Executive M.B.A. Grads Decide to Look Elsewhere

Corporations are using tuition reimbursement for E.M.B.A. programs as a cost effective-way to help employees transition to a new job.
Perri CapellDecember 26, 2003

In 2001, Charles Bryant, 43, began an executive M.B.A. program at Southern Methodist University’s Cox School of Business and his employer, E-commerce-applications company BroadVision Inc., agreed to chip in part of the $63,000 tab.

But the Redwood City, Calif.-based employer laid off Mr. Bryant from his job as a client-relations manager in 2002, when he was halfway through his program. Still, a week later, BroadVision made a final $5,200 payment toward his tuition, and he finished the degree on his own in May 2003.

“My goal after I was laid off was just to finish the degree and worry about finding a new opportunity later,” he says. “It was what I wanted, and I believe having it helped me get my new job.” He’s now a client executive in the Dallas area for Totality Corp., a San Francisco application and infrastructure-management firm.

Means to a Job Change

Traditionally, employers have paid tuitions for select employees to earn executive M.B.A.s (E.M.B.A.s) with the expectation that these executives will stick around afterward and put the company’s investment to use. But layoffs amid a down economy, plus a diminished bond between employers and employees, are resulting in more executives job-hopping as they earn the degrees — creating, in a sense, a career-transition plan for themselves.

In 2003, for instance, a quarter of E.M.B.A. graduates were involved in a job hunt, compared to 17% in 2002, according to a survey by the Graduate Management Admission Council (GMAC), provider of the Graduate Management Admission Test (GMAT), based in McLean, Va.

E.M.B.A.s were originally designed so that groups of seasoned managers — most are in their late 30s with about 10 years’ experience — can keep working while pursuing B-school studies together on weekends. Executives had to be sponsored by their companies to attend, and students weren’t allowed to pay for the program independently. Most then continued on with their employers after graduation.

Now, many executives receive only partial employer funding or foot the whole bill themselves. GMAC researchers at first speculated that having more younger E.M.B.A. participants was the primary reason a higher percentage of graduates were job hunting in 2003. But their survey results showed the opposite: 62% of the 2003 survey respondents were 35 years or older, compared to 54% in 2002.

This led GMAC researchers to speculate whether some E.M.B.A. participants had topped out at their companies and were being eased out the door. For these executives, receiving full or partial tuition payments to complete an E.M.B.A. may be a compassionate and cost-effective way for employers to help them transition to a new job.

“It’s possibly a way to provide significant support to people who are separating from a company,” says Daphne Atkinson, GMAC vice president of industry relations. “To reposition them with new skill sets, they can be sponsored [to earn degrees] with the expectation that they would not return to their companies.”

Mr. Bryant says that when he was downsized, BroadVision was “definitely sympathetic” to the fact that it promised to contribute to his tuition. He received three weeks’ severance pay and some vacation pay, but wasn’t offered transition assistance to help him find a new job. “In a way, this was outplacement,” he says.

More Study Needed

GMAC researchers plan to continue to study the reasons why graduates may be leaving their companies. The Executive M.B.A. Council, an organization of schools and employers based in Orange, Calif., also plans to study the issue, but its members object to the conclusion that the programs are being used to help executives separate from their firms as part of a severance agreement or outplacement strategy.

Business schools rely on companies to pay tuitions for a percentage of students and if employees sponsored by their companies seek new jobs, employer support might dwindle, says Diane Badame, associate dean and director of the E.M.B.A. program at the University of Southern California’s Marshall School of Business.

“There is a concern that employers won’t pay for the E.M.B.A.s and that this source of funds will dry up,” says Dean Badame.

Big changes would be in store for E.M.B.A. programs as a result. According to GMAC, a shift in the student mix toward job seekers could move the E.M.B.A.’s emphasis from personal development to the development of marketable skills, while the classroom environment could become less collaborative and more competitive. Plus, a greater contingent of students paying their own way could drive E.M.B.A. tuition lower and force even more accommodating schedules. Further, E.M.B.A. programs would have to start offering job-search assistance to their graduates.

No Job-Search Assistance

Currently, graduate business schools don’t offer E.M.B.A. participants help with job hunting — at least not openly — for fear of harming employer relationships. Some schools provide only help with resume writing or offer career assistance to students paying their own way. Other schools say they provide E.M.B.A. participants with training in such skills as networking and interviewing because that benefits executives internally.

But most B-school career-services offices don’t have contacts or job listings suitable for seasoned executives. The best job-search resources currently are other E.M.B.A. participants, who are usually hiring managers at their companies. By networking among themselves, students often learn of new opportunities and receive referrals.

John Hendrick, 47, says he didn’t plan to leave his employer, a consulting firm in Baltimore, when he began E.M.B.A. studies at the University of Maryland’s University College. The company was paying almost all of the $45,000 tab, and Mr. Hendrick promised to stay on for one year after finishing it in 2002.

But the president of Constellation Energy Source, a Baltimore energy-services company, was in an M.B.A. program at the university, and he and Mr. Hendrick talked one day. With the president’s blessing, Mr. Hendrick applied for a job at Constellation. He started there four months before graduation and is now a construction-project manager.

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