Footing the bill for an employee’s MBA is a big investment, but one that can see concrete returns.
There’s no question that the letters MBA behind one’s name offer a competitive edge in the job market. But for ambitious individuals who aren’t looking to leave their company in their rise to the top, it can be a tough sell to negotiate full or partial tuition sponsorship and prove to their employer the value of pursuing an MBA while remaining on staff. Beyond landing you the job, does an executive MBA really help you do it better – enough so to justify a company investing $30,000 to $65,000 in an employee?
BMO Bank of Montreal seems to think so. Partnering with the Dalhousie University MBA program between 1996 and 2010, the bank funded annual cohorts comprising exclusively BMO employees from across North America. The program took four years to complete, with one-week on-campus residencies for each course. For 2011, BMO revamped the program with an eye to accommodating work-life balance and now allows candidates a choice of Canadian executive MBA programs. BMO foots the entire bill, but employees must reimburse 100 per cent of the costs if they resign while registered or within two years of completing the course – a typical condition of sponsored MBAs.
The value of funding employees' MBAs can be seen in the bank’s retention rate of graduates, says Joanne Gassman, senior vice-president of the bank’s B.C. and Yukon Division, who completed her MBA through Dalhousie with BMO in 2002. “We had about 350 people who went through the Dalhousie program and we’ve got over 75 per cent of those individuals still in the company, which tells me that this is a good return on investment.”
According to Gassman, BMO has no annual quota for company-sponsored EMBAs (there are 10 employees in the 2011 cohort and 15 slated for September 2012) and candidates are selected based on the current and future leadership needs of the company. “We would be looking at individuals who we felt would be able to move beyond their current role into more senior levels of the organization,” she explains. But while taking an MBA degree certainly makes senior employees more competitive when vying for executive roles, there is no guarantee of a promotion following graduation, says Gassman.
“It’s very hard to quantify the return on investment, to put a dollar figure on it,” agrees Dermot Strong, president of Motion Industries Canada, which bought BC Bearing Engineers in 2010. Brent Pope, then director (now vice-president) of sales and marketing for BC Bearing, approached the company in 2003 to sponsor his MBA through Athabasca University. At a cost of $45,000, it was a much more significant investment than the usual industry-related short courses the company’s continuing education policy reimburses, but one that has paid off, says Strong.
“Brent was already a very capable manager, sales executive [and] leader. I think what the MBA did for him was polish up those skills,” says Strong. “At the end of the day, we feel comfortable with him representing the company at the highest possible level.” Strong also observes the increasing frequency with which BC Bearing senior staff are dealing with MBAs in the marketplace and that having their own MBAs on staff is becoming necessary to maintain a competitive edge in negotiations. Pope is one of only two BC Bearing employees to receive corporate sponsorship for an MBA so far (the program was started by former owner Wendy McDonald and moved to the back burner with the downturn in the economy), but it’s a development strategy that Strong would like to continue. In fact, he acknowledges a preference for developing MBAs in-house as opposed to hiring from outside, “so they know our industry.”
A slightly more tangible benefit employees can offer their sponsoring company comes from the projects students complete as part of their coursework. By using BC Bearing as his case study wherever possible, Pope sees real value in the analysis and proposals he was able to share with his employer. “At Athabasca, your thesis is called an ‘applied project.’ I did mine on sales-force productivity and it was adopted and implemented [by BC Bearing] and has provided a long-term benefit for the company.”
Paul Slusher, co-CEO of Lifetime Eyecare, will also attest the concrete returns of an MBA. Partway through SFU’s executive MBA program (which carries a $47,000 price tag) that he began in September 2011, he’s already seeing it pay off in dollars and cents. In just one semester, Slusher says, he implemented three or four projects or programs directly related to his studies. He cites the example of discussions in his leadership class about best practices for retaining and compensating talent. “The first thing I did was change the way we pay and the way we give bonuses,” he reports. “As a result, we had a record-breaking six-month period.” In fact, sales figures for Lifetime Eyecare are the highest they’ve been in the company’s 83-year history, says Slusher, and he is currently on a year’s leave of absence from the EMBA program to focus on growing the company, with plans for new locations and the expansion of online sales.
“I don’t know if it would pay off for everyone,” says Slusher. “In my case, I don’t work for other people, and as a result, I’m not going to see any climbing of the ladder. But that being said, I’ve been contacted about positions running other companies.” Though Slusher has his hands full with his own business at the moment, he admits it’s gratifying to know the added value an EMBA is perceived to hold in the job market should he consider re-entering it down the road.
“I’m 44. My logic is that in 10 years I’m probably going to want to back off and play a bit more golf and work a little less, and someone’s going to have to replace me.” And, thanks to his own experience, he knows he’d like that someone to have an EMBA. Should the opportunity arise to replace him with an internal candidate, would he consider footing the bill for that employee’s degree? “If we reached the point where that was prudent,” says Slusher, “then yes, for sure.”