The idea of a series of roundtable discussions in important regions of the world, which would include leaders of business education, came out of the enormous growth and changes I have witnessed in this industry over the last five years.
Germany is a particularly dynamic setting and a good example of the burst of innovation and change throughout Europe created by the Bologna Accord. This summary of our discussion delves into the German situation. We plan to host future roundtables in other key regions in the coming years.
The Future of Management Education in Germany
On May 9, 2005 a discussion on the future of German Business Schools was held in Cologne, Germany including the following participants:
Derek Abell, Professor, ESMT European School of Management and Technology GmbH, and President of the ESMT European School of Management and Technology GmbH, Berlin;
Gert Assmus, Professor, Emeritus at the Tuck School of Business at Dartmouth and Director of the Tuck Business Bridge Program, and former dean of the Leipzig Graduate School of Management;
Paul Danos, Dean of the Tuck School of Business at Dartmouth and the Laurence F. Whittemore Professor of Business Administration;
Alfred Kieser, Professor of Organizational Behavior at Mannheim University;
Martin Moehrle, Chief Learning Officer at Deutche Bank AG;
Manfred Schwaiger, Dean and University Professor of Business Administration at the University of Munich, Munich Business School; and
Wolfgang Weber, Dean at the University of Hamburg.
Journalists in attendance included:
Malte Herwig, German correspondent of the Times Higher Education
Supplement and freelance-writer for Suddeutsche Zeitung and
Frankfurter Allgemeine Zeitung;
Christian Chlesiger, Management and Career editor at Capital; and
David Shirreff, German correspondent of The Economist.
The intent was to have knowledgeable participants in the German business school world give their views on the challenges ahead as the Bologna Accord is implemented. The contrast between the North American system and the emerging German system was another major theme. Dean Paul Danos of the Tuck School of Business at Dartmouth moderated the discussion. The following gives highlights of the discussion.
Topic 1—The New Regime in Europe. What was the genesis of The Bologna Accord?
Executive Summary—Topic 1:
- There was strong sentiment that the “government-imposed” solution was not the ideal choice for today’s Germany.
- Market forces have not strongly influenced German academic programs and the Bologna Accord is an example of a non-market based system that relies heavily on government mandates.
- Reducing cost of education was a driving factor for the German government in choosing the proposed system as was achieving higher completion percentages.
- The drop out rate in the current system was considered far too high. A three-year program might have a higher percentage of graduation and is expected to be cheaper as well.
- There is concern that students may not change their patterns and will continue to go straight through their degrees in the management programs with the three/two program just as they did with the current four-year program.
- Good features of the Accord are seen as transparency, exchangeability and compatibility among international students.
Questions and Comments:
Why was the Bologna Accord initiated?
The reform was not initiated by industry. It was initiated by government, by the European ministers who agreed in Bologna to change the system; a major goal was to save money. The assumption behind this goal was that only 20 to 30 percent of Bachelor graduates would take up graduate studies right after their graduation. Thus the new system would mean a reduction in the time which students spend in systems of higher education.
Some complaints about the current German system were that students were too old (upon graduation) and that the students were too theory oriented. But by and large, I believe most employers and others are quite satisfied with the current educational system.
I see some positive attributes of the American system as having very strong interaction between industry and the business schools, the emphasis on softer skills and taking personality into consideration.
The current German system emphasizes specialization and the theoretical foundation of curricula. It is important to know everything exactly.
I fully agree with what Alfred Kieser said. I think the current German program gives a very good basis for working in different fields. People do change fields (except in accounting and taxation) and often go to something outside of their specialty.
To me the strength of the current German system compared to the American system is the fact that the German students are stronger in conceptualizing skills and that’s because of the theoretical background. They are also more critical in their thinking.
The danger with this new agreement is that current programs are simply cut in two and they are artificially called undergraduate and masters but in fact they are still the same thing. I don’t necessarily believe that the new system is going to work for the purpose of professionalization of the program.
What is good about the current German system is what I would call “Fachkompetenz.” In the US if I am an engineer but after a few years of engineering I am not really making it up the engineering ladder, I can go back and get an MBA and that will let me go up the business ladder.
This new system is our chance to go exactly down the middle. The US is now actually weakening in my opinion. We should grasp our opportunity to build on what we have as strength, which is the strong specialized skills upon which to build management skills.
Politicians were looking for a political success story. They are striving to increase the percentage of students earning some kind of a university certificate from around 20 to 40%.
From the corporate side, we don’t see the reform based on a cost structure reason. We have in Germany, in general, a significant lack of market orientation in the educational system. It’s highly overregulated, highly inside-out thinking, its faculty members deciding what is good for the labor market and they don’t want to listen to market forces.
It is German tradition to stick to the training and educational tracks you start with. You do your apprenticeship with a master and then you stay in the field for all of your career.
In this country we have an unusually high dropout rate—40% of people enrolling in a program never make it. If we offer first a 3-year program (which is the what the Bologna Accord calls for as a first degree) they will see the light at the end of the tunnel and very few might drop out. That was a major motivation for the accord.
There is more publicity funded education in Europe and so the government says how should it work, as opposed to allowing the market to work. In the US, a huge number of experiments are allowed in the market place and good things kind of come bubbling up to the surface. Now someone has decided one thing in Bologna and in three years they’ll decide it should be something else. This will never be successful. The market should determine what works or doesn’t work. Even some of the accreditations processes are coming from government or coming from States and that too will not be very successful.
I want to defend the Bologna Accord in one way: it does allow for transparency and compatibility. For instance, the European credit transfer system or a diploma supplement, which actually translates the various educational stages for European countries. It opens opportunities to integrate globally making it easier for European students to move around to take two different or three different degrees in different countries. Before this was a very difficult thing to do.
At the moment only 10% of foreign students are allowed to participate in our programs. Most come from Bulgaria, Romania, Ukraine and countries like that. But, if we have a master’s program that is compatible more universally, then we will be able to more easily exchange students between more universities.
Another point along these lines is that in justifying the Bologna Accord, one of the official reasons they gave the public was to create a structure that is much more global so that people from a much broader geographical area can easily plug in for a year, or two years, or a master’s or undergraduate and that kind of thing.
Topic 2—Some major differences between the American traditional program and those evolving in Germany
Executive Summary—Topic 2:
- The panel believed that most business schools in Germany do not require full-time work experience (most graduate programs can be entered right after graduation from a Bachelor program), and that full-time work experience is more usual for Americans entering MBA programs.
- Germans are older upon graduation and have work built into their education in form of internships and part-time work.
- Apprenticeships which are still very popular among German graduates from high school will conflict with the three-year bachelors program.
- Employers may want to wait to give opportunities to the three-year graduates and shy away from apprenticeships.
- German education is deeper and more rigorous than that in other countries.
- Students like the “maturity” aspect of the current system in Germany comprised of a combination of part-time work and several years to experience life while being educated.
- The American “pressure cooker” approach will not be accepted by the bachelor students in Germany.
- The American style of alumni support will not have much of an effect on the German systems.
- Significant fees are coming but will be negatively received by students.
Questions and Comments:
There are many differences in patterns of MBA education in the U.S. and Germany. One of the hallmarks of the traditional American MBA is the requirement of several years of experience after the first degree and before enrolling in the MBA. Is there movement in that direction in Germany?
The German student is older than American when they get their first degree and they have a rather thorough education. In America the graduate is younger, and his high school education is fairly flimsy in some areas. It is not so clear to me that the German students, with the more thorough education in their first degree, need the same kind of break to really engage in practice.
Only very few faculties are thinking of introducing an MBA which requires practical experience.
In Germany, those who survive (we have a very high drop out quota) at the moment have no need for the American MBA pattern.
Is it true that as the reform goes forward there will be a three-year program followed by a two-year masters program? There will not be the current program that last four to five years, is that correct?
Yes, but there will not be a requirement for practical experience between the end of the first three year program and the start of the next two year program. Another difference with the US is that in the US, you recruit across the board. You fish the best talent, and the access to the top schools is very regulated, very difficult to get in. So there, one knows what you get from the best schools; there is a more uniform product. This is not as much the case in Germany. All students in our programs get the same education but they have very different kind of attitudes to life, different work ethics, different outlook on globalization, etc.
Universities are rigid, but the same applies to many companies. They will stick to recruiting graduates from master programs in management because these resemble the old Diplomkaufleute and perhaps ignore the bachelors.
Again, I see this new pattern as a regulated change and that will not work.
In order to move to the US system of required experience there has to be a willingness on the part of employers to hire out of the bachelor’s programs to get them into that first job, but the students will not be as ready for it. I don’t see a requirement for two or more years of experience happening very fast.
There will be a competition between bachelor’s degree holders and apprentices. That will be very interesting to see, because there is a taboo about touching the apprenticeship system in Germany. The politicians will have an interesting time with that.
There will be an intended or unintended side effect on the educational system. The change away from the apprentice system, which is now co-determined by the chambers of commerce, industry, faculty and university, has not been openly debated.
In America, the ideal for the MBA is to have the engineer who worked for Boeing along with the teacher from Uganda and the programmer from Japan all working on teams together. That’s what the students want in their team and if we put a young person that just graduated from a first degree with no experience with them, they don’t like it.
A problem with the current German system is that it doesn’t maximize the mutual learning within the classroom. It’s not how the system works.
If we send our best students to other countries, they do very well in terms of analytical skills. Again the reform has nothing to do with what the companies wanted or what the students need. It is the result of what the politicians wanted.
I believe that the German system does have higher quality when it comes to conceptual and analytical skills, but we have a high dropout rate. We do not have more efficiencies in the system because we have little market forces at play.
In the United States, the people value their education, because they had to pay for it. Here, the fees are minimal but students have to sit on the floor, they have to wait, they have to cue up in lines.
In contrast to America, the living style of German students is closely related and connected with the pattern of having six or seven years of studying. More than 60% are working while they earn their first degree. This choice of a combination of life style and studying explains the length of the program.
It’s the romantic thing of growing as a personality and living like an adult while being educated, and this is quite different from the US where you are immersed in an education system and you live like a student. In America students are put into a pressure cooker. In Germany the individual student is allowed to taste this, taste that. It’s not very efficient but it allows you to be freer.
I think the attitude will change very quickly once the fees are introduced. And once they have the financial pressure, they will study faster. I think the attitude is getting more comparable to the American way of studying.
Top business schools in the States get a significant percent of their funds from gifts (as much as 40 to 60%) and the rest comes from tuition (fees). How is it changing in Germany?
The introduction of significant fees will be seen as not only an attack on the current system but an attack against the student’s preferred lifestyle. In the United States there is very steep elitist system but the general education is not profiting from that. We should take a clean sheet of paper and review the whole thing. I think the system is not creative enough and courageous enough. I think again because it is regulated that nobody wants to take a risk and the ideal is far from what we have created.
So, the great asset of the US System is that people who pay exercise a lot of power. The students put their money on the line and make an investment so they feel free to say this works and this doesn’t work. And this is very strong.
Topic 3— The Flexibility of the German System and Accreditation Requirements
Executive Summary—Topic 3:
- The new systems allow for experimentation and much more flexibility.
- Accreditation is changing from a strict government checklist approach to a more flexible approach, but it may stifle creativity if run by the government.
- The current accreditation system helps a bit but is far from ideal.
- German business schools should not lose their thoroughness and rigor in order to satisfy general standards, no matter who imposes them.
Questions and Comments:
Is there a movement toward more flexibility in program content and structure?
The system now, in theory, is flexible enough but people are using the old structure and it’s very difficult to change it much. They have all the same structure, with for instance a course of statistics for eight hours during the first two years and requirements like that.
That was a requirement of the government. Has that been washed away completely?
Yes, strict government regulation of that kind is finished. Now, we have a new accreditation system. The universities would be free to be very innovative and to create very new programs. But they are more or less in the same system in their thinking.
I think the accreditation agencies are a problem in the first place. I don’t see many corporate members of the teams. If somebody tried to be creative, then the peers would immediately say—oh, that is too creative.
There is something wrong. We have got to be extremely careful here in Germany in trying to import bits and pieces of what has seemed to work in the past in the US. The world is pressuring for faster changes. At the same time we should not ditch our, let’s say, thoroughness. One of the great dangers is that in speeding things we forget what we are really good at.
I guess there is more freedom now. But if you say you are now free to innovate and you have to be accredited by a governing body, you haven’t really gained a lot.
Accreditation did not exist a few years ago in Germany, and with this change, it changed the framework for study programs and examinations.
For instance, there is one accreditation agency that says we are more oriented on the objective of the mission. Unless, like in engineering, we are very much concentrating on the old system of specific contents of study programs, we may see a little bit of differentiation, but mainly the new system is something like consumer protection that says there’s a minimum standard and if you achieve this minimum standard, then it is OK.
Are outcomes really measured?
I think in the second phase, the outcome measurement may come.
Is it moving toward more of a mission-based and outcome based system than it used to be?
These systems get tight over time because it makes life easier for committee members; so if you have a schedule and checklist accreditation and evaluation is much easier.
What we need is maturity of the rating personnel. They must give their considered opinions instead of just running through a checklist. Maturity is not high yet because it’s a new thing.
I have a question from a journalistic point of view. What should I recommend to our readers? There are so many different accreditations, like AACSB, EQUIS and FIBA in Germany, and I always tell my readers that they should look for accreditation, but as was said, it only demands a minimum of standards.
This is a new development, you can tell your readers. There are four accreditation agencies in Germany, PEBA, EQUIS, AFIN, and FIBA. These four have only the power to guarantee the standard of quality, and there are no big differences between these.
I should add that the accreditation processes improved the programs. I believe that in general, at least 18% of the programs make changes during the accreditation process and achieve higher quality.
Some of the things that seemed right before and are right in the United States today are not right for us now. So, it certainly wasn’t right for some of the schools in Russia who were doing a pretty good job with local people and local problems to apply international standards.
We’ve got to be a bit flexible and I would not accept at all that this must become a kind of a world standard where everything has to fit under the AACSB standards. Are they thinking about the real future of the world? Are they thinking about some new ways?
That’s a good question that nobody raises. I think accreditation is very helpful in benchmarking, learning from each other. The problem is the quality of the accreditor. We must not be dogmatic. We must be market focused and help schools improve in fundamental ways.
Is there some kind of private sector solution for such standards?
The rankings are a private sector solution, very summarized, but it only works for about the top 50 schools. They don’t write articles about all the rest because nobody would read it outside of the region.
Topic 4—How to Move Toward an Ideal System?
Executive Summary—Topic 4:
- An ideal system would be one influenced by markets.
- The needs of corporations must be incorporated.
- An ideal system has continuous feedback and experimentation.
- The failures and excesses of the American system should not be duplicated in Germany.
- The nature of the curriculum cannot be judged by student demands alone.
Questions and Comments:
What are some of your general thoughts about improving MBA education in Germany?
Graduate education in business schools in the US is getting worse because as a teacher you have to please the students. It should not be entertainment.
I think there is a slide down hill in the United States and we should not go that way in Germany. For instance, the number of extra curricular activities is going up under the label of “life learning” and the like, but frankly I believe that going to Kilimanjaro and walking up to the top during an MBA program is not what it is all about.
One thing that would help is to determine how companies should be involved in actually designing the programs. There is a gap between what business wants and what students want.
I think there is no ideal system apart from a business system of market experimentation with different solutions and different degrees of acceptability. But this we can only determine after we have experience with the new system. That requires continuous monitoring and feedback from corporations.
The schools should have some convictions independent of the markets. They need to have strong values and strong convictions to produce graduates with strong skills. Schools need to have some basic understanding and conviction as to the kinds of specialties they will offer and how the different content might be brought forward. And such a system should be able and willing to make small changes but continuous changes to improve their program.
I think the most important thing is to have differentiated systems. This is what we need in our economy at the moment and we will have this only if there is serious competition and a functioning market. Student fees will help to give us more experimentation.
Topic 5—The Future Direction of Faculty Development
Executive Summary—Topic 5:
- Big changes are coming.
- There will be more differential rewards.
- Requirements for more refereed publications will be part of the future.
- Having more non-German faculty in German business schools is coming slowly.
- U.S. faculty are too disciplinary, too much depth—not enough breadth.
- Scientific work is needed, but it must take into consideration the multidisciplinary mixture of global business.
- Germany will change toward the U.S. departmental style and structure.
Questions and Comments:
I would like for us to contrast the American style of faculty development with that of Germany. Let me start with a summary of the American system. At the top schools; the faculty are very well supported for their research. They teach light loads in terms of time in the classroom. For the most part, at the top 30 schools, the requirement for promotion is a strong reputation for publishing in refereed journals. For the most part the best faculty are researching and teaching very practical things though using scientific methods in research. The American faculty system is rather egalitarian. Most of the permanent, full-time professors are on similar tracks and get very similar reward and support.
As with everything else, the system of rewarding professors in Germany is changing at the moment. There will be more recognition of research results along with teaching results and administrative duties. But the incentives will not be as big as they are in the United States in research universities. Currently, the only way to increase your salary is to get an offer from another university.
Are German schools moving towards an individual evaluation system with differentiated rewards?
That is right, but according to my taste we are moving too modestly. We need to do more to have a big impact on the behavior of German professors. But the system in principle is changing. I think it will be flatter; it will become flatter on the top.
Something that really struck me when I came back to Germany was that the faculty was all Germans. Is there a movement toward having more non-Germans?
This is true, but there are many challenges. For instance, what can we offer a spouse from another country for employment? It is more complicated here than it is in the United States. The attitude is changing; the way of valuing publications is changing. We are trying to get rid of what I call the “kingdom” chair.
The PhD system in Germany is significantly different. First, 80% who do a PhD in business or economics do it not for an academic career but to go into management.
There are some universities which have introduced American style PhD programs and others are on their way. Secondly, I think the kingdom chair will be finished in favor of American style departments
I believe that United States is going the wrong way on some faculty issues, one of which is tenured professors. Business silos are breaking down into divisions, and business units, and sub business units, but in the United States the business schools are insisting on being organized around disciplines. They are on the wrong track.
I think there is no way back; you have to accept it because there is more specialization, there is more depth in the refereed journals and as a young management scientist, you can’t escape it.
But the corporate world is going another way.
My observation is that typically American faculties react to that by having two faculties; one for corporations in their executive and MBA education and one for research in their PhD education.
The system is developing in this direction dynamically and I’ve been with the Academy of Management for 10-12 years or so. Each year people complain about the gap between relevance and rigor. It’s not changing. It’s getting deeper and deeper. I absolutely believe you have to stop it and turn it around.
But Derek, if I’ve listened to you right then what you demand will prevent a scholar from doing successful scientific work (as it is right now) and getting into the A+ journals.
I think what is needed is another kind of scientific work. It’s very complicated work. The cross-functional things by definition are even more difficult to research. I would say we have a cancer in our profession and we better start cutting it out before it is too late. I personally think it’s a late hour and curiously the cancer is spreading quicker in the United States than it is in Europe because we have less money. Some of our schools that have been private are trying to go in the direction without many funds. In the States, it just amazes me how much money some business schools have. It does not necessarily lead the faculty in the right direction.