Do you need an MBA to be a great manager?

In my experience, one doesn’t need an MBA to become a great manager. Nor does earning an MBA guarantee success. The degree only holds value when students have entered and graduated from MBA programs with the right mindset.

Attending a top-tier MBA typically results in two years of lost wages and work experience, as well as significant tuition and living expenses. Many experts say the degree is not worth this investment. In his book, Managers Not MBAs, leading management authority Henry Mintzberg stirred controversy about the value of an MBA. He states that MBA programs are not only a huge expense, but also a waste of time and resources for students and the industry. Mintzberg contends that MBA students do not gain relevant skills that can be applied to their jobs. Conventional MBA programs, he writes, “train the wrong people in the wrong ways with the wrong consequences.”

Given that most companies are trying to compete in very tough markets, they need to promote and reward their top performers. Markets react to results, not to degrees or college brands. It does not make sense to reward unproductive employees simply because they attended prestigious colleges decades ago.

As a result, most companies fill managerial positions with a mix of fresh MBA graduates and internal promotions. Depending on the pace of the industry, the ratio of external hires may vary from 10 to 30 percent in the mid-level pool. In many companies, internal hires continue to dominate due to their knowledge of the company, the industry, and their proven track record.

Nonetheless, there are many reasons companies hire MBAs. Companies often supplement management teams with young MBA graduates who have great potential. In the context of the current education system, most engineering graduates, with their narrow engineering education, could use an additional two years of MBA education to gain maturity, exposure to liberal arts subjects, team work skills, and communication skills.

People often ask me how my MBA degree helped me over the years. Was an MBA really necessary to run a company? I think my formal education allowed me to gain confidence and not get intimidated by the “buzzwords” of the month. Additionally, MBA education exposed me to broad functional areas such as accounting, marketing, operations, and organizational behavior.

Which of the two skills — not being intimidated by buzzwords versus functional skills — was more useful? I consider the confidence to ignore buzzwords to have been more helpful in my staying the course while we, patiently, developed MAQ Software.

The above post is an excerpt from my upcoming book, What I Did Not Learn in B School, Insights for New Managers published by Penguin Random House in India. The book examines key common issues faced by new and aspiring managers.

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