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Journal of Education for Business
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Higher Education Business Management Staff and
the MBA: A Small Study Analysing Intrinsic and
Extrinsic Benefits
Michelle Gander
To cite this article: Michelle Gander (2015) Higher Education Business Management Staff and the MBA: A Small Study Analysing Intrinsic and Extrinsic Benefits, Journal of Education for Business, 90:3, 139-144, DOI: 10.1080/08832323.2015.1007905
To link to this article: http://dx.doi.org/10.1080/08832323.2015.1007905
Published online: 23 Feb 2015.
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Higher Education Business Management Staff
and the MBA: A Small Study Analysing Intrinsic
and Extrinsic Benefits
Michelle Gander
Murdoch University, Perth, Western Australia, Australia
Higher education is a key sector for the United Kingdom contributing over £70 billion of output. It functions in an increasingly complex operating, regulatory, and legislative environment that has led to an increased need for effective nonacademic business managers. This study evaluates the benefits of a specialist master of business administration (MBA) in higher education management in the UK. The results indicate that the MBA provides intrinsic benefits such as opportunities to improve management practice and increases in confidence levels in the workplace. It also provides extrinsic benefits of increased pay.
Keywords: extrinsic benefits, higher education management, intrinsic benefits, master of business administration
Higher education (HE) is a significant and growing business in the United Kingdom with increasing private investment and students responsible for paying their own fees. It has been estimated that “both through direct and secondary or multiplier effects, that the higher education sector gener-ated over £73.11 billion of output and 757,268 full-time equivalent jobs throughout the economy [in 2011/12]” (Kelly & White, 2014 p. 4). Directly employed staff num-bered 382,380 full time equivalents in 2012 and 2013 and income from business and the community equaled £3.5 bil-lion in 2012 and 2013 (Higher Education Statistics Agency, 2014). Individual universities therefore are large and com-plex businesses that require both academic management and business management to ensure their continued success in a more competitive market-driven environment.
Due to increased regulation and competition in HE there has been a drive to professionalize higher education man-agement (HEM) especially considering the number of staff involved. Much has been written about academic adminis-tration/management so this article concentrates on the man-agement development of nonacademic managers, or business managers. The UK data from the Higher Educa-tion Statistics Agency (2014) suggest that in 2012 and 2013 there were over 90,000 staff working in the categories of
management, professional, and technical staff. This drive for more professional management in higher education could be argued to follow the trend in the last 20 years or so to professionalize management in general with an attempt to ensure it is seen as a profession akin to for exam-ple, accountancy, engineering or teaching. Previously, many HE managers would have identified with terms such as administrators or clerks mimicking the civil service and public sector; generally it was only at the very top of an organization that individuals would have identified as man-agement. By 2020, the Chartered Management Institute (CMI, 2014) suggests that there will be 3.6 million manag-ers in the UK alone. The CMI was incorporated by Royal Charter in 2002 and has developed its Chartered Manager qualification in the last 10 years, which they view as being akin to a practical master of business administration (MBA); there are currently 100,000 Chartered Managers in the UK. This move to become chartered mimics the devel-opment of other professions although currently there is no requirement for staff named as managers to have any type of training or development unlike accountancy, engineering or teaching where one cannot practice before gaining pro-fessional qualifications. These developments show that management is at the beginning of its journey to become a recognized profession, and research by Baruch and Peiperl (2000) upholds this view that the “‘profession’ of manage-ment is still in its infancy . . . MBA studies may help to ‘professionalize’ managers and help give them a better
Correspondence should be addressed to Michelle Gander, Murdoch University, School of Management and Governance, 90 South Street, Perth, WA 6150, Australia. E-mail: michelle_gander@outlook.com ISSN: 0883-2323 print / 1940-3356 online
DOI: 10.1080/08832323.2015.1007905
position in the workplace so that others with whom they interact will see them as professionals” (p. 85). Certainly in HE the majority of business manager posts require no quali-fication in management with even the most senior posts usually only have a postgraduate management qualification as a desirable attribute. In commercial organizations, that historically have taken management more seriously, many senior managers have postgraduate management qualifica-tions with the most frequent of these being an MBA.
THE MBA
The MBA degree is a widely accepted postgraduate qualifi-cation in business management that is recognized interna-tionally but especially in North America, the UK, Asia, and Australasia. The MBA has, in these jurisdictions at least, become the primary form of management development for aspiring and senior managers. The MBA has traditionally been linked with senior management roles in commercial organizations with holders of MBAs being able to mand increased promotion opportunities and salaries com-pared with their counterparts (Baruch & Peiperl, 2000; Orpen, 1981; Simpson, Sturges, Woods, & Altman, 2005). Indeed some surveys have reported that MBA graduates were likely to be promoted within 18 months of graduation (Baruch & Peiperl, 2000). In the UK many higher education institutions (HEIs) offer an MBA either full-time or via an executive part-time pathway for those people who are already working in a management position and who wish to combine their full- or part-time roles with continuing pro-fessional development. The Association of MBAs (n.d.) estimates that 15,000 MBA degrees are awarded each year . Over the last 10 years the MBA degree has often become specialized for different industries, such as technology management, marketing, and strategic planning. This spe-cialism also now includes MBAs in HEM and in the UK there is one such qualification offered by the Institute of Education (IoE). MBAs in this specialist area are common-place in the United States but have yet to break through in any significant way to the UK, Asia, and Australasia. How-ever, the IoE’s MBA has a full cohort of 25 each year, alongside their master of arts degrees in similar subject areas, so there is an obvious market demand for this type of management development within HE.
THE VALUE OF THE MBA
The value of MBAs to employers are that they provide an established framework to vet applicants easily and quickly and provide a guarantee of standards in the level and scope of education (Baruch & Peiperl, 2000). They also provide organizations with a workforce with high levels of human capital, that is knowledge, skills, and capabilities to be used
for corporate gain (Crook, Todd, Combs, Woehr, & Ketchen, 2011; Keaveny, Inderrieden, & Toumanoff, 2007).
The benefits to individuals are more contested. No doubt they are useful as a proxy for competence, especially for women (Singh, Terjesen, & Vinnicombe, 2008), indeed an alternative theory to human capital is that gaining qualifica-tions provides a way to signal to an employer a person’s innate ability which in itself then leads to above average wages (Hussey, 2012) and HEIs usually promote the value of MBAs to individuals on the extrinsic benefits after grad-uation of increased promotion and pay and to improved effectiveness in their management practice. There is some research that supports this, such as how Orpen (1981), in a study of 41 men who had an MBA compared with 41 with similar profiles who did not hold an MBA, showed that 5 years after graduating with their MBA these men were paid more compared to the non-MBA men; they had also gained increased promotion compared with the non-MBA group. Zhao, Trull, and Hill (2006) in a study of MBA alumni found that of the half of the graduates that stayed in their current role after graduation, 60% of the respondents’ current annual income was significantly higher than their most likely current income if they had not obtained their MBA and the majority of participants received promotions (70%). Simpson (2000a) showed that all MBA graduates in her study benefited from additional extrinsic benefits but that men benefited to a greater extent than women. Many studies evaluating the impact of gender on the benefits gained from an MBA show that women tend to receive fewer extrinsic benefits but benefit more than men from intrinsic benefits (Simpson, 2000b; Simpson et al., 2005) although it should be noted that others have found no such differences, for example Zhao et al. (2006). Keaveney et al. (2007) noted that differences in salaries between the gen-ders cannot be attributed to this single factor (MBA or no MBA) as it is the overall effect of the organization and the market that are the strongest predictors of salary. The value of the MBA in terms of the direct benefit to the recipients’ management practice, has been questioned by numerous researchers with some researchers finding that there is no benefit to management practice (Pfeffer & Fong, 2002; Warhurst, 2011) and others finding that there is, especially for women (Hay & Hodgkinson, 2008; Kretovics, 1999; Lamsa & Savela, 2014; Simpson, 2000a; Simpson et al., 2005).
THE MBA IN HIGHER EDUCATION MANAGEMENT FROM THE IOE
What then, does the MBA in HEM give to those studying it? The IoE’s qualification outline shows that it is aiming to develop participants’ understanding of key concepts in the academic literature in the field of HEM, provide intellectual 140 M. GANDER
and professional challenge, increase an individual’s capac-ity for critical reflection of his or her own practice, and cre-ate a community of practice. It does cover of course, aspects of competencies that would be expected within an MBA such as strategic, financial, physical and human resource management, sustainability, governance, and mar-keting and additionally areas such as the student experi-ence, third-stream activities, teaching and research, and internationalization. Here I aim then to evaluate, via the graduates themselves, exactly what motivated them to invest time and resources to study for the MBA and what they believed they had gained from the MBA in terms of intrinsic benefits such as increased knowledge, confidence and competencies). Additionally, extrinsic benefits gained from the MBA would be evaluated via promotion and a starting salary and one-year postcompletion salary.
METHODOLOGY
To investigate whether gaining an MBA showed an advan-tage within the higher education management sector a pilot survey was carried out with participants being graduates of the MBA HEM course run by the IoE. As an alumnus I had access to the closed Facebook site where a message was posted with a link to a survey asking graduates to spend a few minutes completing the questionnaire; there were 23 respondents. The questionnaire covered three areas. The first area was an about-you section aimed at gathering infor-mation on gender, staff category, age on completion of MBA, and date when completed the MBA. The next sec-tion—your benefits—asked for information on the salary they were on at the start of the MBA and the salary they were on on-year postcompletion. This one-year timeframe was used as HE salary increases happen annually and as job roles for promotion go through a bureaucratic process there would be time for individuals to apply for, be interviewed, and be appointed to their next role. This section also asked if they had stayed in the same role, moved sideways, or been promoted either within their original institution or at another. The final section—your motivation—and benefits asked what had motivated them to take the MBA and finally what they considered the most important advantage the MBA had given them, which was a free form area to cap-ture their own reflections.
RESULTS
Table 1 shows the demographic and other category profiles of the respondents. In accordance with the discussion in the introduction the majority of staff undertaking the MBA were professional management staff and as expected of part-time MBA students they were commonly around 32– 41 years old. There were slightly more women than men
that responded to this questionnaire. Table 2 shows the rea-sons why participants wished to undertake this MBA with the main reason being career progression (87%) followed by to gain the qualification (69.6%), skills development (60.9%), and subject knowledge (60.9%).
There was a wide spread of advantages identified by par-ticipants after completing the MBA (Table 3; they could choose multiple advantages as) but the most commonly cited were, first, an understanding of the wider context of higher education:
As a finance professional the MBA shows people I’m a bit more wise to the ways of the needs of the wider institution, and indeed [the] sector.
TABLE 1
Demographic and Other Category Profiles of the Pilot Survey Respondents (nD23)
Category Number Percentage
Pilot Survey Respondents’ Reasons for Undertaking an MBA (nD23)
Motivation to study Number Percentage
Consolidate career to date 8 34.8 Enable career progression 20 87.0 Personal interest 8 34.8 Networking opportunities 11 47.8 Practical reasons (e.g., suggested by organization,
institution would fund)
6 26.1
Skills development 14 69.6 To gain the qualification 16 60.9 For the subject knowledge 14 69.9 Recommended for career development 5 21.7
Confidence 9 39.1
Note:MBADmaster of business administration.
A much wider vision of the British university environment, as well as administrative and strategic frameworks of uni-versity management.
It’s becoming increasingly important within HE to have a business brain.
Being able to see beyond purely operational needs and develop a more strategy/long term view.
Second, an increase in confidence:
Confidence in my decision-making and challenging/sup-porting people at higher levels.
Confidence to be able to discuss key higher education pol-icy issues” and “extra all round confidence.
Third, the learning of new tools and techniques to improve management practice:
Tools and techniques to look at issues/challenges differently.
A set of ideas and tools in my head that can be applied to everyday situations.
Table 4 shows levels of promotion within and without their original organization. This shows that the majority of
staff who had stayed within their original organization had been successful in gaining a promotion (58.8%) and of those that had moved to another HEI 66.7% had gained a promotion.
Table 5 shows differences in salary between the start of the MBA and one-year post completion. It can be seen that although some salary increases where what was expected (i.e., an annual increase; just under £1k to £1.5k is a normal annual increment), some participants received significant salary increases.
DISCUSSION
In the UK the MBA has become a highly valued qualifica-tion for professional development for senior managers in the private sector and MBAs are marketed to individuals and organizations as a way of developing excellent man-agement practices and being able to command increased promotions and salaries. As HEIs move to improve the effectiveness of their business management and import practices and staff from the private sector, HE business managers are looking to become more professional; one way to do this is to become qualified in management. One of the most successful MBAs in terms of enrollments, for the professional development of business management staff is the MBA in HEM from the IOE. This qualification has been offered for 12 years with 13 cohorts and is highly regarded both from individuals that have completed it and within the sector. However, considering that in the UK HE salary scales are highly unionized where pay is negotiated between a sector-wide employers group and the main unions the obvious question is could individual and organi-zational investment in the MBA in HEM make a difference TABLE 3
Perceived Advantages Postcompletion of the MBA for Pilot Survey Respondents’ (nD23)
Advantage type Number
Confidence 4
Qualification 2
Understanding of strategy 2 Understanding of wider context 6
Writing skills 1
Understanding of business skills 3
Networks 3
General knowledge and skills 2 Professional credibility 2 Tools/techniques of practice 4
Note:MBADmaster of business administration.
TABLE 4
Pilot Survey Respondents’ Promotion Success MBA (nD23)
Progress Number Percentage
Within same higher education institution
Stayed in same role 4 23.5 Moved sideways 3 17.6
Promoted 10 58.8
Moved organization
Moved sideways 3 33.3
Promoted 6 66.7
Note:MBADmaster of business administration.
TABLE 5
Pilot Survey Respondents’ Salary at Start and One-Year Postcom-pletion of the MBA (nD17)
Salary at start of MBA (£) Salary 1-year postcompletion (£) Increase (£)
35,472 36,536 1,064
Note:MBADmaster of business administration.
142 M. GANDER
to participants in terms of extrinsic benefits as it arguably can in the private sector, or is the worth more closely aligned to individuals gaining intrinsic benefits?
The participants reported a number of motivations for enrolling on the MBA with the most important being: to enable career progression, to gain the qualification, skills development and for the subject knowledge (Table 2). On completion of their MBA (Table 3) the major advantages that they reported they had gained fell could be catego-rized as, first, an improvement in knowledge and capabili-ties due to an increase in both an understanding of the HE business and their management practices and secondly, by increased levels of confidence; this was not reported as being important as a motivational factor for enrolling on the course. This aligned well with what they hoped they would gain when they started and as such the MBA is obviously providing value to the individuals on it. Although there is conflicting literature around the impact of MBAs on the improvement of management practice (Hay & Hodgkinson, 2008; Lamsa & Savela, 2014; Kre-tovics, 1999; Pfeffer & Fong, 2002; Simpson, 2000a; Simpson et al., 2005; Warhurst, 2011) this study points to participants feeling that the MBA improved their practice including improvements in knowledge and skills. It should be noted that there were slightly more women than men that responded to this survey (Table 1) and that the litera-ture does suggest that women gain more intrinsic benefits from undertaking an MBA compared with men and it has also been reported that women on an MBA benefit more from increased confidence levels compared with men (Simpson, 2000a). If these participants have indeed improved their management practice then it should lead to employer recognition in some form but within the HE reg-ulated pay environment this might not be able to be through salary increases.
The majority of participants reported promotion either within their HEI or having moved to another institution to gain one (Table 4). Alongside this they reported a greater than expected salary increase one year postcompletion (Table 5). It could be argued that the participants increased their human capital, which their employers acknowledged and appropriately rewarded through promo-tion and increased pay. This is one argument for pay dif-ferentials: an increase in an individual’s human capital generates an increased stock of productive capital, which employers take advantage of but also recognize with increased pay (Keaveney et al., 2007). The participants in this study reported that they were motivated to enroll to increase their subject knowledge and develop their skills and reported that the MBA did indeed provide these advantages. However, Hussey (2012) emphasized that individuals’ innate abilities were the key to higher reward and that education and training was a signaling effect to employers. With one of the main motivations for the
participants to study this MBA was to gain the qualifica-tion perhaps they where signaling to their employers their readiness for promotion and the employer noticed this especially if for example they had paid for or contributed to the cost of the course. Many people on the MBA report that they get promoted before they have completed the qualification so the signaling effect may be quite strong within the HE sector. As indicated previously, there is conflicting evidence of the benefits of an MBA on extrin-sic rewards but some studies have indicated that women gain fewer extrinsic benefits compared with men (Keave-ney et al., 2007; Simpson, 2000a; Simpson et al., 2007). Considering the women responders in this study slightly outweighed the men could lead to perhaps a more conclu-sive argument that this MBA did indeed have a positive effect on their promotion opportunities and pay.
What is clear in this study is that participants had well-defined ideas about what motivated them to study for the MBA, namely gaining a management qualification and to increase their human capital by becoming more knowledge-able and skillful in their management practice. These partici-pants then reported that they did indeed gain intrinsic benefits from the MBA of increased knowledge and skills (and confidence) thereby increasing their human capital, and that taking this qualification was an effective way to signal to their employer that they were ready for promotion. As all of the participants in this study were working within the HE sector albeit at a number of different institutions it does seem that having completed this qualification led to the majority of the participants being rewarded with promotions and significantly higher salaries one year post-completion.
RESEARCH LIMITATIONS
Several limitations from this study are evident beyond the small and self-selecting sample. First, the indicative result that showed that gaining your MBA leads to quicker than expected promotion or pay increases in HEM needs to be studied further as this pilot study could not correct for bias in terms of those people who apply for and are accepted onto the MBA being a self-selecting group that with or without the MBA qualification would have gained increased extrinsic benefits. Second, although the study had slightly more women than men who responded the results were unable to be analyzed for any impact on intrinsic and/ or extrinsic benefits by gender. The idea that women gain more intrinsic and less extrinsic benefits than men is con-tested (Keaveny et al., 2007; Simpson, 2000a, 2000b; Simpson et al., 2005) and for further work it would be of benefit to include this level of analysis. With HEM suffer-ing from the same gender inequality at senior levels as many other organizations (Gander, 2010) this would be a fruitful topic for further analysis.
ACKNOWLEDGMENTS
Thanks to all the staff involved with the MBA and the grad-uates who took part in this survey.
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