MBAs: the holy grail?

It used to be generally agreed that the only thing you needed to manage a business successfully in the UK were the letters ACA after your name. But is being a fully qualified accountant – from the ICAEW or another institute – enough these days? Wouldn’t another business-orientated qualification help?

As David Tyrrall, senior lecturer in accounting at Cass Business School in London, points out, the UK has always been something of an ‘outlier’ by regarding training in accountancy as a business education.

In Germany, for example, that role might be taken by a technical education and subsequent training within a company, and in the US by an MBA.

The question is, is the MBA – the Holy Grail for many young people looking to move into top-flight business jobs – now the natural progression from the ACA or other accounting qualifications in the UK? Many believe that it is.

‘If you want to make your way to the top of a large business – not just as CFO, but as chief executive or chairman – then you need a rounded business education and doing that on the job is not the best way,’ says Andrew Stark, Coutts professor of accounting and finance at Manchester Business School.

‘An MBA lets you see the big picture and not just your bit of it.’

Ray Ball, Sidney Davidson professor of accounting at the University of Chicago Graduate School of Business in the US, has a slightly different take on the issue.

‘Is accounting a good background for a manager? It depends on the company you’re managing,’ he says. ‘I don’t think it’s a good idea for a start-up – you don’t see many CEOs with an accounting background in Silicon Valley. But for mature companies in stable industries then I think accountants do have special skills that they bring.’

Sheryl Miller, finance manager of operations at energy supplier npower in the UK, qualified as an ACA at Ernst & Young and then joined IT group EDS. It was while working in areas such as project evaluation, that she felt the need for an MBA. ‘I saw it as a way of building my business toolkit, in areas like marketing and strategy, and being able to understand what people in other functions were saying,’ she says.

Even if people see their career firmly routed on the practice side of the fence, many believe that there are reasons why an MBA would be more than just a good idea.

Modern accounting firms are very large businesses and they need to be managed by people who know about strategy, managing people, marketing and so on. In addition, they have to deal with their clients and understand the issues facing senior people running large and complex organisations.

Mark Ward, a financial services partner at Deloitte in London with an MBA, agrees. But he believes that there is still no substitute for experience. ‘I would agree that an MBA gives you an academic framework in which to place that experience and also a language and structure to address these issues. And even in the line that understanding can give you a context for client problems that is quite powerful in delivering a professional service,’ he says.

Raymond Maddon, executive director of learning and professional development at the ICAEW, has a career background in business schools and, perhaps not surprisingly, is very much in favour of an MBA as a general management qualification. But he points out that most professional service companies have a similar problem of recruiting from a technically-expert elite.

The issue, Maddon says, is whether the very broad business coverage offered by an MBA is appropriate. He favours the increasing number of specialised masters programmes, such as the masters in finance offered by London Business School.

Indeed, the ICAEW recently teamed up with Oxford University’s Said Business School to offer chartered accountants a diploma in financial strategy aimed at broadening their knowledge and sharpening their senior business skills. The diploma will cover some of the quantitative subjects included in an executive MBA and count towards a Said MBA.

The problem in choosing an MBA is that there are hundreds of programmes in the UK, and very few of them are specifically tailored for qualified accountants. There are exceptions. Manchester Business School runs a series of accelerated distance learning programmes aimed at professionals, including accountants. Bear in mind, though, whichever you choose can have an impact on your career.

David Tyrrall at Cass draws a distinction between people working in big accountancy firms such as PwC or KPMG and those in a corporate accounting function, as well as between those who want to make a complete career switch outside the accounting function and those who want to progress within it.

For accountants in practice, he believes that a full-time MBA is the ideal vehicle for a radical career change. ‘Full-time MBAs are very expensive and people who take them are announcing that they are investing in themselves,’ adds Professor Stark at MBS. He argues that a full-time MBA is basically a way of shifting your career out of accountancy.

For the others, a part-time or distance learning MBA will probably signal to your superiors that you have an interest in progressing to a higher managerial function.

Also, while some business schools allow qualified accountants to waive, or be exempt from, accounting courses, which can make up a significant amount of an MBA programme, others insist that all students take all courses.

Perhaps surprisingly, many believe this is good for accountants. David Tyrrall says that putting accountants into groups where they have to help others to understand the subject can be extremely useful. ‘You can find that you only understand a subject when you start to teach it, when you have to explain it to non-technical people,’ he says.

There are, of course, other advantages to an MBA. Professor Ball at Chicago Graduate School of Business points out that there is a lot of on-the-job learning involved in accountancy. ‘An MBA is a way of accelerating that and of changing the way you think. Accountants tend to think in a very particular way.’

The proof of the pudding, as they say, is in the eating. Deloitte partner Mark Ward says his MBA was a fun and challenging experience, but he believes its main value is in allowing you to step outside the daily client/office routine and explore business issues with like-minded professionals from a mix of disciplines. ‘I think it depends on what you want to do and what stage you are at in your career. But I’m not sure that ultimately it makes an awful lot of difference.’

Sheryl Miller believes that having an MBA really accelerated her career. ‘People do value an MBA when they see it on your CV. It has certainly helped me to get where I am now. Although the ACA qualification has changed, I still think an MBA is almost a must to broaden your experience.’

But not everyone is convinced. A recent poll of ICAEW members showed that less than 5% believed they needed an MBA. The institute is keen to point out that while a large majority of FTSE100 CEOs and FDs have the ACA qualification, many fewer have an MBA.

‘I may be wrong, but if you want to progress in finance and business generally then I think the ACA is still a strong-enough qualification to do that,’ says Mark Ward at Deloitte. ‘The MBA probably makes a marginal difference.’

George Bickerstaffe is the author of Which MBA? – an annual guide to MBA and executive education programmes published by The Economist Intelligence Unit

Feeling the benefit

After Daniel Cavanagh graduated from Leeds University in 1995 with a degree in economics, he joined Cooper Lancaster Brewers, a regional accountancy firm in Manchester with about 30 partners, and took a further four years to get his ACA qualification, working, fairly traditionally, first in audit and then in the financial services area, compliance and then M&A.

Though enjoying the work he felt he lacked particular business skills and, working for a firm with young partners, he felt it was unlikely his career would progress as he hoped. And in any case, he says, ‘I had always wanted to do an MBA.’ He left CLB to join MBNA, the credit card and financial services group, in Chester.

From there, he again left to pursue the long-admired MBA at Manchester
Business School, joining the full-time MBA programme in September 2003 and graduating in March 2004. Subsequently MBNA welcomed him back and
he now works in Dublin as portfolio development manager.

The MBA, he says, provided him with the business skills toolbox he was looking for
and was a thoroughly enjoyable experience ? ‘I’d do the MBA again tomorrow,’ he says. But he’s also keen to extol the virtues of his chartered accountancy qualification. ‘The analytical and diagnostic skills I was trained in are second to none.’

And surprisingly, after three years as an undergraduate, another four training as an accountant, and studying full-time for 18 months to become an MBA, he still regards the MBA as the hardest of all.

‘Even though I was working in audit and studying outside of hours, when I was training as a chartered accountant, the broadness of the MBA programme was a real challenge,’ he says. Though, interestingly, he adds that he uses his MBA and accountancy training about 50/50 in his current job.

And, potentially, he adds, he may one day even go back to accountancy. ‘Perhaps eventually,’ he says.