Des Moines Business Record
03/06/06
Universities battling back from M.B.A. slump
By Erin Morain
erinmorain@bpcdm.com
Economic upswings have meant good news for many Americans in the form of
more jobs, increased consumer spending, higher wages, increased factory
orders and numerous other bright spots.
But at the same time, those upswings have presented a challenge to graduate
schools nationwide: how to drive up enrollment in master of business
administration degree programs when a strong economy is keeping workers in
their office and away from the classroom.
“An institution, if you’re in a metro area offering a part-time program and that
particular area has a dramatic shift in economy in some way, that will significantly
impact your program,” said Danette Kenne, director of graduate programs and
professional studies at Drake University.
Many U.S. workers, encouraged by a strong job market, are more secure in their
current job and level of pay, and are therefore less willing to quit their jobs and
pass up a steady paycheck and opportunities for advancement, according to a
study by the Graduate Management Admission Council. Eight-four percent of
M.B.A. programs reported an increase in applications in 2002.
Though administrators at several Iowa universities say application numbers
appear to be leveling off, some persistent issues have forced them to address
recruitment issues and programming needs.
“The goal, traditionally, has been that you leave your acceptable position with a
quasi-acceptable salary, get your M.B.A. and make a quantum leap in your next
position,” said John Fraser, director of the Executive M.B.A. program at the
University of Iowa Tippie School of Management. “That’s not as likely as it used
to be. There are more (people with) M.B.A.s around and the economy is OK, but
not to the point where (companies) are excited about spending huge amounts of
money to recruit newly minted M.B.A.s.”
The biggest drop in enrollment has been in full-time M.B.A. programs. Students
in part-time, executive or evening M.B.A. programs can often have the best of
both worlds: They keep their job and salary but still go to school. By contrast, fulltime students have to take a two-year sabbatical to achieve their educational
goals.
Universities typically see an inverse relationship between enrollment figures for
full- and part-time programs. In a strong economy, workers are more likely to
enroll in a part-time or evening program that allows them to continue to work full
time and maintain their job security and salary. Last year was the best year for
part-time programs since 2001.
“Certainly the economy is a big factor, and if jobs are plentiful, people are going
to opt for good job opportunities as opposed to going to school,” Kenne said. “It
particularly affects full-time programs.”
Another factor has been the availability of tuition reimbursement from employers.
Many companies have eliminated or tweaked their reimbursement programs as a
cost-savings measure, Fraser said.
“But in a down economy, guess who’s willing to quit their jobs and go back to
school,” he said.
Some students will be reimbursed by their employer only if they have been with
the company for a certain number of years, or if they are working at or above a
certain salary level. Some companies will only reimburse a certain amount of
money annually, while others will only reimburse workers for job-related courses.
Iowa State University has seen a slight decline in full-time program applicants,
and Amy Hutter, associate director of M.B.A. student recruitment for the
university, said it is hard to say when those numbers will bounce back. But she
was encouraged after attending an international convention in June.
“My sense was (other schools) were experiencing the same things,” she said. “It
was kind of a relief. We’re all in the same boat.”
A major contributor to the decline in full-time applicants at Iowa State and other
schools has been the fallout from the Sept. 11, 2001, terrorist attacks. Since
then, “getting a visa has been impossible,” Hutter said.
Not only are foreign nationals less willing to put forth the extra work needed to
obtain a student visa, but in today’s job market, employers are less willing to
hiring international students, and often find it easier to recruit U.S. workers.
Hutter said they risk investing in a student who, after a year or more, may not
receive visa clearance.
“There’s not much incentive for the employer,” she said. But as the economy
improves, she added, companies will likely find it harder to recruit U.S. workers
and will be more open to going through the visa process with international
students and workers.
Fraser believes international student numbers will be affected long into the future
by the loss of relationships with families from other countries. An Indian family,
for example, may have sent four generations to the University of Iowa for
undergraduate or graduate studies. But the next generation may become
frustrated with new visa restrictions and instead decide to study in Australia. Not
only have you lost that student, Fraser said, but you’ve also lost future members
of that family as it forms a relationship with another university.
“We’re recovering, but it’s still a factor,” Fraser said of international student
enrollment. “I don’t know if it will ever return to pre-9/11 numbers.”
Recruiting a diverse student body is a constant challenge for schools located in a
state that has struggled to achieve cultural and ethnic diversity, Fraser said.
M.B.A. programs are regularly adapted to meet the needs of employers, who are
increasingly concerned about the need for diversity and its role in achieving
global success.
But in the struggle to achieve diversity, female students have provided some
encouragement.
Though M.B.A. applications have declined in recent years, applications from
women have been up or flat at most schools, the GMAC study found. Drake’s
Kenne said enrollment numbers were skewed heavily in favor of men when she
joined the university’s staff four years ago. Since then, she said inquiries,
applications and enrollments have come closer to achieving a 50/50 split
between men and women.
“There are more women in the workforce, but more to where they see career
advancement as an opportunity, so they want to position themselves so they can
take advantage of those opportunities as they come along,” Kenne said. The
trend is not only occurring in M.B.A. programs, but in most graduate programs.
According to the GMAC study, female applicant volume appears to be on the
rise. Greater increases can be seen for executive and part-time programs, and
full-time programs reported fewer declines. But only one in four part-time M.B.A.
programs and two in five full-time programs have targeted efforts in place to
recruit female students.
Hutter said Iowa State has not developed recruitment efforts specifically targeted
to women, but the university’s M.B.A. programs, like Drake’s, have been close to
a 50/50 enrollment split in recent years. “There was a slight dip last year, but that
was an anomaly,” she added.
Fraser said Iowa’s Executive M.B.A. program “very aggressively recruits female
students.” The current class is 27 percent female, which Fraser said is “not that
bad” but he’d like it to be higher.
To keep the number of female applicants climbing, the university talks to
companies that have supported the program in the past and encourages them to
send female executives into the program. The university also maintains a
network of female students and alumni to encourage word-of-mouth referrals with
other women.
Mary Sellers, executive director of the Science Center of Iowa, and Shannon
Cofield, president of United Way of Central Iowa, began course work in Iowa’s
Executive M.B.A. program in September and will graduate in May 2007. Both
women had considered enrolling in an M.B.A. program for several years, and
said it is likely they would have enrolled eventually. But the real push came in the
form of a scholarship offered to female non-profit leaders by the university.
“It was the determining factor for me,” said Cofield, a single mother of two who
spends her evenings studying with her daughters. “It was something I wanted to
do and would have forked over (the tuition money) on my own. But it sealed the
deal. It was extremely generous, and I couldn’t just assume that it would be there
next year.”
Universities are facing heightened competition for M.B.A. students, and have had
to broaden their recruitment efforts in order to remain competitive, particularly in
the full-time arena.
The number of young people in Iowa is declining, Hutter said, which has already
affected high school and college enrollments within the state and has trickled into
graduate-level programs as well. In response, Iowa State has stepped up its outof-state recruitment efforts, marketing Iowa as a place to not only live while
attending school, but as a place to stay and raise a family after graduation.
Fraser said there has been a greater push at Iowa to help part-time students
complete the program more quickly. Classes are more frequently being held
year-round without Christmas or summer breaks.
A great deal of effort is also being put into improved programming, which the
universities hope will diversify their offerings in an increasingly competitive
environment.
“We see students being given perhaps more choice in the options that are
available,” Kenne. “They’re looking to enhance their careers, gain knowledge,
and they’re doing that in a variety of different ways.”
Iowa State, responding to workplace demands, has stepped up its offerings in
the areas of supply chain management and sustainable agriculture. Many jobs
are available in those fields in Iowa, Hutter said, and the university’s program is
an effort to not only strengthen those Iowa companies but also keep students in
the state following graduation.
The university has also developed a program through which students can work
concurrently toward a bachelor’s degree in engineering and an M.B.A. \ and earn
both in five years. The university will graduate its first student from this program
in the spring. Hutter said it is an effort to drive up international enrollment, and
also an opportunity to provide students with a specialized undergraduate degree
coupled with strong business skills.
Iowa and Iowa State are currently working with a third cohort class of a dualdegree program through which students, after five semesters, can graduate with
an M.B.A. degree from Iowa and a master’s degree in systems engineering from
Iowa State. Engineers from major manufacturing companies such as Maytag
Corp., Rockwell Collins Inc. and Bandag Inc. have enrolled in the program.
“The full-time program recruits worldwide and nationwide, so it’s more
competitive,” Fraser said. “We’re not just competing within the region; we’re
competing against any school in the country that has an M.B.A. program. So you
have to have a real differentiation to bring someone from the Sun Belt to Iowa.”