Specific Mini-Cases

Professor Paul Heller 'Propelling Undergraduate Business Schools Forward'

Professor Paul Heller