The MBA and International Experience: Are they becoming pre-requisites for the world’s CEOs?

The MBA and International Experience: Are they becoming pre-requisites for the world’s CEOs? It’s taking less time to get to the top and the MBA is making reaching the boardroom even more likely than ever before, according to exclusive research released in May 2008. In addition, the research into the career habits of the world’s top CEOs show that financiers have replaced marketers as the dominant track for getting into the C-Suite; that international experience is a must – but not too much; and that now, more than ever, the MBA is a career accelerator for those with ambitions of reaching the boardroom.

The research, conducted by Professor Monika Hamori (PhD – Wharton) from IE Business School in Madrid, Spain, is the most comprehensive study of its kind into the career trajectories and habits of the world’s top CEOs. Focussing on ten top level executives from each company in the Fortune 100 between 1980 and 2001 the research, featured in the Harvard Business Review, shows the profile and career path of modern executives and the role of the MBA in their careers.

The most striking observation is the role played by the MBA program and by leading business schools on the careers of CEOs, principally in the US and Western Europe; additionally the rise of women in executive ranks is notable.

The statistics show that CEOs in 2001 were more educated, having completed almost two per cent more education - 17.3 years on average compared to the 17years of their 1980 counterparts. More time behind a school desk translates to more time behind the top tier corporate desk as younger executives found themselves in the C-Suite towards the end of the century. In 2001 the average age of a CEO was 52 compared to 56 in 1980.

There are regional differences here too. The average age of a European CEO is just over 54 years against the US average of 56.2. Europe also has a higher percentage of CEOs in the 45 years and below bracket (14% to the US’ 8%) as well as the 46-55 segment (41% to the US 36%) than the US. One reason for this discrepancy may be the time spent by US executives completing their MBAs. The research shows that far more US CEOs (38%) have MBAs than did their European colleagues (16%).

So, from the evidence of recent CEOs, it looks like the MBA is set to keep its relevance, says Prof. Hamori. “The fact is that the proportion of MBA graduates is growing among the younger generation CEOs in Europe. 34% of European CEOs who are 45 years or younger are MBA grads, while the figure is only 10% among CEOs who are 55 and older.”

She continues: “The second piece of evidence comes from the study I did with Peter Cappelli: a comparison of 1980 and 2001 top executives. Statistically, in the type of second degrees, graduate or master’s, earned by the Fortune 100 top executives in the two time periods, the percentage of business and law master's degrees among all types of degrees, including arts and science, was 23% in 1980 and 26.6% in 2001, a slight increase. However, the overall number of law and business second degrees increased across the two time periods. While in 1980 there were 187 law and business second degrees earned, in 2001 we have 307 executives with law and business second degrees.”

While there is a marked upward trend in the numbers of business educated CEOs in the world, international experience is, according to Prof Hamori, extremely important in reaching the top, even though it comes with a slight word of warning. “International experience is not just necessary, but it has become a business pre-requisite to have that skill set. Paradoxically, it also slows down your path to the top. It’s a career gamble but is seen, these days, very positively.”

This was not always the case. In 1993 only seven per cent of American CEOs had international experience. The latest figure stands at 44%, a clear indication that such experience is valued highly in a globalizing market. Prof. Hamori explains why. “It’s a business requirement to have the skill sets associated with international experience. It’s associated with problem-solving and management skills, managing overseas staff requires more sophisticated management skills and dealing with additional levels of complexity.”

This advice comes with a caveat, however. Get some essential overseas experience but don’t stay away for too long. CEOs who spend seven years or more abroad do significantly worse than their colleagues who do not, perhaps choosing to return earlier to the eye of the storm and being close to the hearts and minds of their managers earlier in their careers. Says Prof Hamori: “Those who embark on fewer (overseas) assignments that last for a shorter time, one or two years, or who gain international experience by staying in the company HQ and visiting foreign divisions may reach top divisions faster.”

In the 2008 QS TopMBA Applicant Survey, one in six applicants responding to the survey said that they see themselves as CEOs of a large corporation in ten years time after graduating from their MBA. While the time frame may be a little ambitious, there has never been a stronger argument for getting that overseas experience and MBA at the same time.

Source: topmba.com