A costly lesson

Published on The Economist online, August 27, 2010.

If “executive” MBA programmes are not much different from their full-time counterparts, how do business schools justify charging twice the price?

IT STARTED with a little-reported court judgement in an American backwater. In 2007 Ruth Creps, a resident of Idaho, was made redundant by her employer. She applied for funds from the Federal Trade Adjustment Assistance programme, a scheme designed to help retrain workers who lost their jobs due to international trade competition. Ms Creps wanted to take an MBA at nearby Boise University, but decided that she would rather do the $41,000 part-time “executive” MBA (EMBA)—which is usually paid for by employers who are looking to train up their high potentials—instead of the full-time programme which cost just $14,000. 

When her request was turned down Ms Creps fought them all the way to the Idaho Supreme Court, only to lose because the court decided the more expensive programme was not significantly different from its traditional alternative.

The decision was seized upon by business education commentators and a debate began as to how business schools could justify charging so much more for their executive MBAs. At INSEAD in France, for example, a full-time MBA costs €52,000, while the EMBA comes in at €90,000. Where schools getting away with it simply because firms have deeper pockets than individuals?

IT STARTED with a little-reported court judgement in an American backwater. In 2007 Ruth Creps, a resident of Idaho, was made redundant by her employer. She applied for funds from the Federal Trade Adjustment Assistance programme, a scheme designed to help retrain workers who lost their jobs due to international trade competition. Ms Creps wanted to take an MBA at nearby Boise University, but decided that she would rather do the $41,000 part-time “executive” MBA (EMBA)—which is usually paid for by employers who are looking to train up their high potentials—instead of the full-time programme which cost just $14,000. When her request was turned down Ms Creps fought them all the way to the Idaho Supreme Court, only to lose because the court decided the more expensive programme was not significantly different from its traditional alternative.

The decision was seized upon by business education commentators and a debate began as to how business schools could justify charging so much more for their executive MBAs. At INSEAD in France, for example, a full-time MBA costs €52,000, while the EMBA comes in at €90,000. Where schools getting away with it simply because firms have deeper pockets than individuals?

Indeed one of the biggest challenges facing executive-MBA providers is finding faculty that can hold the attention of such a demanding audience. Most EMBA participants have already learned the basic lessons of business and are on their chosen programme because they want better insight into the way they are operating within their present company, rather than for personal development or a career change. Such lessons are both difficult and expensive to teach.

EMBA students expect to be taught by people who not only have the theory but who also have demonstrable real-life experience. Sean Kilbride, a professor at HEC School of Management, Paris, says that this means flying in top professors from all over the world and recruiting business veterans with credibility, including former CEOs … (full text).

Comments are closed.