Three subtle factors influence the decision to do an MBA: Selection, Self-Selection and Signalling

By George ILIEV

Last week I took part in a Financial Times discussion on the value of business school education and the MBA degree. One question kept coming up in the session: “Can I get the benefits of an MBA without doing an MBA: skills, networks, stamp of approval?” Here is my response on the meta-processes involved in the decision to do an MBA and how an MBA enhances one's career.

The decision to do an MBA is to a large degree about three subtle processes: self-selection, selection and signalling.

1. SELF-SELECTION

Driven and competitive people self-select. By merely deciding to do an MBA, you join a small segment of the business world who have gone down the MBA route.

2. SELECTION

The top schools select from the shortlist of self-selected applicants. Harvard Business School admits 1 out of 10 applicants for its full-time MBA. Emory University (Atlanta) admits 3 out of 10 applicants.

3. SIGNALLING

By completing an MBA, you signal to the market that you belong to the category of successful professionals who know how the business world works. This signalling includes a number of constituent elements: you have passed the self-selection and selection process at the gate of the MBA and you have accumulated skills and networks during the MBA.

4. COUNTER-SIGNALLING

You can certainly counter-signal by "not doing an MBA" but the success of such a strategy would be based on an assumption that the market is discerning and that busy executives will embark on a lengthy process of verifying and teasing out your skills and credentials before they hire you. Unfortunately, executives don't have the time for this and the gatekeepers (recruiters and HR managers) are not too discerning in the 10 seconds they will spend reviewing a CV. This matters particularly in the first half of your career.

Entrepreneurs who don't depend so much on the opinion of others are more immune to this, but even entrepreneurs benefit hugely from an MBA in terms of skills, networks and the "stamp of approval".

5. SELF-FULFILLING PROPHECY

An MBA thus tends to becomes a self-fulfilling prophecy for success in business, at least in the vast majority of cases. The world is simply too crowded and noisy and the MBA serves as a clear signal that rises above the noise. But first, you need to be driven and successful before you even consider an MBA.

By pronking (jumping high), a springbok signals to predators that it is fit and fast so it would not be worth chasing.
(image source: Wikipedia)