B-School Applicants Decline for Four Years

The business-school numbers are in and they aren’t pretty.

Applications for two-year, full-time M.B.A. programs that start this fall declined for the fourth year in a row, according to new data from the Graduate Management Admission Council, which administers the Graduate Management Admission Test.

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The median number of applications world-wide fell 22% in 2012 for the two-year degrees, after a nearly 10% decline last year. For many programs, the losses are off of multiyear highs that occurred as young professionals sought refuge and new skills in academia amid the financial crisis. But prolonged economic uncertainty is leaving many prospective students wary of the significant investment of both time and money required for a two-year, full-time program.

The GMAC survey included 744 M.B.A. and other business programs at 359 schools world-wide.

Some top schools experienced sharp declines. Columbia Business School posted a 19% drop in applications to its flagship two-year master of business administration program this year, after four years of rapid growth.

Noting that the decline comes off large gains, Amanda Carlson, assistant dean of admissions, said an improved employment market kept many would-be M.B.A.s from leaving the workforce.

Meanwhile, University of California, Los Angeles’s Anderson School of Management reported a 22% jump in applications to its two-year M.B.A. program this year, thanks in part to more aggressive marketing efforts. Rob Weiler, associate dean of the full-time program, said the school reached out to about 45,000 potential applicants with tailored emails saying not just “apply,” but also “here’s why you should consider us.”

Overall, 62% of U.S. schools reported declines in applications to two-year M.B.A. programs.

The picture was different abroad: Some 79% of two-year degree programs in the Asian-Pacific region and 80% of those in Central Asia experienced application gains as more locals sought graduate certifications and international students considered the region’s strong job markets and economic opportunities.

Part-time, online and executive M.B.A. programs also reported gains globally, benefiting from workers who want to earn advanced degrees without having to leave their jobs.

Applications to the evening and weekend part-time M.B.A. program at University of California, Berkeley’s Haas School of Business rose 11% this year. The school said it has experienced increased interest from applicants outside the San Francisco Bay area, due in part to its growing national profile.

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BloombergColumbia Business School posted a 19% drop in applications to its flagship two-year master of business administration. Above, the students walk in front of Columbia’s library.

Even in Europe, where the sovereign-debt crisis, strict government austerity programs and high unemployment have pushed applications down, the picture was less bleak than last year. Thirty-seven percent of one-year M.B.A. programs in Europe reported an increase this year, compared with just 22% notching gains in 2011, as some schools bounced off dismal lows. (The one-year M.B.A. degree is the most common M.B.A. offering in Europe.)

Class sizes, too, were a mixed bag, as some schools saw a higher yield, or the percentage of students accepting offers of admission, while others cut back after particularly large classes last year. While applications to the Yale School of Management’s M.B.A. program fell 9.6% to 2,554 this year, the school’s full-time M.B.A. class size increased 9.7% to 249.

UCLA’s Anderson School of Management trimmed its full-time M.B.A. class 4% to 359, as its applicant pool increased 22% to 3,335.

And Dartmouth College’s Tuck School of Business said applications to its M.B.A. program fell 8.8% to 2,502, as the class increased 6% to 282. That school’s M.B.A. application pool rose and its class size shrunk last year, and both are now on par with 2010 levels.

Globally, most M.B.A. programs reported plans to increase their class size, according to the GMAC survey.

Specialized master’s programs had a strong showing, with about three-quarters of management, accounting and marketing-and-communications degree programs reporting application increases in 2012. Those programs, which generally cater to students straight out of college, have gained popularity as undergraduates clamor to bolster their credentials before hitting the job market.

Write to Melissa Korn at melissa.korn@wsj.com

A version of this article appeared September 17, 2012, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: B-School Applicants Decline for Fourth Year.

What MBA Rankings Actually Measure

INFOGRAPHIC: What MBA Rankings Actually Measure

Here’s an infographic constructed by GBC participant Gavin Wedell with a colleague at LBS that shows broadly what the current rankings systems are actually based upon. Personal  experience and that of friends at other Business Schools has shown that there is a big need for someone to shine light on MBA programme quality. Gavin will be continuing research on the business education quality project that was discussed at GBC2012 in Rochester through the extended GBF community.

Surviving And Excelling In Turbulent Times

Unemployment has been high and economic velocity has been low. Many companies and even countries are in economic crisis… the effect has been felt all over the world. One thing we are confident about: The global economy will emerge from this global economic recession.

If the goal is to emerge as a strong, competitive, invigorated company, what can be done to seize the opportunity when the economy recovers? What are business leaders are doing, or not doing, to prepare for success?

Many companies make common mistakes in response to adverse economic pressure. Training is cut, benefits are reduced, and employees are laid-off, perhaps the most common practice, to cut costs. While this can help a company save money due to a drop in demand, cutting too deeply can have lasting effects.

The morale for “survivors” of layoffs is often lower due to the loss of colleagues and increased workloads. When the economy begins to improve, the first expectation is to ask the staff to increase their workload. Hiring tends to lag thereby exacerbating the situation. When the economy improves, the attrition rate among existing overstressed staff rises due to the stronger job market. Therefore, the result of layoffs that are too deep; a decreasing workforce just as economic opportunities return. Many small and large companies find themselves in exactly this situation; working to meet demand as the economy improves but finding their growth is stifled by an over-worked and decreasing workforce.

Here are some tactics that companies are employing to develop themselves in the modern economy.

Tactic #1: Use slower economic times to invest in employee training and education. While other companies cut training programs to cut costs, modern companies invest in training when resources are idle due to short-term slower demand. These trainings should be consistent with the company strategy, but also tailored to the individual’s aspirations. Do you have interest in pursuing a Project Management Certification? Let them invest company time into the endeavor and you will have a stronger (and likely more loyal) employee afterwards. Is a manager trying to improve his sales team’s skills? This is the time, before sales increase, to make that investment.

Tactic #2: Have multiple lines of revenue and be flexible enough to pursue the “hot” line of business. As the needs of the marketplace change with the economic times, some segments of your business may have more demand than others. As the recession hit, one manager found that while corporations were spending less on traditional market research consulting there was increase in demand for information on how to develop new sales channels for existing products. Her ability to aid companies on how to sell through existing online infrastructure was in greater demand. She focused her resources into that line of business to meet demand and shifted the focus of her team accordingly. For this instance, diversification was the key.

Tactic #3: Keep the workforce flexible to be ready when demand returns. Many modern companies use flexible human resource models facilitated by contractors, consultants, temporary workers, shared workers, outsourced workers and so forth. In some cases, companies can develop talent on a contract basis before investing in full time employment. In other cases, for seasonal or dynamic workflows, a team of contractors or consultants may be the best way to keep moving forward. Flexibly is the key.

As the economy improves, companies that made smart moves to stay ahead of the competition and invested in the future will benefit the most. Other companies, who hunkered down looking to protect themselves instead of planning for future growth, may find themselves playing catch-up as the economy grows. It is during these times that a manager should consider developing training programs, diversifying revenue streams, and creating an adaptable, nimble workforce. When the economic winds begin moving in the right direction, you can be the first ship with your sails up.

This article is the result of a Learning Circle Session on December 10, 2010, hosted by the Graduate Business Forum and attended by Graduate Business Conference Alumni. The ideas in this paper derive from this session and reflect only the views of the attendees. Corporate strategies discussed range from American Express, Microsoft, VeriSign, and Cardinal Health to service companies assisting larger entities with online penetration/distribution leveraging Amazon.

Bonnie Schwerin (GBC ’06, ’07, ’08) is a Consulting Manager for Bridge Partners Consulting and is a member of the Board of Directors of the Graduate Business Forum. She received her MBA from the University of Washington, Foster School of Business where she also served as the president of the student government.

Leadership Best Practices

To inspire leadership and global citizenship the GBF collects Leadership Best Practices globally from student leaders at the top 50 graduate schools in the world. In addition, we annually bestow the Student Leadership Award, a practice we started 20 years ago.

Currently we are working to make these cases of Leadership Best Practice available to you and formalize access to mentoring/ coaching/ sponsoring.

Please check back for more information, subscribe to the GBF newsletter for updates or contact robert.christensen@graduatebusinessforum.com if you want to know more about the possibility to become a mentor/ coach/ sponsor of a current student leader or to participate in our upcoming alumni event.