In October, Economic Development Minister Trevor Mallard told this magazine that while New Zealand needs skilled managers to improve economic performance and grow more globally competitive firms, the will to build up that management capability is not always evident.
“There’s concern that while New Zealand managers and owners are positive about developing the skills and capabilities of their employees they don’t embark on their own formalised training or take advantage of the wide range of capability development tools available to them,” said Mallard.
Is this fair comment? Management training leaders certainly think so.
“I think that’s fairly good generalisation; we are 95 percent small and medium-sized business and at the heart of that is entrepreneurs who have done it with the number eight wire mentality,” says John Tucker, MBA programme leader for the University of Waikato.
Tucker suspects too many New Zealand managers pride themselves on their gut feel for business and management, approaching the practice of management as an art rather than science, when it is mix of both.
“We still need that innovative and entrepreneurial flair, but because we are small agrarian economy in global market we have to look beyond gut feel and number eight wire mentalities to take into account global changes in management and business,” says Tucker.
Andy Hamilton, CEO for business incubator The Icehouse, also agrees with Mallard, saying there is not generally an attitude of lifelong learning among New Zealand managers comparative to other countries – something he attributes to the relative immaturity of the New Zealand management style. He says the Business Capability Partnership – led by the NZIM, EMA and Chambers of Commerce among others – will this year focus on management capability with themes including how to encourage managers to start the formal training journey, how to draw off and use new learnings and how to maintain the momentum.
“Our experience is that it is good to help people grow their businesses experientially. Yet we have one of our team who we have encouraged to start an MBA next year because we want [that person] to have better functional and business commercial skills. [That person] is very intelligent but lacks experience,” says Hamilton.
And global comparisons are relevant. According to report published in early 2007 by the United Kingdom publication Financial Times, MBA programmes in the UK and United States are seeing an upsurge in applicants with students competing vigorously for places in the best programmes. Data collected for the Financial Times shows that three years after graduation, alumni from the classes of 2001, 2002 and 2003 reported substantial salaries and salary increases, with an average salary increase from the start to the end of three-year MBA of 127 percent.
In the report, the associate dean of student recruitment and admissions at the University of Chicago graduate school of business said applicants as well as employers are placing greater emphasis on the long-term value of an MBA, which fitted with GMAC research global
database figures which showed the number of US business schools grew 10 percent between 1999 and 2006. In India the number of business schools grew from 639 to 953; more schools than exist in the US. Perhaps surprisingly, new business schools in management-mature Europe also exploded from 181 in 1999 to 658 in 2006, while Germany has 150 separate, if small, MBA programmes.
Patricia Fulcher, executive education manager for Massey University’s northern region, says lack of formal management training amongst New Zealand managers could have an adverse effect on the ability of New Zealand managers to keep pace with their international counterparts. She says Indian companies like Tata Consulting Service (rated third of 500 ‘most valuable’ businesses in India according to India’s Business Today) award staff wanting to do MBA in New Zealand time off and cash contribution in addition to keeping their jobs open.
“In India and China, education is classed above all else, whereas in New Zealand we have traditionally relied on our innovation, on our number eight wire approach. Because of our geographic isolation we think we are great innovators and don’t need lot else. But to be in global market we need to be more [formally educated] and we need to open our arms to that,” says Fulcher.
She says some New Zealand owner managers and senior managers even hold back potential managers from enrolling in MBAs and similar courses to avoid feeling inferior or threatened.
“There is also this MBA myth out there that says employers will lose someone that has done an MBA, but my experience is that if that happens it is because the employer has not used the new MBA skills of the manager,” says Fulcher.
Tucker agrees, saying employers can make the mistake of supporting formal management training course for staff then not providing an altered employment environment so that people can grow by using their new skills.
“One of the problems we have in New Zealand is HR directors who have budget of ‘x’ dollars which they think they need to get rid of or they won’t get the same money back next year. People then are sent on course and may return to work fired up only to find there is no support and possibly no interest in their new learnings,” he says.
MBA: valuable or not?
MBA sceptics may be surprised to hear that Fulcher and other programme leaders don’t believe MBA is for everyone – some people have the potential but are not ready yet due to lack of experience, and mental resilience is needed to complete an MBA. Fulcher says Massey University MBA students now have their mental toughness evaluated as part of their programme. The results give students insights into what they can do to maximise their effectiveness in the programme and in their lives, as well as how to change established attitudes.
Hamilton says the value of an MBA programme depends on its content relative to what the individual wants to achieve.
“The MBA is internationally recognised and if it meets the objectives of your learning then fantastic. But if you have busy business, making the time for things like MBAs and post-graduate qualifications is challenging and short courses can be more functional,” says Hamilton.
Tucker says time concerns mean many MBA programmes are now restructured to minimise time loss to the employer – weekend classes and reduced class time during the working week are both popular strategies.
“Many employers have to be lean and mean and are not in position to release large numbers of people during the working week. Money is less of an issue as most businesses realise the course is an investment,” says Tucker.
He says negative attitudes to formal management learning are changing – slowly – because the New Zealand economy is “growing up”. At present, Waikato MBA students are between 40 and 50 percent employer funded on the basis that if they pass the papers they get refund on course fees and Tucker suggests employers should be funding MBAs now because unemployment is low and workplace attrition rates are correspondingly high.
“So if you engage people in funded one or two-year learning process, you assure yourself of retaining those people for at least that period,” he says.
Fulcher says the cost of management training is rarely barrier if the value is perceived by both employers and candidates. But she says managers and business owners that sign up for MBA programme and pay for it themselves are more likely to persist compared with those sponsored by an employer – which is why employer contributions should ideally be conditional on course pass.
Like Waikato, Massey has recognised the need for MBA timetable that suits the time and workforce constraints of employers and owner managers and runs weekend programmes in blocks of two days every third weekend. The Financial Times report also notes the majority of new MBA
