What's wrong with management education?

With as many as a third of all business organisations currently planning to reduce their headcount over the next 12 months, the need for retraining is set to mushroom. But are British business schools ready or willing to take on the demand?

News of the latest serious cutbacks in the UK job market by companies as diverse as GKN, Glaxo and Ford raises an important question: what are business schools doing, or what should they be doing, to provide re-training and re-skilling programmes?

The downturn is an opportunity for redundant managers to re-examine their skills base and take advantage of retraining schemes. The UK government runs some programmes like 'Train to Gain' and promises huge sums for retraining, but there is little evidence so far that such courses provide real benefits, or that business schools are equipped to handle large-scale retraining. This should be a challenge for the UK's business and management schools if they want to be more relevant.

 With sterling at a low point, why can't management courses be adapted to retrain managers to rebuild the UK's manufacturing base? The global fall in demand for manufactured goods, especially in the automotive market which suffers from overcapacity, should not deter the UK from focusing on quality products for which there is still a worldwide demand. Where is the entrepreneurial training for automotive workers leaving the car industry to equip them to set up their own engineering shops? Why can't MBA courses be adapted for senior engineers?

Of course, there are exceptions. Warwick University works closely with the car industry, and Cranfield University offers a range of full and part-time post-graduate courses and short courses for professionals looking to develop their skills. Loughborough University Business School's MBA programme is both part-time and aimed at engineers.

The Learning and Skills Council has announced that 200,000 workers are set to benefit from training under the Skills Pledge Scheme, which is good for firms like British Gas, Royal Mail, Network Rail, the Capita Group and others who have signed up. The training their employees will benefit from is basic literacy and numeracy skills towards their first level two qualification in areas relevant to their business. But isn't this something they should have learnt in school? It's not likely to contribute to helping during the current crisis.

 Leading business schools are very effective at teaching MBA and Masters courses covering the disciplines of management - international business, marketing, finance, HR, and, in some cases, science and technology, for example - but, as the recession has shown, they need stronger partnership with industry. These courses need to rethink what management is about in today's economic climate and how they can be more innovative and adaptable. And they should be thinking about the needs of management education over the next ten years or more.

World-renowned business schools

The recession and poorer employment prospects has encouraged more managers to study for an MBA, which is now taught by 46 business schools in the UK and 166 worldwide, including in China, India and Russia, all accredited by the Association of MBAs in London.

Business schools in Europe can expect increasing competition as new rivals in south east Asia make their mark. The Financial Times (FT) recently ranked the China International Business School among the top ten business schools in the world for the first time alongside Harvard, Wharton and London Business School.

 In 2003 there were two Greater China business schools in the FT's MBA rankings in 59th and 90th position. By 2006 these had risen to 21st and 47th place. There were none in India and south east Asia, but by 2009 the region could claim four business schools and ranked among the top 25 - China 8th, India 15th, Hong Kong 16th and Nanyang 24th. In all of Asia Pacific there were no business schools in the top 50 in 2003, but by 2009 there were six and the leading four Chinese business schools had achieved international accreditation.

A recent career survey by the Association of MBAs, the global accreditation service for all MBAs, DBAs and MBM programmes, showed that 94 per cent of respondents said they would encourage their colleagues to take an MBA.

According to the 2008 survey, the two main sectors employing MBAs were still finance and consultancy, followed by information technology, educational, energy, public services, pharmaceuticals and health care, telecommunications, and mechanical engineering.

With finance and consultancy likely to be out of favour, which sectors stand to benefit? There are still wide opportunities, but the main two markets for newly-minted MBAs will be severely restricted. Opportunities in finance will be curtailed, with less merger and acquisition activity and fewer initial public offerings. On the other hand, the climate for starting new busi--nesses should be more robust.

The Prince's Trust is one example of how young would-be entrepreneurs can be encouraged to develop their own small and often growing businesses. The government's 'Train to Gain' scheme, targeted at people who have recently lost their jobs rather than the long-term unemployed, can claim some modest successes. 'Train to Gain' is expected to treat redundant employees of small and medium-sized businesses as a priority. Programmes include free and part-funded 'bite size' training courses where they are likely to gain tuition in cash flow management and business improvement techniques among other subjects.

Train to gain

 A leadership and management programme has also been extended to businesses with between five and 250 employees and access up to £1,000 for coaching or mentoring or working towards a qualification. But, as the Chartered Institute of Personnel and Development (CIPD) has pointed out, extra aid totalling £158m from 'Train to Gain' and the European Social Fund will be dwarfed by the 600,000 job losses expected this year (in addition to the two million already out of work.)

Some retraining courses do a good job, but one has to ask what others, like Hull College, hope to achieve in the short-term working with caravan manufacturers who have seen a fall in sales and have moved to three-or four-day weeks. In fairness, Hull College is also working with people who expect to lose their job at BAE.

Stoke College works closely with retail chains to help redundant staff back to work. And in Wales, redundant workers can take advantage of support from an EU-backed project to retrain for new careers through the Welsh Assembly government's ReAct scheme.

 Professional bodies like the Chartered Management Institute (CMI) and the CIPD offer helpful redundancy support services for members, including free legal advice, career advice and a job search facility. But are university management and business schools offering a mix of practical and relevant courses not only for tomorrow's managers, but also for redundant managers of today?

The point has to be raised: do business schools want to be relevant to business? Or, for that matter, do they really value business experience, as Dr Peter Hahn, a banker turned academic, recently asked in the Financial Times?

Sadly, he pointed out, too much of business academia maintains a two-tiered universe, with those doing most of the central business teaching lacking business experience, and those leading and administering often lacking academic experience. Those with business backgrounds could add so much more. "Business schools need to entice more experienced men and women to gain superior academic credentials," Hahn says. "The economics of teaching will assure that this is never going to be a large group, but it should be a vital one to keep business schools viable and relevant."

As Professor Henry Mintzberg has warned: business school academics pursue the arcane just to achieve academic publication. For state-funded institutions, being published means points and points bring prizes in the form of additional government funds.

"We need more innovative ways of teaching," Professor Cary Cooper of Lancaster University's Management School admits. "MBA courses, case studies and knowledge transfer are not the whole answer to what management education should be about.

"We need more strategic management experience related to front line management. Managing change in technology, ethics, leadership and management skills is what dictates the success or failure of companies today. I don't think management education is enough about the skills of management - the skills of managing other human beings." 

 And echoing Dr Hahn, Prof Cooper agrees that "we need more people from industry and the City to teach. At the same time, industry and the City should open their doors more to business students, allowing them to shadow managers. Television programmes like 'The Apprentice' did a good job by involving people in real-life scenarios. We need more of the same.

"There are different types of business schools specialising in training and retraining," says Prof Cooper. "University management schools are not really geared to handle the current need of retraining managers. In any case, it raises the question - who is going to fund it: government, companies, outplacement consultants?

"Management education, like businesses, needs income. What's really needed are specific retraining courses to equip redundant car workers, for instance, to go into other manufacturing sectors or to start small businesses, or to work in the public sector."

Looking at the wider picture, the UK faces a twin problem - rising unemployment and deteriorating new job prospects. As a new report by CIPD and KPMG points out, more than a third of employers expect to cut jobs this year (twice as many with such plans last autumn). About 36 per cent of employers intend to shed staff in the first quarter of 2009.

"At the same time," John Philpot, the CIPD's chief economist adds, "job prospects are deteriorating at an alarming rate. It seems inevitable that UK unemployment will top three million before the job market starts to recover. Only the public sector has no plans to scale back recruitment. Nearly 90 per cent of employers in education and healthcare expect to take on new staff in the next quarter."

Credit crisis fears

Many companies fear the credit crisis will get worse, says a new Confederation of British Industry (CBI) survey which shows that 37 per cent of firms have cut staff over the past three months due to credit-related issues. Forty per cent of large firms have cut production. Two-thirds of companies reported that access to credit had deteriorated over the past three months.

The government has published a whole series of packages but, if you ask companies across the country, they don't know the details yet and they still can't get any credit.

"We have urged the government to move as quickly as possible to set out when the various support packages to tackle the credit crunch will come into effect and to implement them quickly," says the CBI. "Members of the Federation of Small Businesses report that banks have turned down their applications for government guaranteed credit."

"There may be agreement in principle at the top level between the Chancellor and bank directors, but the reality is far different," explains Kevin Dickens, president of UK200 Group of accountants and lawyers which acts for many hundreds of thousands of small and medium-sized business. "All our member firms are reporting the same experience. Bank managers and credit teams are not only refusing new loans, but reducing existing arrangements at the stroke of a pen.

"I find it offensive that some of my clients have had letters raising their borrowing rates from 2.5 per cent over base to 6.25 per cent over base, only to receive another letter two weeks later, after the government's bail-out, putting it back to 2.5 per cent. If it was a fair rate before and after, then the proposed rate in the middle was an exploitation opportunity."

Today the twin issues are swifter access to credit for businesses and urgent action to provide re-skilling and training.

Innovative MBAs

There is still a kind of producer sovereignty on the part of universities and business schools which runs counter to the marketing ethos that puts the customer first, and last. Of course, there are times when customers have to be guided or at least informed what is or can be made available.

In the US, academics talk about the diminished role of scholarship in management education and blame more powerful customers, even though MBA courses must conform to certain rules and be accredited by the Association of MBAs. 

Yet there is plenty of evidence, in the UK at least, that business schools' courses can innovate and adapt - for example, the much greater focus in management education on ethics and corporate social responsibility prompted by local/regional demand and by business schools' leadership. 

Similarly, the content of MBA programmes increasingly tends to reflect regional industry and diversity. Aberdeen Business School's MBA programmes, for example, include agricultural and food business and oil and gas management. Birmingham Business School's MBA includes international banking and finance and international issues, while Bristol Business School includes Asia Business, Entrepreneurship and Global Operations.

The current climate is prompting more graduates to study for the MBA, but preferred career choice will be more restricted. Meanwhile the challenge for government and educational authorities is to ensure wide-ranging training and retraining opportunities to reduce unemployment.

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