Company-sponsored MBA: Pros and cons

For those who have resolved to do an MBA from a good university, the big question is obviously how to fund your course.

The tuition fee for a full-time course can run into millions of rupees, and part-time or online courses, though slightly less expensive, will also make you considerably poorer. An education loan with a generous assistance from parents or other relatives is often the answer.

However, if you have a few years’ work experience and have proved yourself, there is another option that may not come to mind immediately: persuade your company to sponsor your MBA.

Obviously, this will take some doing, and you can expect a rigorous cost-benefit analysis, first by your boss and then by other senior managers, before you get the go-ahead.

But only a handful of the biggest global companies will even consider sponsoring an employee to attend a full-time program, for obvious reasons.

Many smaller organizations have either well-entrenched or case-by-case policies on providing financial assistance to a talented staffer for a part-time or online program or an executive MBA, provided the applicant makes a strong case.

It is no surprise, therefore, that a 2015 survey by the Executive MBA Council found that only 25 percent of EMBA students receive full sponsorship and that 41 percent study EMBA without any corporate funding. According to a newspaper report, the Stanford Graduate School of Business has had only six to ten percent fully sponsored students in recent years.

If a company agrees to fund an employee’s studies, the assistance will be based on a binding contract that requires the employee to stay on for a certain period after completing the MBA program. Company sponsorship of MBA tuition comes with quite a few strings attached. Here’s a look at the pluses and minuses.
 

No bank-hopping required for Company sponsored MBA

Sponsorship has a bright side from the employee’s financial viewpoint. If your company agrees to fund your MBA, or even part-fund it, you won’t have to go bank-hopping for a big loan nor worry about how burdensome it is going to be.

You won’t also have to bother about job-hunting post-MBA as you will be going back to your tried-and-trusted employer after the program. Not to forget, in rough times, should retention issues come up, you will be more likely than others to keep your job, owing to your MBA and your company’s investment in you.

Now, for the bitter pills of company sponsorship. As mentioned, you will be under contract to serve your employer for two to four years. Unlike students who pay their own way through b-school, you won’t be able to attend campus interviews, which are a major attraction of the b-school campus, or consider job offers that factor in your MBA.

Simply put, you will have to continue to plug away at your old work desk, which might be quite frustrating if you don’t like your job, your company, or your industry very much.

However, there are also quite a few blessings to count. For one, now that you are armed with an MBA, you will be more valuable to your company. Your acumen for critical analysis and strategy planning, and even your soft skills, will have improved, and your organization will be keen to use them.

You will also have built a network of senior b-school professors and fellow students, mostly top corporate functionaries, and your company will be interested in tapping them for new business leads. Your MBA project report will add to your employer’s knowledge bank.

From the employer’s perspective, too, knowledge and experience that you acquired from the course will make you a better employee. You will also take back new perspectives to your organization, which will help you to see things differently and suggest new solutions to old problems. With the new ideas and skills, you will be able to guide your peers and junior colleagues.

Because you start to implement lessons from your b-school right away, your company will be able to realize an immediate return on its investment. For your organization, your graduation will be equal to recruiting an MBA fresh from b-school but one who is already familiar with the company’s corporate goals.

Although sponsoring companies envisage a return of investment in only two years, many companies have reported that they feel they earn their money back in just 18 months, according to a university survey.
 

Happy signals for the sponsored MBA student

Besides assistance towards your MBA tuition fee, there are also other benefits to you. The fact that you have been selected for a good MBA program itself will remind management that you are a bright employee. Your applying for financial assistance and accepting it will declare to senior managers that you are not only keen to take up more supervisory responsibilities but also loyal and interested in staying on post-MBA.

In turn, from the company’s decision to fund your studies, you will know that it sees you as someone with potential — management teams do not hand out aid to all those who ask for it. You will be grateful, and will want to repay the organization for its gesture by applying at your workplace what you learned from b-school.

Moreover, continuing with your company after your MBA needn’t be seen as a sacrifice or just fulfilment of a contractual obligation. Remaining with the company for at least the duration of the contract will help you shore up your finances and even build up a capital for any business that you may want to launch before long.

Of course, self-funding MBA students do not have to suffer these gains and pains. They have full freedom to chart their own careers after their MBA program. They are not tied to a company or industry and can make a career in any sector they want.

On the other hand, for a company-sponsored student, future career, at least a two-year segment of it right after MBA, will depend on the company—how much it values and uses the new skills acquired, and rewards the employee.

A funding contract may include terms such as a temporary promotion freeze. Of course, employees may be able to negotiate difficult clauses such as this, so that there is no permanent damage to their careers.

There are also some employees who benefit from funding but feel the need to “unshackle” themselves from their employers who made their studies possible. They make the best use of their analytical capabilities to conclude that they should not wait to put their dreams into action. Some of them discharge themselves from the aid contract by returning the aid on finding better-paying jobs or refinancing options.

Career-services cells at b-schools discourage company-sponsored students from breaking their funding contracts. They counsel these students about the importance of maintaining good relations with their employers, telling them that burning bridges may not be a good idea in the long run.

Career counselors say that if you are unhappy with your current company or industry, it is better not to ask for aid.

After completing your MBA, you are likely to receive tempting job offers and be torn between two difficult choices: resign and touch off debates about your loyalty and integrity (which may affect your reputation), or endure an exasperating return to your old job.

The moral of the story is that you should accept help only if you like your company and the company likes you.

You might also find this article helpful – Applying to MBA Programs as a Sponsored Candidate
 
References: 1, 2, 3, 4, 5, 6, 7 | Image: source