The trouble with MBAs

(Fortune Magazine) -- When Jack Welch gave a guest lecture at MIT's Sloan School of Management in 2005, someone in the crowd asked, "What should we be learning in business school?" Welch's reply: "Just concentrate on networking. Everything else you need to know, you can learn on the job." Sloan's dean, Richard Schmalensee, was stunned because "Jack was essentially saying a graduate business degree was a waste of time."

Not long after that visit, MIT began a curriculum rethink - dialing back on pure quantitative skills and adding more interpersonal coursework. Wharton, Tuck, Chicago, the University of Virginia's Darden, and Berkeley's Haas School, among many others, have also started stressing teamwork and are paying more attention to "soft" skills like listening to colleagues.

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What's driving the curriculum shift? B-schools are acting a lot more like businesses these days (gasp) and responding to their various customers - corporate recruiters and students. "MBA students we employ don't need to come in being finance gurus. What's much more important is that they know how to analyze issues and communicate recommendations," says Ken Barnet, a vice president at State Street Corp. (Charts, Fortune 500) who works with both B-school interns and freshly minted MBAs.

The numbers back up Barnet. Every year since 2002, the Graduate Management Admissions Council, which administers the GMAT exam for B-school applicants, has surveyed recruiters. And every year so far, the survey has revealed that several skills employers value most - like the ability to write and speak clearly and persuasively - are also skills that new MBAs lack.

Another spur for the ivory towers to change is competition from online degree programs, which have been eligible for federal student-loan funding since February 2006. Not only is an Internet degree more convenient to get, but a recent survey by employment site Vault.com says 81% of hiring managers look more favorably on job candidates with virtual sheepskins than they did five years ago, and 41% now think an online degree is just as good as a "real" one.

The syllabus changes are most noticeable at the hard-core quant schools. At the University of Chicago, the only course that every single MBA candidate must take in order to graduate is a communications and team-building course, in which specially trained second-year students coach and mentor newbies. Last year Chicago added Spring Launch, a series of seminars for graduating MBAs to help them polish their people skills before they rejoin the working world.

Likewise, in 2005, Wharton - home of econometrics and other arcane quantitative tools - began offering a leadership program that emphasizes one-on-one counseling from professional coaches. It's a hit: Enrollment has nearly doubled, from 50 students two years ago to 90 now. Balaji Krish, who came to Wharton from India by way of Silicon Valley, will graduate this spring. He says the altered curriculum has prepared him for a "team-oriented world. You work on ten to 15 different teams before you leave here."

Students, meanwhile, have pushed for some changes too - notably a greater focus on business ethics. Starting this fall, the Tuck School at Dartmouth will offer a course on using microfinance as a tool for alleviating global poverty. "They want to learn how to give shareholders a great return while also being balanced and principled. It's the double bottom line," says Tuck's dean Paul Danos.

That's not to say that plain old self-interest has fallen by the wayside. The Yale School of Management, for one, just added a required course for first-year students that teaches them how to plan a career, including how to cope with "stressors like job loss [and] aging," the course description says. Notes Jonathan Feinstein, the prof who designed and teaches the course: "We want to stretch their minds to realize that a career is a long-range project."

Ultimately that kind of thinking will help B-schools prosper too. "If our students leave here and get great first jobs but don't succeed in the long run, we've failed," says Stacey Kole, deputy dean of the full-time MBA program at Chicago. "We want them to be successful as their careers evolve." Employers, not to mention MBAs themselves, couldn't agree more.