Why don't Australia's CEOs have MBAs?
Yesterday, LeadingCompany published the findings of our investigation into how many MBAs appear on the resumes of ASX100 chiefs.
The answer is 20, in case you missed it. Just one in five of the heads of our largest ASX-listed companies holds a Masters of Business Administration Degree, the world’s premier business qualification. In America, this figure is a good deal higher: 35% of Fortune500 companies are headed by the holder of an MBA.
The low figure is alarming, especially when considered in light of the findings of government reports such as Management Matters, which found Australian managers lack soft leadership skills.
But the dearth of MBAs in our top corporate ranks may just be about timing, says Pete Manasantivongs, the director of the full-time MBA program at Melbourne Business School.
“It’s understandable given the MBA is a relatively new degree in Australia,” he tells LeadingCompany.
The first Australian MBA was offered by the Melbourne Business School in 1964. It was first offered at Harvard University in the first decade of the 20th century, meaning Australia is 50 years behind America in embracing the MBA.
For the better part of the 20th century, the MBA had free reign in much of the world as the only widely-recognised post-graduate business degree. That wasn’t the case here.
Australian universities had post-graduate business qualifications that tended to be more targeted, and less focused on general management. Here, degrees such as the Masters of Commerce and the Masters of Finance have been around for much of the 20th century. In places like the United States, they are only now becoming more mainstream.
We can see a smattering of this among the ASX100. Sydney Airport’s CEO, Kerrie Mather, for example, holds a Masters of Commerce in Marketing.
This is what you’d expect for a cohort of CEOs who finished their university studies before the MBA became very popular in Australia. Mather is 52, which is the average age of the ASX50 CEO, according to a recent Suncorp survey.
The MBA is largely a young professional’s degree. “At Melbourne Business School, in our full-time program, the average age is 28 years old with five years of work experience,” Manasantivongs says.
“In our part-time program it goes up to 30 years average with seven years’ experience, while the executive MBA tends to have those in their mid-30s to mid-40s.
In America, most leading MBA schools have an average age of 26.
This makes sense when you consider why people take up MBAs: it is an aspirational degree. “Many people who aspire to be business leaders, they’ll work for a while in an area that matches their undergraduate study,” Mansantivongs says.
“They’ll then realise they want to be a general manager, and to do that they need a set of ‘tools’ and an exposure to how things are done in other industries. That’s what an MBA gives you.”
Because the MBA has been around for longer overseas, it is more commonly held by overseas-born leaders: of the 20 CEOs with an MBA, 10 were born overseas, our research found.
Most of the ASX100 chiefs were born in Australia, meaning foreign-born CEOs on the ASX100 are far more likely to have completed an MBA.
Over time, Mansantivongs says he expects the prevalence of MBAs in our top corporate ranks to grow. More Australians are studying MBAs, and while they tend to be young, some of them will in the next few decades come to comprise the ranks of our corporate leaders.
Globalisation also plays a role in driving the popularity of MBAs, says Pete Richards, the marketing director at the Macquarie Graduate School of Management, which has two ASX 100 leaders as graduates of its MBA program.
“Increasingly, it’s important for CEOs and senior professionals to make sure that they’re good leaders with a global mindset,” he says. Many MBA schools, MGSM included, pride themselves on the diversity of their cohort. Tomorrow’s executive is more likely to have to manage in a country different to the one they grew up in, and this can be helped by an MBA. And as Australian companies employ more and more foreign graduates, those senior executives are likely to hold MBAs, leading to increased acceptance of the qualification in Australia.
After the GFC, MBAs are back with a vengeance
Australian business schools experienced a drop in interest for the MBA during the global financial crisis, but this has since rebounded.
Richards says at the Macquarie Graduate School of Management, interest in the program is as high or higher than it was in 2007.
This is borne out by the data.
The General Management Admissions Test, or GMAT, is a standardised computer-based test used by most business schools worldwide as part of their admissions process into an MBA. The body which administers it, the Graduate Management Admission Council, has since 2007 published statistics on how many students take the test in each country. Compare the Australian figures over several years, and there’s a clear upward trend.
In 2007, 753 students undertook the GMAT in Australia. In 2011, that figure was 1,113 – up nearly 48% on just four years earlier.
Myriam Robin
Myriam Robin is a journalist with LeadingCompany. You can follow her on Twitter at @myriamrobin
Private Media Publications
