Excessive Professor Salary at Thunderbird

[burbuja0512]

WOW! I had no idea that Thunderbird was going down the toilet so badly!!! I actually looked at them first because of the type of MBA I wanted, but could not justify the 70k tuition cost plus required international campus visits, which would have easily added another several thousand on to the total cost, not to mention the time away from work. I'm actually glad that I didn't end up there because my dual language MBA is MUCH cooler than anything that they have and a heck of a lot cheaper! However, in looking at this article, it looks like the high price of tuition is due to school mismanagement and excessive staff compensation.

Ten Business School Professors Who Make $4.3 Million A Year | LinkedIn

Holy cow!!! Why get a management degree from a school that can't manage itself!

[sanantone]

So, are they going to become a for-profit college? Their reputation is going to tank if so.

[Yanji]

Although I do support high compensation for business school professors, (and Thunderbird should certainly try to recruit the best International Business professors, seeing as they are essentially a one-trick pony school) their financial mismanagement shocks me. Depending on the nature of their relationship with the for-profit education company mentioned in the article, I really hope IU will "re-evaluate" their existing joint degree partnership with Thunderbird, and in fact I will encourage them to. I cannot stomach the thought of the Kelley School's good name being sullied by a partnership with a school wading into the murky waters of for-profit education. I think the for-profit partnership is more to help Thunderbird trim organizational fat to become financially stable rather than changing to a for-profit school though, although I'm not exactly sure how they are in such dire financial shape with their sky-high tuition.

With competition from UA and the ever-rising ASU in Arizona though, I can see Thunderbird continue to struggle and perhaps either have to flee to another state or return to being a low-key school in the desert.

[burbuja0512]

I also am not against high business school salaries, but I think that they should be relative to the amount of money the professor could make if he/she were working in the "real world." For example, if you can get a 700k job in the business world, that means that you are able to easily find work as the CEO of a mid-sized company. Perhaps not the Fortune 500, but those guys (well mostly guys anyhow) make millions. However, if you don't have the skills and business savvy to obtain a 700k job, then why should you make that much teaching? I don't think it's unreasonable to pay high dollar amounts to learn from the best.. after all, many successful C-level types make a fortune on books and speaking engagements because people want to learn their secrets. But paying that much to relatively unknown professors whose business world contributions are minimal seems foolish.

I feel bad for the people who've shelled out a ton of cash to get a Thunderbird degree only to find out that it'll be moving into the for-profit world. What a shame that with all of the high salaries paid to business "experts," they couldn't have a school that could run effectively. I think that fact in and of itself is going to greatly hurt the reputation for degree holders. If T-Bird is known as the management school that didn't know how to manage itself, it sounds very bad for the quality of the education that they could have imparted on the students.

In reality, I'm certain that the education has been top notch or they wouldn't have such a solid reputation as one of the best schools for graduate-level international business education, but it still doesn't look good...

However, overall, I believe that the education is only part of what an MBA offers. When you pay that sort of money to go to a prestigious school, you are IMHO also paying for the connections you make. So, maybe the ROI on the T-Bird education isn't what you learn, but perhaps the fact that you're studying side-by-side with people who can help you get your foot in the door at a company you want to work for. However, if the prestige lessens but the tuition does not, this will not be a solid justification to attend their school in the future.

[Yanji]

However, overall, I believe that the education is only part of what an MBA offers. When you pay that sort of money to go to a prestigious school, you are IMHO also paying for the connections you make. So, maybe the ROI on the T-Bird education isn't what you learn, but perhaps the fact that you're studying side-by-side with people who can help you get your foot in the door at a company you want to work for. However, if the prestige lessens but the tuition does not, this will not be a solid justification to attend their school in the future.

Very true. If even public perception is that Thunderbird is slipping (even if it may not be in reality), they will receive fewer quality applicants and their industry connections may be hesitant to hire from them, which will only exacerbate their problems. 90% of MBA students are there to advance their career, so it's important for a business school to at least have the outward appearance of a steady hand on the tiller.

Look at the Marshall school at USC. 10 years ago, Marshall was considered a top 20 business school, but mismanagement has taken its toll and combined with them not having someone to lead their career services department for about half of 2011-2012, they ended up with an atrocious 77% graduate employment rate, far below the 85%+ average at most other top 30 schools. It just goes to show how important it is for educational institutions to be mindful of their public image, because it can lead to a vicious cycle.

[ryoder]

It is silly to think that a business school professor would want to be highly paid or that the school would want to make a profit. After all, it is a business school and business is all about providing services for free right? Not.

[sanantone]

Thunderbird is a non-profit organization that exists to break even, not make a profit. If they can't even break even, how can they expect to make a profit? A business school professor can expect exorbitant pay, but it doesn't mean he or she is going to get it. The professors at Thunderbird are getting the compensation packages that they want at the detriment of the school. If the problem isn't fixed, then Thunderbird will go out of business, and the professors will have to find work elsewhere like the former Hostess employees. It is up to the administration of the school to determine what the professors are worth and how much the school can afford to pay. They are failing to do that, which looks bad for what's supposed to be a good business school. Their compensation is way above the market rate. Thunderbird charges more than enough to stay in business. It's not even close to free. Business 101: they need to cut costs and they may even need to cut tuition to combat the declining interest in their business programs.

Maybe Laureate Education is just there to help them do the managing that the supposedly top business professionals failed to do, but if they go for-profit, they can kiss all of their prestige goodbye. I wouldn't be surprised if Laureate advises them to replace half of their faculty with adjuncts who are paid the equivalent of $10 an hour. For-profits also have the tendency to spend more on marketing than education. Thunderbird definitely wouldn't be worth the nearly $70k they charge now. If they really want to bring in the money, they can always lower their admissions requirements to match those of other for-profits further bringing down the reputation of the school. The alumni who were educated in business by this school are not happy with this sale. I wonder why.

The decision has kicked up a storm of controversy. At least two board members have resigned in protest and nearly 2,000 of the school's alumni have signed a petition contending that its agreement with Laureate Education Inc. would "cheapen the value of the [Thunderbird] degree."

Inside Thunderbird B-school's chronic decline - Fortune Management

Some observers say the deal is evidence of waning interest in the MBA degree. In fact, many of the institution's troubles have been long lasting and self-inflicted, making it a quintessential case study in organizational decline. The new partnership reflects years of deterioration due to increased competition from rivals, lackluster fundraising, insufficient resources devoted to getting jobs for students, and overly generous compensation for some of its faculty.

As much as they charge, how much money do they need to raise from donations? How can they not afford to provide sufficient job search resources for their students? Oh, maybe it has something to do with mismanagement and the outrageous compensation packages. If they don't support their students during the job hunt and they lower their prestige by going for-profit, are they going to expect donations to increase? I guess they won't need them if they end up publicly traded on the stock market. I'm sure shareholders wouldn't put up with those compensation packages. Shareholders only like to pay high salaries to executives. If the professors aren't bringing in the money, then they aren't worth their pay.

It's not unusual for world class faculty to be paid so generously, but the highest paid business school professors tend to be widely known and publicly visible figures at universities that can afford them, not at a troubled school that has been in a long-term fight for survival.

[burbuja0512]

One of my first jobs was at a for-profit English school in Mexico. I loved it- the classes were good and the teaching method was unique and effective. The only problem was that with any for-profit, education is important, but not the primary goal. What this meant was that while most people that entered ended up learning English, many who didn't try very hard or just weren't very talented ended up getting pushed through because they were paying. It was an expensive school with small class sizes and we had a bare minimum number of 4 people per class to maintain a profitable group. So, if there were 3 good ones and one horrible one in a group, this bad person would pass each level regardless, otherwise we would have to shut the class and lose the revenue for all 4 students.

However... this school was not giving degrees, it was just teaching English so it wasn't a degree mill, just a for-profit school that was indeed very profitable. But the problem of profit does lead to the typical issues that you see with UOP graduates. Some of them bust their butt and learn a lot, but others seem to be barely literate.. yes, if they can pay the tuition, they will somehow manage to get a degree. The fact that everyone knows someone like this who is a UOP graduate is what gives the school a really bad reputation.

@Ryoder - yes I do think that B-schools should want profit as should their professors, but not unjustifiably so. Just like any employee can't walk into a company and ask for a 700k salary, you have to bring some serious skills to the organization. While I have no doubt that this particular professor is excellent, the point that he isn't contributing to the academic community or doing much beyond teaching classes does call into question his high cost. At some B-schools, professors will work with students to create start-up companies that serve as projects for the students and create revenue for the schools - these are the types of professors who should be making the big bucks. OR take someone like Michael Porter... I don't care how much he makes, it's probably not enough. I don't know if there's an MBA program out there that doesn't extensively use and cite his work. This is what I'm talking about.. pay a lot of money, but create value at the same time. There's nothing wrong with making lots of money, but it's cases like this with T-bird where the perceived "bang for the buck" just isn't there with some of these professors.

[burbuja0512]

@sanantone - good article, thanks for sharing.

I keep hearing a lot about the "decline of the MBA." Personally, this irritates me and I think it's a load of crap. In looking at the job boards on any decent site such as TheLadders (only 100k+ jobs) MBA's are mentioned as a desired asset in almost all jobs, at least in my field. So, I really can't believe that the MBA is in decline from a hiring perspective.

My personal opinion is that MBAs are still needed and desired, but people don't want to shell out 50-100k for something that is becoming such a common degree. So, I believe that the smart thing to do is that students should go one of two routes: either get the cheapest and quickest MBA you can so that you can check off "MBA" on your resume, or go for something more expensive but more specialized that will provide an ROI in other ways.

The cheap MBA gives you a great ROI because you didn't spend a lot of money but can leverage the MBA in your job searches and yes, ever since I put MBA on my LinkedIn, the number of recruiters contacting me has gone up exponentially. However, if you don't want to do a quick/cheap MBA, the more expensive, but specialized MBA can give you a great ROI. You can make great connections in the program AND your MBA is almost like a totally different degree, with the benefit of being an MBA, which is what employers are asking for.

Here's what I mean. When people ask me what I'm studying, if I just say "MBA" they smile and nod. However, if I say that I'm studying a dual-language, Global MBA with a focus in emerging markets, I will get TONS of questions, not to mention the occasional ooh, ahh, or even a wow. Not to mention the two promotions that I've gotten since I started studying.. not it wasn't just the Global MBA, but I was able to leverage my work experience with the fact that I was studying something relevant to the positions I was applying for to move forward. Yes, my employer is genuinely impressed with my field of study.

There's nothing wrong with a general MBA, but IMHO it's just too generic to pay a ton of money for and this is where the B-schools fall short. Some places have really cool MBA's with unique focuses or even a combined MBA/JD, but overall, I think it's not very wise to pay 50K for a normal MBA unless you are going to a top business school where the connections are worth their weight in gold.

I guess it's like what I've seen mentioned on the forums before in undergraduate discussions where we debate the merits of the Big 3 versus State U degree. If you can go to Harvard, CLEPping may not be the best choice. Or, if you're going to study pharmacy or engineering, you will spend a lot, but you'll also easily make your money back - in these cases, the Big 3 may not be the best choice. However, if you're going to go to State U and pay 40k for a four-year liberal arts degree (that probably takes you 5-6 years to complete,) CLEPping is MUCH smarter and a much better use of your time and money.

[Daithi]

Here is another article on Thunderbird that is rather interesting (article from WSJ). One of the things the article points out is that Hult International Business School and Arizona State University offered to have Thunderbird join Hult's roster of global campuses, but "Hult also intended to cut Thunderbird's board of directors to 10 from 28, with five directors each from Hult and Thunderbird." The Thunderbird board rejected that proposal. Apparently, voting yourself out of a job wasn't appealing.

My own personal opinion in regards to MBAs is that there are only a few schools worth the huge cost (Harvard, Stanford, Wharton, Booth, etc.). I'd say only around 10 to 15 schools are really worth the big money, but an argument could be made for about 20 to 25 or so. If you can't get into one the top schools then you're probably much better off getting the cheapest MBA you can as a "check off box" and rely on actual experience instead of schooling.

Actually, with the exception of physicians, I believe most degrees work like this. If you can get into a school like Harvard, Yale, Stanford, etc. then GREAT. If you can't then you're best bet is probably keeping your costs as low as possible and then set the world on fire based on your performance in your chosen field. (If you want to be a physician then get into any medical school that will accept you.)

Schools like Thunderbird and Babson, who are more specialized, are harder to classify in my view of education (which means my beliefs may be all wet). However, I have no doubt that a school like Thunderbird cannot afford to take hits to their reputation. If they lose their reputation as the top school for International Business they'll never get it back.