Why Canada's MBA programs are beating American competition - Macleans.ca

Why Canada’s MBA programs are beating American competition

Applications to American MBA programs are falling. In Canada, they’re skyrocketing. What’s behind the trends? (Hint: It’s not just about Trump.)

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Students at the Rotman School of Management in Toronto, Ont., in 2018. (Hannah Yoon)

After overseeing IT projects in Alaska’s oil and gas industry for seven years, Zach McMahon had begun wondering about the future of his sector. So, with gas prices in freefall, the 32-year-old Kansas native and his partner, Tess Cecil-Cockwell, an engineer, decided to do a professional reboot in 2015.

They both applied to graduate business schools. Offers of admission arrived from Tufts, in Boston, as well as Western University’s Ivey Business School and the Rotman School of Management at the University of Toronto.

Despite having graduated from Princeton and worked in the U.S., Cecil-Cockwell’s family lives in Toronto. Given the couple was expecting a child, they chose a Canadian program over Boston, where they had no social network.

The decision to return to Canada, McMahon notes, predated the election of Donald Trump (he’s frequently asked whether U.S. politics was the motivating factor—it wasn’t). Once in the program, the two met students from all around the world. The ranks of international students have grown by 90 per cent since 2014, Rotman officials say, with international or foreign-born students accounting for 60 per cent of the enrolment in the 2020 MBA program.

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Rotman’s story is reflected more broadly in the rapidly diverging business school application stats on either side of the 49th parallel. Canadian faculties saw a 7.7 per cent increase in applications between 2017 and 2018, according to the 2018 application trends survey conducted by the Graduate Management Admissions Council (GMAC). (According to Statistics Canada, there are roughly 100 MBA programs in Canada offered by 50 schools.) Applications to U.S. schools, by contrast, fell by 6.6 per cent, according to GMAC. That study found almost two-thirds of Canadian business schools reported a year-over-year increase in applications, while only a third of American schools did. Moreover, some of the most sought-after MBA programs in the U.S. are the ones reporting declines, including the University of Chicago (8.2 per cent drop), Northwestern (2.7 per cent), Harvard (4.5 per cent) and Stanford (4.6 per cent). “What we’re seeing is a long-term trend, which is declining interest from students across the world to study at business schools in the U.S.,” GMAC president Sangeet Chowfla told the Chicago Tribune. Once-prestigious American MBAs are losing their lustre, while students—and corporations—around the globe now appreciate what Canada offers. Among those who opted for graduate business education in the Great White North, many cite factors such as Canada’s political and economic stability, the health care system, quality of life and postgraduate opportunities to secure work visas.

Avani Singh, who comes from Jaipur, India, and is in her third year of a Rotman undergrad degree, adds one more explanation to the list: Toronto’s cosmopolitan vibe makes it a “very accepting” place to both study and live, especially for young immigrants raised with more cultural restrictions. But, she notes, the dark mood in the U.S. has also played a significant role for her, her parents and many others in her cohort who chose Canada. “In my year, Trump was always a very big factor,” says Singh, 20, who heads U of T’s Indian Students’ Society. “You don’t want to be involved in all the protests and the mass shootings.”

Avani Singh, an international student from India, chose to study in Canada at the Rotman School of Management. (Hannah Yoon)

But it would be misleading to solely blame current events for the woes of American schools. Two years ago, in fact, GMAC surveyed about 10,000 international students for their views of U.S. MBA programs. Roughly half felt the tuition was too costly, and almost the same proportion were concerned about hefty tuition debt after graduation. Their preferences were also determined by non-monetary factors. Fifty-seven per cent wanted to study outside their home country, and a third sought “global” careers.

Sure enough, a great many MBA and other business program applicants in Canada now come from away. All the interest from students around the world is accelerating in lockstep with the ebbing cachet of an American MBA. “The majority of applications received by Canadian and European programs this year are from international applicants,” the GMAC study noted. By contrast, international applications to U.S. schools dropped by 10.5 per cent. (GMAC sent questionnaires to almost 2,600 business schools around the world, and the survey reflects feedback from 363 faculty and 1,087 graduate management programs.)

The trends in both countries, it’s worth saying, predate Trump and the noisy anti-immigrant sentiment that has gripped parts of America since he began his run at the presidency. But the Trump administration’s restrictions on specialized work permits, coupled with Ottawa’s decision (taken late in Stephen Harper’s term) to relax work visa rules for international students, graduates and their spouses seem to be bearing fruit. “They are very much attracted by Canada,” says Michel Gendron, dean of the Laval University’s business program and chair of the Canadian Federation of Business School Deans (CFBSD). As Singh and others point out, the generous terms for work visas granted to graduate students provide a “relatively easy path to PR”—permanent residence status.

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According to Paul Davidson, CEO of Universities Canada, Canadian post-secondary institutions have seen increases in applications across a range of professional programs from countries like Mexico and India. Students are looking askance at the mixed signals coming from both the U.S. and the U.K. in the Brexit era. “There is a moment Canada is experiencing right now,” he says. “There’s brand value in being a place that is seen as open and diverse.”

Canadian policy-makers aren’t just capitalizing on the nativist sentiment in other countries. They have also glommed on to the realization that the way to attract direct investment to Canada is by providing a highly educated and globally minded labour force. “This is a recognition by government that talent is becoming the defining competitive advantage,” says Tiff Macklem, Rotman dean and former deputy governor of the Bank of Canada. “Instead of offering corporate subsidies, let’s create a deep talent pool, and the best companies will come.”

Davidson points out that MBAs who are trained in Canadian classrooms may bring a whole other set of soft skills that multinational corporations require. He recalls a recent conversation with the CEO of a global firm with its headquarters in France but a large division in the U.S. The CEO liked to recruit MBAs here, and often described his Canadian managers as the “blue helmets” for a firm with operations straddling two very different working cultures.

However, the good news for Canada comes with some salient caveats. For one thing, GMAC’s survey found that domestic applications to Canadian graduate business programs are actually falling, and not by a small amount—11.2 per cent between 2017 and 2018. Gendron also cautions that applications don’t necessarily lead to letters of acceptance, so the mix of students enrolled may not reflect the statistical trends in the GMAC survey.

Nor does the slump in applications to U.S. MBA programs necessarily reflect a waning interest in graduate business education. As Gregg Schoenfeld, GMAC’s senior research director, argues, enrolment in these programs is “counter-cyclical”: when the economy is purring along—as it is now in the U.S.—people are less likely to step aside from their careers to obtain a costly but career-accelerating MBA.

Yet Macklem, an economist by training, isn’t entirely convinced by that explanation. “I don’t think [the decline] is entirely cyclical,” he says. He cites stats showing that the number of people writing graduate aptitude tests, or GMATs, has been declining for some time. The trend, Macklem adds, was already apparent during the post-crash downturn a decade ago, which suggests other drivers.

Part of the reason has to do with problems that Canadian business school administrators also face, which is the maturation of the North American MBA market and growing global competition from emerging MBA programs in Asia. Some of the newer programs are very competitive, but less expensive than the elite U.S. schools. Says Schoenfeld, “There’s more global competition for talent.”

A second important factor is marketing. While Canada’s multiculturalism and its relaxed immigration rules are certainly inducements, it’s clear that Canadian business school officials are promoting their programs around the globe. At the same time, they nurture global alumni networks. Antoinette Molino, the associate director of admissions for McGill’s Desautels Faculty of Management, says officials there have stepped up their recruitment activities in regions like Europe and Latin America, a move that seems to have coincided with increases in applications from South and East Asia over the past three years.

Being located in Montreal—long considered to be one of North America’s great student cities—is obviously a draw for some applicants to Desautels. But Molino adds that McGill’s MBA is a relatively small program—there are just 63 students enrolled this year—which also seems to be an increasingly attractive feature for international students seeking a differentiated experience.

Molino’s observation underscores yet another highly relevant factor in the ebb and flow of applications to global MBA programs. In recent years, business faculties, sensing a mature market and mounting demand among employers for other sorts of management skills, have raced to introduce both specialized master’s programs and specialized MBAs.

These programs now come in a wide and growing variety of flavours. There are graduate-level degrees in fields as diverse as project management, sustainable commerce, data analytics, leadership, supply chain management, entrepreneurship and management finance. Some are ordinary master’s degrees available for anyone with an undergraduate degree, while others are focused MBAs that require applicants to bring work experience.

South of the border, says Schoenfeld, one of the few bright spots for enrolment lately has been the uptick in demand for such programs. While he says the conventional MBA remains the most popular choice, students are now shopping around for alternatives. “Counter to the overall trend for U.S. programs,” the GMAC report notes, “more master’s of data analytics programs [reported] international application growth (61 per cent) than domestic application growth (47 per cent) this year.”

In Canada, many business schools have also moved to establish these kinds of master’s programs in recent years. Since 2015, Rotman has created graduate degrees in financial risk management and management analytics, as well as a global executive MBA, which has attracted a large cohort of applicants from fields like health sciences and medicine. “We’ve seen a very strong response to all of these,” says Macklem, adding that the executive MBA module is delivered in Silicon Valley and Singapore.

At the University of Guelph’s college of business and economics, one specialized MBA—in sustainable development—saw a 27 per cent jump in applications in the past year, says dean Julia Christensen Hughes, who is vice-chair of the Canadian Federation of Business School Deans. At the same time, she adds, other focused programs, like Guelph’s master’s in leadership, are drawing from larger pools of applicants in a range of non-business fields, including government, health care and even religion. Likewise, McGill launched two specialized master’s degrees, in management finance and analytics, in the past three years.

As Laval’s Gendron observes, the existence of these kinds of degrees speaks to the fact that the demand for graduate business education, both domestically and among international students, has shifted in the direction of the shorter and more focused programs that employers are seeking.

McMahon and Cecil-Cockwell completed their Rotman MBAs last year and don’t seem to be heading back to the U.S. anytime soon. McMahon and two of his fellow MBAs have set up a small business advisory called Catalyst Venture Consulting, which aims to tap into the Toronto region’s roiling start-up scene. As for Singh, she’s got her sights set on a graduate business program, likely at Rotman or another Canadian university. Many of her peers, international students from India, feel similarly. “A lot of people really like Canada because, honestly, it has almost everything going for it—except the cold.”

Where she’ll land after she finally graduates with her made-in-Canada graduate business degree remains up in the air. “I may go back home,” she muses, “or I may explore different parts of the world.”

Yet Singh’s global future is one that Rotman dean Macklem not only anticipates, but welcomes. “The reality is that education is a great export industry for Canada. For a country that needs to diversify its trade beyond the U.S., it’s a very valuable way to build connectivity around the world.”

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