Students may need to adjust their focus
When Nabil Nasser applied for Insead's one year MBA programme in mid-2007, the prospects for the global economy and in particular the financial sector were far brighter than they are today. High on the 30-year-old's wishlist was a move into private equity after several years in the hospitality industry.
With graduation now imminent, Mr Nasser is having to consider other career paths: " Private equity is no longer an option, " he says.
Times of economic gloom traditionally herald a surge in applications to business schools as students seek to escape the storm and emerge with new skills when the job market is improving again.
As Mr Nasser's case shows, however, the timing can be critical. Most European schools offer one year MBA programmes, in contrast to the two year courses traditional in the US.
On present predictions, the global economy is heading for a more pronounced and longer downturn than the previous slowdown this decade. This raises the question of whether now is a good time to consider a longer MBA programme rather than risk graduating at the low point.
Luis Palencia, associate dean at Barcelona-based Iese, one of the few European schools offering a two-year MBA, argues that the longer period allows for more profound changes, as well as for longer internships and exchange programmes with other schools.
" Not only do we want to transmit knowledge, we also want to influence a person's way of thinking and making decisions. We need time for this, " he says.
A common concern amongst those who decide against a two-year course is the " opportunity cost " of being out of the workforce for a longer period.
But David Simpson, associate director of MBA marketing and admission at London Business School, which offers a 21 month MBA, refutes this argument: " When taking time out, you are not out of the employment network, you are in it in a different way, " he says.
One of the most obvious drawbacks in taking a longer degree, however, is the higher financial cost.
This has become even more of an issue for the global MBA sector, says Mr Simpson, because, with the credit crisis, some schools have lost their loan scheme's banking partners.
But the harder economic times will also reap dividends for those schools that worked on scholarship funds and other financing initiatives during the good times.
While almost all schools offer scholarships, relatively few finance loans themselves. An exception is IMD where about 30 per cent of students get financing from a school fund, says Janet Shaner, a director at the Lausanne-based institution.
The deterioration in global finance is also hitting business schools from a recruitment perspective: the investment banking industry had been one of the biggest employers of MBA graduates. In recent years, more than half of Iese's MBA graduates pursued careers in finance while 46 per cent of LBS's 2007 graduates headed into the financial sector.
The more finance industry-dependent schools are hopeful the gap left by finance recruiters will be filled by consultancy, industry and other employers that in recent years would have liked more MBA graduates but were squeezed out by high-paying banks.
Many schools are investing in career services: Mr Simpson says it makes more sense to invest in this area than to cut student numbers. But he adds that students need to be realistic.
" During the admission process, we look very closely at the realism of candidates' aspirations. We can adjust who we admit depending on the economic climate. "
A common feature of many schools in a downturn is tapping into alumni networks. Insead, for example, has encouraged this year's classes to make contact with the 2002 student body - which also graduated into hard times.
" We've had a lot of good tips from the 2002 graduates, " says Caroline Diarte Edwards at Insead. " More of those graduates than usual started their own companies, for example. "
But decisions over the timing and length of an MBA course come down much more to an individual's own circumstances and preferences than to economic cycles, she adds.
The more intense one-year courses tend to appeal to slightly older candidates, often on clearer career paths, while two-year courses are more likely to attract younger students and those contemplating more dramatic career changes, says Ms Shaner.
" I know from people doing a one-year MBA that they started interviewing for full-time positions one month into the programme - it really doesn't allow you the time for reflection, " says Adi Heinhorn, a second-year LBS student.
Mr Nasser concedes that the pace at Insead has been so intense that he has not had time for reflection but says he still would not opt for a two-year course.
" I enjoy working too much, " he says. " You don't lose your rhythm in a one-year course."
Mr Nasser and Ms Heinhorn are optimistic about their long-term prospects.
A key difference with previous downturns is increased globalisation, reflected in the international nature of student bodies and more diverse opportunities available for graduates.
" We may well need to relocate and take up the most promising employment opportunities, " says Ms Heinhorn, " wherever they are in the world " .
