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Silk-Tie America

I was reading through BusinessWeek the other day, and in one of the new issues they are going on about the new crop of MBA students. As I happen to be pursuing the Masters of Business Administration degree myself, I took note and paid close attention. I was a bit dismayed to note how much of the magazine that week was little better than an advertising platform for the high-priced schools, the ones just below that elite status that attracts the best students by reputation. Don't get me wrong, these are fine schools but I can spot a market ploy quickly enough, and it made me wonder how much I could trust in the stories surrounding the advertisements from the schools.

One thing which struck me in the stories presented, was the focus on two sorts of MBA students; the commuter student who treks thousands of miles in order to go to the "right" school, sometimes leaving family and common sense behind in pursuit of the degree with that certain cachet, and the students who indulge in high-style living in hopes of creating a network which will, they say, be repaid for by bonuses and perks from their future employers. Maybe it's my Scottish blood speaking, but if I owned a major company and I heard about these wane-be jetsetters, I would be careful to make a list of their names, and instruct my recruiters to under no circumstance hire any of them, as the people who are so quick to spend company money even years before they expect to get it, cannot in my mind be trusted with the responsibility for the company's success and growth. It may sound harsh, but anyone who figures they deserve the highest pay grades before they have done a single thing to earn them, is a dishonest con artist in my book.

I understand that companies consider the schools which prospective executives attend. And as much as I like the University of Houston at Victoria, I am not confusing it with the Wharton School or Harvard. Even so, when I have my MBA, I shall be qualified for all the nominal duties and responsibilities which that degree portends, and combined with my experience I consider myself a formidable force if my talents are properly utilized. OK, so a lot of business people feel that way, but my point is that a lot of the people who get paid the big bucks do not seem, speaking bluntly, to earn their base salaries, let alone the perks and bonuses. I don't blame them for having those things - I respect anyone for the ability to succeed in their personal wealth, and would like to be wealthy myself some day. But any competent businessman can tell you that you need to watch your costs, and to make sure you are not wasting money. And boy howdy, there sure seems to be a lot of waste in the executive suites of many companies. How hard is it, for example, to understand that it makes no sense to buy a company like Tribune for around eight billion dollars, when it's thirteen billion in debt and it's revenues are in free-fall? How stupid does someone have to be to propose buying TXU with private equity money, and not consider that the Public Utility Commission might have doubts and questions about a gas and electric company hiding information from the public? Some things are counter-intuitive, I know, but a lot of the major action these days smells a lot like gambling. And the guys gambling are doing it with stocks and bonds owned by regular folks, so the average fella is getting all the risk dumped on him. I mean, shouldn't a decent business school be focusing less on tricks of manipulation, and more on core principles? Shouldn't a company looking for a top executive consider a track record that has at least as much practical experience as theory? Why is this even a question?

Maybe I am too blue-collar for the haute cuisine set, unable to understand why an expensive golf club membership should be necessary for a business plan to be considered, or why someone who wants his mind to be taken seriously, should have to plan on "being seen" at the "right" parties. But I know what makes businesses fail or fly, and this idea that snob appeal should be a critical component in nabbing the attention of a top company, strikes me as a critical flaw.


Comments (10)

I've had the "pleasure" of ... (Below threshold)
cirby:

I've had the "pleasure" of dealing with a lot of high-dollar MBA-carriers over the years, and if I were the owner of a big business, I'd never hire one of the Harvard/Yale/whatever types.

They bring such a startling lack of common sense to the table that it sometimes takes my breath away.

They also (as a rule) tend to be truly stellar jerks and assholes, with a level of assumed superiority that can be hard to believe.

...and no, they never make mistakes. Never ever ever. Just ask them.

If you want someone to get things done and done right, get an MBA holder from a decent state university.

Also having experienced man... (Below threshold)
Jeff:

Also having experienced many top school MBA's and many not so top school MBA's I would never hire an MBA ...

A reasonably polished college grad who paid his/her own way thru school and has 2 years of work would be a much better hire 90% of the time.

You simply cannot teach someone how to effectively manage people or deal with the contstant scarcity of time and resources that are daily challenges in todays business world.

The MBA is your future bosses way over covering his/her a** because if you don't work out they can just throw up their hands and say, "He had an MBA".

It makes hiring decisions easier and "absolves" managers of actually being responsible for hiring candidates with potential.

Sorry but in many ways its just a glorified cover charge.

It's not what you know.. it... (Below threshold)
Paul:

It's not what you know.. it is indeed who you know.

In my business I deal with common laborers all the way up to CEO types... people who make over a quarter million a year.

With a few notable excetions, income, job position and general achivement don't often correlate that tightly to intelligence, education or common sense.

If you find a "plant foreman" type guy, he's usually the smartest guy in the joint... even if his formal educaton is lacking.

To take it to the extream, look at entertainers... When you hear them speak, most of them are too stupid to manage a Burger King but get paid millions because people like them. Oh boy.

The folks you're talking about aren't in business school to learn how to run a business, they are there to learn how to do business as an art form. Two different skills.

I agree with many of your p... (Below threshold)
Regret:

I agree with many of your points, DJ, but would suggest you consider some other factors:

1. In my experience, the material learned by most MBAs at the top schools is less valuable than the relationships they've built while in school. A Harvard MBA will have a valuable network on which to draw for the rest of his/her life. It's harder for a second-tier business school to accomplish the same thing. I've seen this in practice.

2. Big businesses are bureaucracies and as such are not as efficient as shareholders would like. However, some of the bureaucracy is necessary for a large organization to operate. The structure just happens. The only way to avoid it, is to stay small. If the bureaucracy gets too inefficient or costly, have no fear, smaller competitors will fix the problem for them.

3. Your rhetoric about private equity and LBO firms' latest binge buying makes you sound kind of naive. First, this is hardly the first time this cycle has occurred. Second, as I think you are aware, the guys are not "doing it with stocks and bonds owned by regular folks." They are doing it with institutional pools of money [if this is not clear, I can elaborate]. Third, these pools are very diversified and their use of alternative investments (such as private equity and LBO funds) has led the bulk of them to achieve better-than-index returns over the past three decades. This isn't to say that all of the current deals will succeed, or that regular folks might not be harmed as a result of the change in management or if a particular deal fails, but the populist tone makes it sound like you don't know how the financial markets or institutional investors operate; which I don't think is true.

I also read the article in ... (Below threshold)
GawainsGhost:

I also read the article in BusinessWeek and came away underwhelmed. These MBA students are living a high lifestyle in anticipation of earning a high salary, which if they do in fact earn will quickly be spent maintaining said lifestyle. This is not the way to build wealth.

I highly recommend The Millionaire Next Door by Stanley and Danko. It is a little known fact that the three careers that have the least likely of producing one million dollars of net worth by retirement are the three status careers: doctor, lawyer, professor. Why? Because the education cost is so high, the time spent before entering the job market is so long, and the amount of money required to start a successful practice is so large, most of these people spend the majority of their peak earning years paying off the debt they have acquired. This is further exacerbated by their felt necessity to live in a large house, drive a nice car, wear fine clothes, and go on expensive vacations to reflect their status, which only adds to the mountain of debt they've buried themselves under. In the end, by the time they retire they have not acculumated wealth, only worked to get out of debt.

The vast majority, over 80%, of millionaires in this country became so in the last thirty or forty years. They are first generation rich. Most of them live in small towns, attended state universities, own their own business, bought houses that cost less than $200,000, drive used cars, and for entertainment they go to high school football games on Friday nights. Their most defining characteristic is frugality.

It's a simple formula, tried and true. Minimize expenses, maximize savings, invest in income generating assetts. Which is precisely the opposite of the way the MBA students profiled in BusinessWeek are going about it.

But, you know, some people would rather be vain than rich.

Cirby has it pegged. DJ wil... (Below threshold)
Scrapiron:

Cirby has it pegged. DJ will have an education. The elite will have a piece of paper. Someone should figure this out soon.

You're right, Regret. But ... (Below threshold)
DJ Drummond:

You're right, Regret. But I wanted a good rant, and details can get in the way of that!

i agree that the millionair... (Below threshold)
slingshot:

i agree that the millionaire next door is a very eye-opening book. i would recommend it to anyone.

as for DJ'scomments about MBAs from snob schools,there is a lot to be said there. i would agree with Regret, though, in saying that the elite MBA is much more about the networking than anything else. i spent sometime in the dot.com world back in the 90s, and many companies were started or operated by Stanford MBAs. I will say I was not as impressed by them as they were by themselves. however, as they had been to stanford they had access to the VCs and their ENORMOUS capital pools. this is, sad to say,an unfortunate reality. i may be wrong, but it seems to me that the real MBA objective is meeting people, not really learning management skills. this is not a judgment, just my observation.

In the <a href="http://www.... (Below threshold)

In the immortal words of Ace Greenberg, the Chairman of Bear Stearns Company, "I don't want a guy with an MBA. I want a guy with PSD."

PSD stands for "Poor, Smart, and Deep determination to become rich."

I find this thread pretty h... (Below threshold)
sean nyc/aa:

I find this thread pretty humorous. Not because I don't agree with it, actually I do, but because the clearest example of DJ's point (that elite/Ivy school MBAs who are concerned more about networking than performance and feel they "deserve the highest pay grades before they have done a single thing to earn them") is George Bush. He failed at every business venture he attempted, but kept getting high-paying, executive level jobs because of his daddy.

Cirby's quote: They also (as a rule) tend to be truly stellar jerks and assholes, with a level of assumed superiority that can be hard to believe.

...and no, they never make mistakes. Never ever ever. Just ask them.

fits right in with that theme as well.

Then Scrapiron chimes in and says cirby is right on. This may be the first time I've ever agreed with old Scrappy.

Oh, the unintended irony is so satisfying.




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