Yesterday, we started a thought experiment in which we oversee a medium-sized computer company.

[L]et’s assume that our yearly budget has $5,000,000 set aside for employee training.  Each June we sit down and determine the employee training programs we will offer for the next fiscal year.  Each year we invite two consultants - Tim the Technology Consultant and Mark the Management Consultant - to give us presentations about the proper distribution of these training funds between technical workers and managers.  Tim always recommends spending 100% of training funds on technical workers; Mark always advocates 100% spending on managers.

What kind of arguments do you suppose Tim and Mark will make to bolster their case?

Today, Tim the Technology Consultant speaks to us about the need for technical training.  What are his main arguments?

• Quality of your product. Widgets are what you sell.  They are the source of all of your revenue.  Therefore, the workers who are most instrumental to your success are the widget-makers.  If they are well-trained and do a good job, you have a good product that is easy to sell.  If they are poorly-trained and do a poor job, you have a poor product that is harder to sell.
• Increased efficiency. The more training you provide to your workers, the more likely they are to avoid harmful, inefficient practices and to pursue beneficial, efficient practices.  This will reduce your costs and enable you to compete more effectively with other widget-makers.
• Measurability. You can measure the success of your training dollars.  Widget-making is easy enough to track.  Say it takes your employees 5 minutes to produce a widget.  After training, you can expect that time to go down; or, if it doesn’t, you can change training methodologies.  This allows for more effective training programs.

These are strong reasons to prefer technical training programs.  But do they necessarily eliminate the need for management training?  We’ll see tomorrow.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

We ended yesterday’s post with the following promise:  “Over the next few days we’ll investigate this crucial issue of how higher education provides value, and whether such value can, in fact, be measured.”

In order to do this, let’s conduct a thought experiment.  Let’s pretend that we own a medium-sized computer company.  We manufacture wonderful devices (which we will refer to as “widgets”) that make any computer faster, better, smarter, etc.  The majority of our workforce (95%) are involved in the manufacturing, packaging, and shipping of those widgets.  They work in factories producing the various materials for the widgets, and then pack and ship those widgets to buyers.  These tasks are not particularly easy, but they are technical in nature - that is to say, based upon a defined set of skills or ideas, mastery of which allows one to perform the particular task.

The other 5% of our workforce are involved in the administration and mmanagement of our company.  They handle human resources, finance, marketing, research and development, etc.  The skills employed by these workers are mmanagement skills.  Notably, they are not based upon a defined set of skills or ideas.  One skill set is required in certain situations, another skill set in different situations - and the situations (and therefore the skill sets) are constantly changing.

(QUICK NOTE:  I realize that this thought-experiment is over-simplified and indeed quite unrealistic; the point is not to be realistic but to investigate the relationship between technical and management skills in as “pure” a context as can be imagined).

Now, let’s assume that our yearly budget has $5,000,000 set aside for employee training.  Each June we sit down and determine the employee training programs we will offer for the next fiscal year.  Each year we invite two consultants - Tim the Technology Consultant and Mark the Management Consultant - to give us presentations about the proper distribution of these training funds between technical workers and managers.  Tim always recommends spending 100% of training funds on technical workers; Mark always advocates 100% spending on managers.

What kind of arguments do you suppose Tim and Mark will make to bolster their case?

Tomorrow and the day after tomorrow we will hear from both of them.  Before we do, however, let’s ask ourselves this question:  how would we divide the training money at first glance - that is, before any detailed analysis?  Do we think that the technical side is important enough to demand 100% of our training funds?  Or do we prefer to fund management training?  Or do we feel that both are deserving of funding, in some mix (and what is that mix)?

Jot down your own, personal opinions.  We’ll return to the subject tomorrow.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

Readers of the first three posts of this series may be getting impatient.  Yes, you may say, Graduate school is a beneficial thing.  Tell us something we don’t know.

The real question isn’t whether providing a graduate school education to its employees or citizens can help a business or a nation.  We all agree, I think, that it can.  The real question is whether providing such an education can help as much as doing other things, like spending money on more basic educational and training programs that are a lot, lot cheaper.

This is the main challenge to the idea that nations and / or companies should spend a significant amount of resources to send citizens and / or employees to graduate programs.  As such, I’ll spend today’s post fleshing it out.

I found the following information in a Working Paper by Megan Crowley and Devesh Kapur of the Center for Global Development:

Tertiary education has received short shrift in the international development community stemming from the belief that it yields lower social returns relative to other investments, especially primary and secondary education and therefore should receive fewer public resources. Investments in tertiary education are often considered regressive, reproducing existing social and economic inequalities.

Crowley and Kapur go on to cite World Bank studies from the past few decades that, among other things, include the following information:

• rates of return for higher education in developing countries were on average 13 percent lower than the returns from basic education
• a review of 98 countries from 1960-1997 found that the typical estimate of the rate of return from primary schooling was 18.9 percent, while for tertiary education the return was just 10.8 percent

In addition, primary education usually provides benefits to citizens across the socio-economic spectrum, whereas higher education programs “seem to be yet another case of misplaced priorities . . . [S]carce public expenditures devoted to it have been decried as yet another case of regressive income transfers benefiting developing country elites.”

In other words, there’s a strong case to be made that higher education, while certainly “nice,” does not produce as many benefits for society as primary or secondary systems of education.

Is there another way of interpreting the data cited above?  Yes, there is, and Crowley and Kapur eventually go on to conclude that higher education does have an important role to play:

While the returns to investment in basic education are visible and nearly immediate, the returns to higher education are far more elusive and difficult to measure.   Re-evaluations of the data suggest that standard estimates of social returns to tertiary education do not accurately reflect the positive public externalities . . .

In other words, higher education is just as important as primary or secondary education, but its positive impacts are harder to define and measure.

To recap briefly:

1. You can make a strong case based on economic data that investments in higher education are not as valuable as investments in primary or secondary education
2. There is a possibility, however, that such data does not accurately capture the true value of higher education

Over the next few days we’ll investigate this crucial issue of how higher education provides value, and whether such value can, in fact, be measured.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

For the past two posts we have talked about empirical examples of nations, organizations and businesses sponsoring citizens or employees in foreign graduate programs.  We have suggested that the mere fact that sponsors such as these do invest in graduate education shows that such education provides significant benefits to these sponsors.  What can this tell us?

At the beginning of this series of posts, I advanced the hypothesis that “the education of future economic and political leaders abroad in graduate-level programs is a necessary (but not sufficient) step in any country’s continued economic and political development.”  Have I proved that this is the case?

Hardly.  If these degrees are so “worth it,” as I’ve tried to show in the past few days, why doesn’t every nation/organization/business sponsor their citizens/employees to get one? Yes, many thousands of international students attend U.S. graduate schools on fellowships sponsored by their home countries . . . but many millions more don’t.  Yes, thousands of executives are in sponsored MBA programs . . . but millions more aren’t.

We’ve created a choice between two explanations for the existence of sponsored fellowships to foreign graduate schools.  Either:

1. Graduate programs provide such fantastic educational value that sponsoring a citizen or employee in them makes sense for nations, organizations or companies; OR
2. Nations, organizations or companies that sponsor citizens or employees in graduate programs are mistaken in doing so.

We can turn this around, however, to explain why countries, organizations or businesses don’t sponsor all of their citizens / employees.  Either:

1. Graduate programs do not provide enough educational value to make it worthwhile to provide a graduate-level education to all citizens / employees; OR
2. Nations, organizations or companies that do not sponsor all citizens or employees in graduate programs are mistaken in not doing so.

What’s going on here?  Having established, over the past two days, the empirical fact that nations, organizations and businesses see value in graduate programs, tomorrow we must begin to ask what exactly that value is. What is it about graduate education that creates a benefit to the society, organization or business in which alumni of these programs work?  What are the limits of a graduate education that make it undesirable to provide graduate-level education to everyone?  What is the correct amount of support for a government or business to provide towards graduate programs?  Only when we answer these questions can we get a reliable picture of how graduate-level education can assist in the development of a nation.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

If you are thinking about applying to graduate school this year, here are five New Year’s Resolutions I propose that you adopt:

1. I will not procrastinate. Every year, hundreds of thousands of people who should be applying to graduate school don’t. Why?  They’re too busy . . . um, I don’t know, watching television? . . . to fill out their applications.  You may think you have a lot of time left until next year’s application deadline.  You don’t. It takes a lot of time and effort to assemble a competitive application for graduate school.  Don’t be lazy.
2. I will evaluate my life’s priorities. The number one mistake of most application essays, in my view, has nothing to do with the essay itself.  It has to do with the writer of the essay.  The essay comes off as bland and uninspired not because the writer is poor, but because the writer is bland and uninspired.  Long story short, you can’t convince a selection committee of why you want to go to graduate school if you don’t know why you want to go to graduate school.  So think about your life, your goals, and the way in which grad.  school can help you accomplish them.
3. I will get organized. Each school or scholarship program you apply to will have different deadlines and different requirements for documentation.  Now is the time to buy some folders and start getting organized.

There’s obviously a lot more to getting into graduate school than just the above.  But if you stick to these three resolutions, I promise you, you’ll go a long way towards getting into a good program.

Yesterday, we looked at Harvard’s John F. Kennedy School of Government, and noted the large number of students that are sponsored at the school by nations, businesses or organizations.  Then we asked, “If a graduate-level edcuation is not worth investing in, why do all of these nations, businesses and organizations sponsor these students?”  Today we delve deeper into the question of sponsors by investigating the reasons behind businesses paying for managers to go through MBA programs.

Almost every business school website contains information for businesses who wish to sponsor their students in an MBA program.  Picking one site at random - IMD, in Switzerland - we find the following reasons why it makes sense for businesses to sponsor their employees:

You can develop your high-potential people into internationally experienced, globally oriented managers through a series of job rotations and projects over a number of years. But with the IMD EMBA, future leaders can get there faster:

• They’ll discuss business trends, concepts and challenges with people from all over the world. They’ll work in teams within that same diverse group.
• The curriculum is designed to develop a global orientation and an appreciation of the challenges of running a business in a rapidly changing global environment.
• Discovery expeditions to very different but important locations provide intense exposure to how business works in different parts of the world and to important business topics such as globalization and innovation.

In other words, “Give us money to train your people, and your people will be better at doing business.”

Given what the Executive MBA Council calls the “explosive growth of Executive MBA Programs,” it seems that more and more businesses are buying into the idea.   Or are they?

Although it is true that over one-third of Executive MBAs are fully-sponsored (meaning that the employer covers all costs), it’s also the case that the percentage of MBAs that are paid for has been in gradual decline.

This 2004 article from the Wall Street Journal documents that start of the decline:

A decade ago, full sponsorship of an employee’s master of business administration was standard practice at many big companies. Since such programs are designed for executives who remain at their jobs while studying for their degrees, companies figured the skills employees gained were worth the cost. But along with generous health-care benefits and reliable raises, corporate sponsorship of pricey executive degrees is disappearing as companies trim costs.

Now, some will read this and conclude, “Oh, so sponsoring an MBA doesn’t really make sense for a company.”   Let’s not be hasty.

What the article points to is that, given external factors such as rising costs, businesses are less likely to sponsor employees for an MBA.  In essence, these businesses are deciding that providing managers with MBAs is not as important, from a business perspective, as, say, providing their employees with health insurance.

In other words, the decision to sponsor employees in MBA programs is market-driven.  Businesses make a calculation of whether the investment in a particular employee makes sense relative to other potential investments.  Then, and only then, do they decide to sponsor an employee in a graduate program. This is an important decision, especially in today’s economic climate.  Businesses that inefficiently deploy resources are likely to suffer quick and possibly catastrophic consequences.

So yes, the WSJ article shows that businesses are adjusting their valuation of sponsored MBAs downward.  But the fact that so many MBAs are still sponsored should show us that there is quite a lot of value in the degree - not only for an individual and his or her career, but for the business that employs them.

This is unlike our topic yesterday, which involved nations or organizations sponsoring students for degrees in Public Policy.  In that case, we could at least imagine that the sponsors were simply mistaken in the allocation of their resources.  But businesses that make bad decisions are inevitably punished by that sternest of taskmasters, the market, and so the fact that so many businesses still sponsor MBAs is a powerful demonstration that this graduate degree, at least, is “worth it.”

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

Yesterday, in the initial post of this series, I promised to advance the hypothesis, “The education of future economic and political leaders abroad in graduate-level programs is a necessary (but not sufficient) step in any country’s continued economic and political development.”  In today’s post I look at an empirical example of a graduate program that claims to provide future leaders with exactly the skills they need to help their countries make such progress:  The John F. Kennedy School of Government at Harvard University.

The dean of Harvard’s John F. Kennedy School of Government writes that “at the heart of our school lies an abiding commitment to advancing the public interest by training leaders.”  This prestigious graduate program’s list of notable alumni indicates that it has had some success in its mission.  Alumni include Ministers, Ambassadors, Senators and Presidents.  Let’s hear again from the dean, Dr. David T. Ellwood:

Our graduates include: U.N. Secretary-General Ban Ki- moon; World Bank President Robert Zoellick; Mexico’s President Felipe Calderon; Singapore’s Prime Minister Lee Hsien Loong; the first elected female president in Africa, Liberia’s President Ellen Johnson Sirleaf; and Hong Kong’s Chief Executive Sir Donald Tsang.

According to the Kennedy School’s website, graduate-level education is a necessity today because “the greatest problems confronting our world today – from nuclear proliferation to climate change and entrenched poverty – are complex, interrelated and urgent.  At Harvard Kennedy School,” the site goes on to proclaim, “we ask what we can do to solve them.”

Students at the Kennedy school come from 93 different countries.  403 students are “international,” a figure that represents almost 45% of the student body.

It’s not an inexpensive school.  The yearly cost for a student is roughly $65,000.  The 901-member student body contributes 38.7 million dollars per year to the school’s operating budget.  Another $24.8 million comes from “sponsored revenue,” meaning funds provided by organizations in order to support students at the school (for example, the Kosovo American Education Fund currently has two students at the Kennedy School, and therefore KAEF makes up a tiny portion of that 24.8 million).

I bring up the Kennedy School and its “sponsored revenue” as a starting point in our discussion for a simple reason:  to demonstrate that organizations and nations are very willing to spend vast amounts of money providing  their citizens or their employees with a top-flight graduate education.  They obviously believe that the value added by the education at the Kennedy School is “worth it” - meaning that the benefits of providing that education to a particular student will outweigh the short-term monetary cost.

Are they right?  It seems to me that we are faced with two options in evaluating the Kennedy School and their students.  Either:

• The Kennedy School provides an education so valuable that the high costs are worth paying.  The “returns” to a country - expressed in the reform a graduate is able to generate upon returning to their nation or organization - are large enough to justify the large costs; OR
• The nations and organizations that support students at the school are mistaken.  The value added by the education provided does not outweigh the costs.  They are wasting their money.

I strongly suspect that the correct option is the first.  And I want to point out that any argument that providing graduate education is somehow a waste must answer the following question:  “If investing in graduate education for your citizens or employees is truly a waste of money, why do so many organizations do it?”

I believe that in fact providing graduate education is not a waste, and that the returns a country or organization receives from investing in one of its citizens or employees make schools like the John F. Kennedy School a very worthwhile investment.

What about you?  Let’s conduct a small thought experiment.   Let’s say that a distant relative, of whom you’ve never heard, sadly passes away and leaves you $1 million in his or her will.  There is a condition, however.  In order to claim the inheritance, you must immediately give half of it ($500,000) away to the education of your nations’ citizens.  That education can be at any level, at any institution, in any country, so long as it goes directly to providing student learning.

How much of that $500,000 will you give to sponsor graduate students, if any?  And of that amount, how much will you provide to sponsor graduate students at “elite” foreign universities?  (Please provide any answers and reasoning in the “Comments” section, and I’ll share your thoughts in future posts).

My guess is that most people, when faced with the above thought experiment, will respond by giving very little to graduate students, and almost nothing to sponsor graduate students at foreign schools.  My guess is that most people would direct the money to primary and secondary schooling.  My guess, in other words, is that most people do believe that the organizations and nations sponsoring students at The Kennedy School are, in fact, mistaken -  that the education provide by the School, while nice, is not nearly as important, or as good an investment, as more “basic” education for a larger number of people.

Having framed the question in this way, tomorrow we’ll investigate it further by looking at businesses that invest heavily in education, and the reasons that they do so.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

Many of the readers of this blog assume - correctly, in most instances - that attending a graduate school program in the United States will be beneficial for their own career.  Is there reason to believe that your graduate-level education abroad would be beneficial to your country as well?

Over the next two weeks we’ll be investigating this question in greater depth, and delving into many of the complicated questions surrounding a nation’s political and economic development.  At the outset, let me offer this sure-to-be-qualified hypothesis:

The education of future economic and political leaders abroad in graduate-level programs is a necessary (but not sufficient) step in any country’s continued economic and political development.

I italicized the word any because the provision of graduate-level education to an economy’s “managers” seems to me to be just as important for the so-called “developed” world as it is for the so-called “developing” world.  This is not one of those development topics where we can draw a clear line between countries that “have” a resource and countries that do not “have” it, and have to be instructed on how to “get” it.  This is for the simple reason that a person’s intellectual capacity can not survive their own death; therefore, each generation must be educated anew.  An infant in the United States does not have more management skills than an infant in the so-called “developing world.”  Those skills must, in both cases, arise through an educational process.

Over the next few weeks, we’ll see how including a graduate school education in that process can lead to positive outcomes not only for the individuals who are the subject of that education, but also for their broader society.

Other posts in this series:

• Introduction
• Part One
• Part Two
• Part Three
• Part Four
• Part Five
• Part Six
• Part Seven
• Part Eight

It’s almost that time of year when we all get out a piece of paper and write down our New Year’s Resolutions.  Will your list this year include, “Apply to Graduate School?”

Before you even think about starting the application process, you need to think about whether you really want to go to grad. school in the first place.   As a starting point for thinking about this, we here at KAEF wanted to provide five questions for you to mull over:

1. What do I expect to gain from graduate school? What is it you hope to get out the graduate school experience?  Is it just the degree?  Is it a special form of knowledge?  Do you want to advance your career?  Get a higher salary?  Visit a new country?  Meet new people?  It’s important to be honest with yourself in compiling a list of expectations.  Once you have a good picture of your expectations, move on to question #2.
2. Is there any evidence that my expectations are realistic? Let’s say you expect a graduate degree in Psychology to snag you an extra 10,000 a year in salary.  Is there any reason to think that your expectation conforms to reality?  If you’re interested in an MBA, then you can reasonably expect to make more money - but what if you’re interested in an MPH?  Take your entire list of expectations and do research on each of them.  Make sure that your idea of what graduate school will give you is an accurate one.  Chances are you’ll have to refine your expectations considerably.  Then move onto question #3.
3. Is there an easier way of achieving my goals? Graduate school is hard. Like, really hard.  No, really.  It’s hard.  So hard that even applying to it is hard.  So before you go to all the trouble, you might want to ask yourself if there isn’t an easier way of achieving your goals.   For example, if you are interested in spending time in another country, well, a tourist visa is probably a better bet than a degree program.
4. Are there specific graduate programs that meet my expectations? Now that you have a list of reasonable expectations, and you can’t see any easy, straightforward way of achieving them, go ahead and research graduate programs.  Yes, research.  This is the point where most people say, “What, I have to actually spend time researching this?  But that’s so hard!”  If that’s your reaction, stop reading right now because graduate school is not for you.  If, on the other hand, you feel interested - even excited - in the prospect of checking out programs, then go ahead and do it.  Make a list of the programs that appeal to you (be sure to note why they appeal to you as well).
5. Do I have the time to devote to applying for graduate school? Even if you’ve found a program that perfectly meets your (reasonable) expectations, now may just not be the time for you to apply.  As I mentioned above, applying to grad. school is NOT an easy task.  If you have something important going on in your life, maybe you should think about waiting until next year.  After all, graduate institutions are not going anywhere!

If, after asking these five questions, you feel like applying to graduate school is the right choice for you, then do it!

Today is Christmas in the U.S., and so the KAEF Blog will be limited to this small post wishing you a very Happy Holidays!

See you again tomorrow.