Is an MBA a Good Investment for Companies?

Is it sustainable for a company to pay for people to get their MBAs? The last three people we’ve given tuition reimbursement quit within a year of finishing school. It seems like we’re paying people to move to competitors.

There’s no right or wrong answer to your question. It depends on your business needs. But, I can help you figure out if it’s worth it for your business.

Question 1: Do you need more people with MBAs?

The MBA is kind of an all-purpose master’s degree for people who work. You can specialize in all sorts of different areas within the MBA degree and it can be great training. But, it’s not the only advanced degree out there. And, not every person needs one to succeed. Ask yourself, what skills do people with MBAs have that our current staff doesn’t have?

Question 2: What do you do when people finish their degrees?

An MBA isn’t an easy degree, and it does make you more marketable. So, naturally, your newly minted MBAs will want to move on to bigger and better things. If you’re paying for those degrees but not providing the opportunity for bigger and better, you’re wasting your time and your money.

If your idea of celebrating someone’s newly minted degree is a socially distanced imaginary pat on the back, combined with “get back to work!” then it’s no wonder your employees are leaving. Tuition reimbursement programs only make financial sense in two cases:

  1. It helps you recruit and retain employees. This is especially helpful in industries with lots of entry-level jobs and high turnover. Paying part or all of tuition for an undergraduate degree can give you long term employees.
  2. You’re using the newfound knowledge and skills your employees gain to benefit your business.

Retention after the degree only works if you allow employees to use their degrees and you increase compensation appropriately. For instance, many companies have policies that limit maximum increase an employee can receive. But, if you recruited a new MBA from outside the company, you wouldn’t be bound by that 10 percent over his current salary. And, in many states, you can’t even ask what his current salary is.

Your employees are leaving within the year, which means your company is either a terrible place to work and they stuck it out for the free tuition, or they aren’t getting the salary and responsibility bump that comes with a new degree.

The fact that they are leaving within less than a year, probably indicates that you don’t require them to work for a certain period without having to repay. That’s probably not the best plan, and you should have a minimum time they have to stay to keep the benefit. But, that will not solve your problem unless you recognize and reward the earned degree.

So, is it worth it? It might be, but only if you make changes. And it’s absolutely okay to say, “you know what? We don’t need any more people with MBAs, or we’ll just hire externally if we do.” Tuition reimbursement isn’t a strictly necessary benefit. It does attract some people, but it only benefits your business if you do your part.

Image by Clker-Free-Vector-Images from Pixabay

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4 thoughts on “Is an MBA a Good Investment for Companies?

  1. So this company is covering 100% of an MBA and not requiring the employee to stay after? If word gets out, people will take an entry level job just to use the benefit and leave the day after graduation!
    Every company I have worked for gave a flat rate tuition allowance. $3K-5K per year, depending on the job. And it came with a guarantee that you would stay with the company one year past your graduation.

  2. If you have an employee working on an MBA, they are almost as knowledgeable the semester before they graduate as they are the minute after they get their diploma. A smart company would realize that and start utilizing their knowledge and abilities well before they have that piece of paper.

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