As MBA Demand Wanes, is Now the Time for an MBA?

As the global economy fluctuates, there’s been a noticeable 5 percent decline in MBA applications. What are the nuanced reasons behind this trend and what does it mean for prospective business students?

The latest Application Trends Survey from GMAC, which puts on the GMAT entrance test, has cast a spotlight on a noteworthy development – a discernible 5 percent decline in overall demand for pursuing an MBA in 2023.

Experts put this down to economic cycles. “The MBA market is countercyclical, serving in part as a safe haven for high-performing professionals when the economy goes bad. We saw this effect most recently during the COVID pandemic: applications went from a 3.1% decline in 2019 to a 2.5% increase in 2020,” says Alex Collazo, managing director of systems and content at admissions consulting firm Admissionado.

“Most people don't go to business school when their company is growing rapidly, and promotions are raining down on every desk,” he adds.

These steep declines are the product of the strong economy, but Admissionado feels that there is a longer-term stagnation setting in. “Preventing a long-term decline will require business schools to market themselves in new ways,” says Collazo. “Algorithms and big data are now thoroughly entrenched in the decision-making processes of many businesses, and education that gives executives the ability to assess the quality of those algorithms will be in greater demand.”

The post-pandemic landscape

In the US, the ancestral home of the MBA where most of the highest ranked programs are based, some business schools say the drop reflects a process of normalization after the pandemic induced surge in MBA applications.

“It's hard to pinpoint the exact cause, but there were massive COVID-19 layoffs in 2020 and once those people who were laid off regained employment, they wanted to stay at the company for two or three years before going back to school. This would have potentially affected enrollment,” explains Shelly Heinrich, who leads the MBA admissions team at Georgetown McDonough School of Business, in Washington D.C.

The 5 percent decline in 2023 comes on top of a 3.4 percent drop in 2022. “The year before still had many COVID-19 restrictions -- including vaccination requirements and uncertainties in school-sponsored global travel. These restrictions may have been a turnoff to students who wanted to make sure they received the full MBA experience,” Heinrich points out.

Georgetown McDonough is seeing a sharp application increase this fall which indicates that people may be ready to come back to school. “There is nothing certain in the world economic situation now, but investing in yourself to make sure you become more marketable and less dispensable to organizations is a strong ROI calculation,” adds Heinrich.

International perspectives: Europe and China

INSEAD, established in France, says the overall 5 percent decline observed globally by graduate business schools varies across regions and institutions. INSEAD has seen a smaller drop than this. “Applications have gone down for combination of reasons linked to the economic conjuncture in the US, where employees were able to boost their career without doing an MBA, or to the post-COVID travel policies in some regions, to just name a couple,” says Virginie Fougea, global director of admissions, financial aid and scholarships at INSEAD.

She believe this is part of long-term trend for MBA programs but a temporary blip for graduate management education. “While the MBA market remains slow, some other degrees like the Master in Management are seeing upward trends,” adds Fougea.

To boost the relevance of the MBA, she says schools need to adapt to a generation of incoming students who are looking to have a meaningful impact. INSEAD has reviewed its MBA curriculum to integrate topics linked to sustainability, responsible finance or regeneration, for example.

In China, a rising power in business education, Michelle Zhu, MBA administration director at China Europe International Business School, says the slight decline in MBA demand reflects a mix of global economic uncertainties plus a shift in career priorities post-pandemic. “At CEIBS, we’ve seen a growing interest in specialized programs that align closely with evolving business needs and individual career goals, which suggests a more selective approach by applicants,” she says.

Future outlook: optimism and trends

CEIBS sees this period as an opportunity for reflection and revision, and for MBA programs to evolve to ensure their offerings remain relevant for the next generation of leaders. “Business schools should focus on designing innovative curricula that emphasize digital transformation, sustainability and global leadership,” says Zhu.

This is a key strategy to showcase the value of an MBA in a rapidly evolving world. “If anything, now couldn’t be a better time to pursue an MBA, as it equips graduates with the skills to thrive in uncertain times,” Zhu says, stressing the blend of strategic insight, leadership and adaptability.

Admissions consultants remain bullish on future MBA demand globally. Esther Magna, a principal MBA admissions consultant at Stacy Blackman Consulting, says that global economic predictions (avoiding a recession) and strong US job reports are affecting MBA interest. “Grad school demand is always countercyclical to the economy, so we expect this to be a cycle and not a trend,” she adds.

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