Each year, hundreds of thousands of people enroll in master of business administration programs, the most popular graduate degree, according to the latest figures from the U.S. Department of Education.
MBA programs require a steep investment. They can cost up to $100,000 or more at the top universities. But the return on the investment is evident; companies pay an average of 36 percent more to candidates with MBAs than those with a bachelor's-level business degree with similar experience, according to global leadership development consultancy Development Dimensions International. While the degree may provide students with enhanced financial and management knowledge and increase competitiveness in the job market, the question remains: Do MBAs make the best leaders?
According to DDI's "High-Resolution Leadership" report, the answer is no. The report, which is based on research of 15,000 leaders across 300 companies and 18 countries, found when it comes to the full range of leadership skills required in the current complex business environment, an MBA is not always the best choice.
"MBA degrees did indeed make better managers," said Evan Sinar, PhD, DDI's chief scientist and director at the center for analytics and behavioral research. "Unfortunately, the same couldn't be said for stronger leadership."
DDI's research compared the performance of undergraduate business degrees and MBA degree holders against eight leadership skills: financial acumen, business savvy, compelling communication, driving execution, driving for results, entrepreneurship, influence and inspiring excellence. Although MBA graduates consistently outperformed business degree undergraduates in financial acumen, business savvy and strategic decision making, they performed worse in coaching, results orientation and visionary leadership.
"These are significant shortcomings when you consider the cost of the investment," said Dr. Sinar. "The research demonstrates that MBA students need more well-rounded background[s] and experiences to learn the important interaction and inspirational skills they will need to truly excel as leaders. These skills are developable with sustained focus, but can't be learned in an academic classroom. Skills practice with employees, expert coaching/mentoring and abundant on-the-job application opportunities are critical to make these challenging skills stick."
Which undergraduate degrees produce the best leaders?
According to Dr. Sinar, educational degrees simultaneously inform and mislead potential employers about leadership skills and aptitude, as degrees are closely linked to leadership capabilities and compensation levels for more than a decade into an individual's career.
Senior leaders most commonly have business undergraduate degrees. When tested against eight key leadership competencies, these leaders outperformed other degrees on five of eight key leadership skill sets. Humanities graduates also outperformed other degrees through strengths not only in interpersonal competencies, but also in results orientation and entrepreneurship. Engineering graduates were near the bottom in leadership proficiency in six of the eight assessed competencies, while natural science, social science and IT were near average.