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A plus which is not a must – business administration programs in Hungary

MBA degrees are no longer a free ticket to management positions with lucrative salesladies. Yet, the education they provide, even if it means only fundamental skills, still come in handy.

Nobody who is preparing to apply for an MBA course is in an easy situation in Hungary. None of the business schools are included in the international top lists, even though the costs of some MBAs are equal to the double of an average Hungarian annual salary. What is more: a Hungarian corporate executive is not automatically required to have a master’s degree in business administration. However, if you ask a personnel consultant, even the most skeptical one, he or she will admit that some MBA programs may return their tuition fees to their lucky holders many times. The only question is which those programs are – and who the lucky ones turn out to be.

“As an executive search consultant I have never seen a candidate who failed because he or she did not have an MBA”, said a principal of Egon Zehnder International. István Ajtony Majoros admitted that MBA is a plus on one’s CV, but it is not an essential precondition of top executive positions. The reasons are simple: a degree is no guarantee that its owner is able to apply his MBA knowledge when required.  The theoretical knowledge behind MBAs is easy to define and standardize; Hungarian corporations looking for executives, however, are little interested in it. They only believe that one really knows what an MBA-graduate should know if he proves it by heading a corporation. And if he does it really well, it does not matter whether or not he has an MBA.

But if an MBA degree does not guarantee admission into the club of top executives, what is it good for? Well, at least in Hungary there are some really worrisome signs. At the moment, twelve business schools are active in the country offering MBA programs; some, like Central European University (CEU) and Corvinus University, operate two or more programs simultaneously. There are hundreds of students every year to whom they issue new MBAs – last year, for example, Hungarian business schools awarded altogether 235 degrees to their graduates. “I wonder whether there would be a demand for so many MBAs in such a little country,” a higher education expert, who preferred to remain anonymous, suggested, “but the same is true for most Hungarian master’s degrees”. The knowledge represented by these programs are hard to compare internationally since CEU Business School is the only one boasting an AMBA-accreditation; but even this CEU program has not been scored on any international top lists, neither by Bloomberg Business Week, nor by The Economist, let alone the Financial Times.

Two skills guaranteed

“There are at least two things international MBA programs surely guarantee by the end of the course,” Majoros said. One is written and oral proficiency in business English, due to the English-speaking academic environment these programs provide. The other is strong  problem-solving abilities; graduates of these programs are able to approach problems from various angles, and find solutions which simultaneously fit into a number of different professional frameworks. “MBA

candidates, even if they are well trained in economics, tend to be experienced in one field only,” Majoros said. International MBA programs make these one-track students open to other paradigms. “A student with a background in corporate finance will learn how to approach the same question from a legal or organizational point of view.” This competence is deliberately reinforced by international programs: MBA classes are assembled in a way to represent diverse business cultures, enabling students to learn from each other. “If one class gets the task of building up a cigarette brand marketing campaign, Western European students are likely to be more sensitive to the legal side of the issue, while Asians will concentrate more on marketing techniques; and in the end experiences will be exchanged,” Majoros cited an example.

The rise and fall of MBAs' reputation

“Once MBA used to be like an advanced scientific degree: a PhD of the business world,” reminiscences Majoros. Full time education took up to three years and candidates, in no sense beginners, spent the summers in between as interns at the most prestigious companies in their fields. Most people entered MBA programs in their early thirties, having around 10 years of work experience. Applicants were selected on the basis of strict criteria. By now the situation has become totally different. Most MBA programs today are not longer than two semesters, and not even the relatively rare four-semester programs include mandatory summer internships. The majority of candidates apply in their mid-twenties, after a few years spent in the trade. Even at the best places, entrance exams consist of nothing more than a TOEFL language exam, a GMAT test measuring analytical competence, and one or two essays.

“Decline is largely due to the evolution of mass education. Even in the emerging regions almost every university offers an MBA program,” Majoros said. In his opinion, the other reason for the decline is that companies are often willing to pay for their employees’ tuition, treating it as a perk. Obviously, long years of training do not serve their interest, while employees’ internship at rival firms poses an explicit danger. “The more skillful a student is, the more likely he or she will get a job offer from an outside company,” Majoros pointed out.

Sztrakay’s experiences at CEU, however, do not entirely support this. “Our business school started 22 years ago and we have not lowered any of our expectations ever since. Our entrance exam is as demanding as it has always been. Only our tuition fees have become more favorable: instead of asking for €20,400 we now offer both executive and full time programs for €15,000 and €12,000, respectively.”

 

One would assume that students graduating from such multicultural and multi-paradigmatic programs will end up with multinational companies – an assumption which is fully proven by CEU’s career tracking data regarding full time students of the institution. “Thirty percent of our graduates last year found jobs in the banking sector, 29% in management consulting, and 16% at telco companies,” career services manager Mónika Sztrakay said. Relatively few graduates, 8%, start up their own business, but this is still higher than their pre-crisis rate of 5-6%. Similarly, there is a growing interest toward specialization in entrepreneurship, as a consequence of the increasing ratio of Eastern European students versus Western Europeans. “A typical career story of a full time student is like this: they come from a multinational branch operating in their home country, get an MBA in Hungary, and then move up to a middle managerial position at another multinational company.”

The innovator

As a Hungarian student of HEC Paris, Orsolya O. Szabó was awarded the $10,000 third prize at a competition, the goal of which was the creative revision of the GMAT exam, used as international standard at MBA entrance exams.

Q: What kind of changes did you propose?

A: My idea was that the GMAT exam should be enriched by group simulation exercises. Some competences, such as English-language composition, are tested unnecessarily often: at the language exam, then as part of GMAT, and eventually via the submitted CV. Group cooperation, which is extremely important in business life is, however, never tested, probably because it is considered to be a “soft skill”. As a psychologist, I designed “hard methods” for measuring these soft skills.

Q: As a psychologist, how did you hit upon the idea of applying for an MBA?

A: Working for a management recruitment company, I realize every day that I should know more about the inner mechanisms of companies. In order to put my business knowledge on a solid footing, I needed to pursue formal studies.

Q: How were able to finance your studies at one of the most recognized business schools of Europe?

A: The tuition fee for two semesters is €40,000. Fortunately, I automatically received a waiver on the basis of my entrance exam scores. I tried to take out a bank loan to pay for the rest of my tuition fee, but that was impossible in Hungary. Eventually, one of my relatives lent me the money on interests. I am also going to spend the $10,000 prize on tuition and living expenses.

An MBA executive, that’s different

Besides their full time MBA programs, both CEU and Corvinus University offer so-called executive MBA programs. Courses in both programs are taught on weekends in blocks, or in so-called modules. Executive programs, however, are different from full time ones not only in terms of time structuring, but in almost everything else as well. “Our MBA Executive program is targeted at those who have already arrived at a certain level of corporate management. These people work as company executives during the week and further develop their leadership skills over the weekends,” Tamás Kowalik, former managing director of Corvinus Business School said. This explains why the average age of MBA executive students is about 10 years higher than that of full timers, as is their work experience. Since they work full time, their companies are typically based in Hungary. “More than 80% of MBA Executive students are citizens of Hungary, as opposed to full time MBA students, among whom one rarely finds Hungarians,” Kowalik explains.

Seventy percent of MBA executive students at Corvinus are sent by their own companies. The goal is to satisfy the needs of inner executive recruitment and complement company training programs. About half of students paid for by their companies also come from multinational firms prominent in Hungary, such as Audi or MOL. Their managing directors, by the way, sit on the board of Corvinus Business School. For the above reasons, the MBA executive program of Corvinus has been largely based on Hungarian case studies, and its guest lecturers usually come from large Hungarian corporations; knowledge learnt at the courses is therefore easy to apply in practice.

Is it possible that the entrance ticket to exclusive circles of top managers is the MBA executive degree, and not the full time MBA which was originally designed for that purpose? This is only partially true, Kowalik says. “Students whose companies are ready to pay the tuition fee have already been admitted into top managerial circles. Those students, however, who finance their studies themselves, especially foreigners, may face difficulties while looking for a job even if they possess an advanced degree,” Kowalik warns.