28 Nov 2017 19:16 IST

MBA courses in the US must reprogram to stay relevant

With new policies making it hard for international students to get jobs, the MBA is fast losing sheen

Nearly three years ago, writing in BusinessLine, I asked if obtaining an MBA degree was worth it. I was quoting Nitin Nohria, the first Indian-born dean of Harvard Business School. In a Wall Street Journal interview, he had said that the golden era for US business schools was over because an MBA degree was no longer essential for a career at Goldman Sachs or McKinsey. “The biggest challenge [we face]”, Nohria said at the time, “is [that] a lot of people are asking the question whether they need to go to business school at all.”

It turns out Nohria was too pessimistic, at least for the top B-Schools. Harvard, Stanford, MIT and Columbia have continued to report record interest, as more students globally seek MBA credentials from the world’s best programmes. According to Poets and Quants , four programmes actually showed double-digit rises in the number of applications, including the University of Chicago’s Booth School of Business (whose dean was recently featured in a BLoC interview ) and Carnegie Mellon’s Tepper School of Business. With more applicants chasing the same number of seats, the median GMAT score of the admit class has risen, making getting in even harder than before.

But Nohria was spot on if you consider the overall MBA landscape. Many Tier-II full-time programmes — that largely depend on an international pool of applicants — are struggling, as candidates weigh the high cost of a US MBA against the tight immigration policies put in place by the Trump administration. These policies make obtaining a job post-graduation, and keeping the job thereafter, extremely difficult.

The H-1B conundrum

The post-MBA employment issue was humanised last week by Frida Yu, a Chinese national, and a recent MBA graduate of Stanford, when she wrote an explosive op-ed in The New York Times criticising the Trump administration for its harsh H-1B visa policies. Yu claimed that having won an H-1B visa in a lottery, she should have been allowed to keep it for three years, the duration typically allowed.

But the Trump administration has stepped up its audits of the H-1B programme and Yu was denied her permit six months later because she ‘could not satisfactorily answer whether her skills were so unique that no other American could be found to fill her role’. Yu is a lawyer and an MBA by training; and her H-1B position was with a Silicon Valley start-up doing work in artificial intelligence and big data.

Over 800 reader comments were submitted in just 24 hours during a slow, holiday weekend, and so many of them were critical of the writer that the Times, which often publishes op-eds sympathetic to the views of its editorial board, quickly shut off public comments. Many readers — and Times readers are not exactly supporters of President Trump — seemed to side with the government’s decision. One reader summarised it this way: “America has a lot of lawyers, and having an MBA isn’t really that exceptional. If you had a Ph.D in an engineering field, this article would make sense.”

Roadblocks

For international students, the path to obtaining a job after celebrating a freshly-minted US MBA is strewn with landmines. The student has 60 days after graduating to seek an F-1 Optional Practical Training (OPT) visa, which is usually granted automatically.

Students can legally wait in the US and keep looking for jobs during the time the government acts on the OPT application. Once the application is approved, students get what is called an Employment Authorisation Document, or EAD. This permits them to work anywhere in the US for any company, as long as the job is related to their business field, such as finance, marketing or accounting.

There are other restrictions. For starters, the EAD is only valid if the student has a job offer. If not, the document expires, making the entire process until then null and void. Even if the student has a job offer, the EAD expires after 12 months of OPT. The candidate can, of course, apply for an H-1B visa but only 85,000 new visas are granted each year, and only during the first week of April. There is such a mad rush for these visas that the government is forced to resort to a visa lottery to disburse scarce visas.

There is a high likelihood that the student’s H-1B visa application is denied simply because it is a matter of supply and demand. And even if someone does win the visa lottery, as this Chinese student did, the Department of Homeland Security (DHS) reserves the right to demand further evidence that the underlying terms of the law — that is, that the person seeking employment has skills so unique that are not already available among Americans — are met.

Under the Trump administration, DHS has been very aggressive in demanding RFEs — Requests for Evidence. Contrary to myth, this provision is somehow not unique to the Trump administration; it has always been enshrined into immigration law, since the inception of the H-1B visa; it is just that prior presidents never sought to enforce this critical part of the law in the past. Until Trump.

The ripple effect

For a company about to extend an offer of employment, the knowledge that a promising candidate is on a student visa spells trouble. If, after spending six to eight months working for the company, the candidate’s H-1B visa is denied, or later revoked upon RFE, the company’s investment in the candidate comes to nothing. Voluntary churn of top MBA employees is a bad enough problem because employees can be baited by better jobs, compensation or location. When companies are forced to involuntarily let employees go, it becomes a serious issue.

So companies simply stay away from hiring international MBA students.

When prospective international MBA students become aware of these pitfalls, and their GMAT scores or overall profiles are not strong enough to merit entry into the top 25 B-schools, they begin to hesitate to apply to lower ranked schools. Axios reported last week that some schools, such as Wake Forest, the University of Iowa and Virginia Tech, have decided to call it quits. They have all announced that they will be discontinuing their full-time MBA programmes.

This is why I often counsel students to stay away from Tier-2 business schools, and ask them if they could modify their career goals to pursue a technology-based MBA, such as a degree in management information systems focusing on data security. Tech-based programmes earn a STEM designation from the DHS, which means students can take advantage of the OPT-STEM extension, a benefit which extends their EAD to 24 additional months. In a tough H-1B environment, this amounts to two more chances to get a bite at the H-1B apple.

The larger picture is that none of these changes should come as a surprise. As economies increasingly go tech, they need fewer people with generic skills. Unless US MBA programmes re-tool their degrees to accommodate this change, they are less appealing to international students.

So, in a sense, Nohria was right; a lot of people are concluding that an MBA is probably not worth it.

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