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Women and Leadership: Do women value MBAs as much as men?

An article this week in AFR titled “Women Lagging in MBAs” caught my interest and has had me pondering ever since whether or not it’s a problem that only 35 per cent of students in Australian MBAs. A decade or so ago when I was completing an Executive MBA, there were just 8 women in my final year cohort of 32. At the time I had little awareness of gender balance; it had simply not appeared in my consciousness as yet. Though I do recall some discussions about the 1:3 ratio and my personal feeling was it had advantages.

So on the one hand, it’s probably a good result that women number as much as 35 per cent of MBA students, given they currently hold only 24 per cent of senior management roles in Australia. That more women aspire to senior ranks than are presently in them must be a good thing, right?

Yet on the other hand, when you contrast MBAs with undergraduate courses, where 51 per cent of students are women, and in postgraduate courses where 48 per cent are women, it’s worth asking why fewer women take up a degree that is all about leadership than other technical or specialist courses.

After several days of kicking around whether or not women in or out of MBAs is a good or bad thing, I went to my trusted sources and rang some of my fellow alumni.  “Is it a problem?”, I asked. Two said yes; and the other said no.  Still hardly conclusive.  So I thought I’d throw out a few ideas for exploration here, and see what you think.

Why do an MBA?

I’ve lost count of the number of times I’ve been asked whether an MBA is worth the effort.  Given I’ve actually made that effort, it surprises me that people still ask (what’s the likelihood of someone saying the investment and years of hard work wasn’t worth it, after all?)

In any case, my normal and immediate response is that it was definitely worth it for me.  Firstly, completing the MBA gave me a skill set that was immediately applicable to my role at the time as a management consultant. Plus I’d always had leadership aspirations.  And perhaps more importantly, it gave me a completely different perspective of myself.

When I started the MBA I was absolutely terrified I’d be found out to be the dumbest person in the room.  With all those amazingly skilled, experienced and savvy business people around me, it was only a matter of time before I was asked to leave the room, I thought.

But as the weeks and months went by, and I realised I could hold my own with the men and women around my, my confidence grew and grew.  My persona as a businesswoman blossomed.  I became what I had observed in the room at that first lecture class: a very capable business leader like everyone else.  And that wasn’t just about the course content.

So why don’t more women do MBAs?

I’ll be honest and say that doing the MBA wasn’t my idea.  In fact I knew very little about MBAs when I submitted the application form.  What I did know, however, is that all the leaders in the firm where I worked had one.  From top ranking business schools.  And it certainly hadn’t done any harm to their careers!

My boss and internal mentors at the time – all of them men – thought it would be a good thing if I went ahead and got one too.  And just to make sure I took them seriously, they offered to pay J

On the other hand, most of the men I studied with weren’t employer sponsored; they’d made a conscious decision to get an MBA, paid the $50,000 or so it cost at the time, and saw it as an important investment in their future careers. There were some women self-funding too, but far more men.

So is it that women just don’t rate the value of an MBA as highly as men do?

When you consider that these days an MBA in Australia costs as much as $100,000 in tuition fees, it’s fair enough to scrutinise the potential return on your investment.

So what is the expected return on investment from an MBA?

Well, that all depends… on many factors including whether or not you were born with the Y chromosome (but other non-financial measures as well, such as the network you’ll make, the job options it will give you, the chance for a new career direction and so on). The Beyond Graduation 2011 report shows that three years after graduation, commerce and management postgraduates – which takes in those with MBAs – saw their median salary increase from $80,000 to $104,000.

Males earned an average of $120,000, while women earned $92,000.  That’s hardly encouraging.

Why the big difference between the genders?

Research shows that women MBAs are likely to earn less than their male colleagues right from their first post-MBA offer.  This has to do with men being offered more (obviously!) and women negotiating less. But for those women who take career breaks, there’s a bigger issue at play.

Because prior work experience is often a pre-requisite, most MBA students are in their late 20s to early 30s.  Indeed the average age of students in Australia’s leading MBAs is 33 years.  When you consider that many women will have children already or be planning families and career breaks around this time, it’s exactly the wrong time for many.  Particularly for Executive MBAs, although I do know women who have juggled this while raising kids and so it’s clearly not impossible; but certainly very tough.

Even if they push on with their studies, there’s a good chance that parenting breaks will have them out of the workforce for one or more remuneration review cycles.  And it only takes one or two payrises on a post-MBA salary to ratchet up a significant pay gap.

Leaning in or not, women can’t control all these factors but they can ask the questions about how their pay stacks up against the men they work with.

So do MBA courses need to adapt to women?

According to Women’s Agenda, some universities are evolving their programs to cater to what they believe is and will be a growing market of female MBA students. Is this really necessary, I wonder?  Given women have made it to almost half of the undergraduate and Masters students in other disciplines without special treatment, is there something special about the MBA? Are changes needed, and will they result in more women taking up the MBA?

Possibly.  Change is good in most contexts, and if it makes for a better product and outcomes, then why not.  But for what it’s worth, I think the biggest change needs to come in the way we:

  1. Encourage leaders to encourage women to think about leadership, aspire to it, and plan for it in their careers.
  2. Identify, nurture and reward talent, particularly in terms of timing and process.  If 30-something isn’t the best time for women to do an MBA, then maybe we should encourage and pick up these women later in their lives and careers;
  3. Remunerate fairly, regardless of gender, across comparable skills, experience and education levels. It cannot be fair that there’s a 30 per cent pay differential between male and female MBAs in Australia, and transparency on this issue this would be a great starting point.

Your thoughts on this?

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