Capital letters.

MBAs are becoming more popular than ever. But how much does a course cost, how is it structured and which business school should you choose? Godfrey Golzen comes up with some answers

The MBA is by far the world's most popular postgraduate qualification. This year in the UK alone, more than 10,000 students will gain the right to put those coveted letters after their names. There are 35 UK business schools accredited by the Association of MBAs (AMBA). A further 23 schools in Europe have also met AMBA's accreditation criteria on faculty-to-student ratios, teaching standards, campus facilities and, above all, admission requirements.

The MBA is a post-experience as well as a postgraduate qualification and most schools require at least three years' work (but not necessarily business) experience, as well as a good degree or its professional equivalent. On average, around 10 per cent of MBA candidates have a qualification from one of the accountancy bodies. But why should anyone need an MBA when they already have a perfectly good set of professional letters after their name?

"As you move up the management ladder, you need a broader set of skills and a wider understanding of the business environment," says Barbara Beeby, head of career services at Manchester Business School. "That's basically what the MBA gives you."

A typical programme kicks off with a foundation course in the core functions of management: marketing; human resources; managing information systems; operations management; and quantitative methods, including financial accounting. In the second phase, it broadens out into topics such as business strategy, the management of change and the implications of globalisation.

"It gives you an overview of stuff you're aware of as a financial manager, but have never really had to get to grips with," says David Walker, a CIMA member doing a one-year full-time MBA at Ashridge. "It's very practical as well. You get a toolkit of skills and competencies that enable you to ask your colleagues in other disciplines the right questions -- and make sense of their replies?

Walker is a 41-year-old FCMA who got his qualification in 1986. "I'm obviously comfortable with numbers, but I've worked in various business functions and I've become aware of the importance of the need to explain the reasoning behind the figures to my colleagues" Three months into his MBA, he feels that what he is learning is putting him in a position to do that.

But if you already have an accountancy qualification, why do you need to do the finance module on the foundation course? Some schools give an exemption to people who are professionally certified in one of the areas it covers, but they are not keen to do so and still require these students to take the exam that goes with that part of the course.

The reason for their reluctance has to do with the way learning takes place on an MBA. It is quite different from an undergraduate course, on which students are taught by a teacher who stands in front of the class. Much of MBA learning takes the form of students working together in small syndicate groups of six or seven and they all report that this one of its great strengths.

"Apart from the content itself, discussion develops communication skills, points out Steven Robinson, a CIMA member who is now a senior member of the faculty at Ashridge Management College. "That's a skill a lot of numerate people struggle with"

John Tranter, a 40-year-old ACA doing a part-time MBA at Cranfield School of Management, agrees. He has found that coaching other students in his group on accounting issues has improved his ability to interpret the numbers to non-specialists.

Some traditional classroom learning does take place, but it is an interactive process in which the teacher acts as facilitator, constantly asking members of the class to contribute their own views and perspectives. These emerge not only from reading course material, but also from experience of work and from the group's assignments and seminars.

The absence of anyone well qualified to contribute to the discussion would deprive the process of much of its value. So would the absence of work experience, which is why schools insist on this. Many students report that the average age of participants was a factor in their decision to choose a particular school. The usual age range is 25-35, although there is fair sprinkling of 40-somethings.

Teachers put syndicates together so that team-members' skills and work experience complement each other. For example, a group member with a marketing or a human resources background could help a finance person -- and vice versa.

Some students also organise informal tutorials among themselves to strengthen the weaker links in their syndicate group. This may be one reason why failure rates on MBA programmes are astonishingly low, although there is a certain amount of self-selection in the admission process.

Most schools require applicants to undertake the GMAT (graduate management school admission test), or equivalent. GMAT tests numerical and verbal reasoning and has been found to be a fairly accurate predictor of success in completing the programme. Consequently, reports indicate that students who drop out, do so because of the workload of 12-15 extra hours a week, not because they can't hack it intellectually.

The foundation modules and the broader, more strategic topics that follow on from them fill the first two stages of the MBA. How long these take depends on the mode of study. Most full-time programmes in the UK take 12 months, although Manchester and London Business Schools take 18 and 24 months respectively.

Most of the continental schools offer programmes of similar length, although the two leading ones, IMD in Switzerland and INSEAD in France (William Hague's alma mater) take less than a year. But full-time MBAs are now less popular than distance learning -- for which the two best-known names are Henley and the Open University Business School -- and part-time courses, taught as an evening, weekend or modular programme. The latter, also called the executive MBA, is an upmarket version of a sandwich course: periods of intensive full-time residential study are interspersed with a day job. Assignments and reading are carried out in any available spare time.

One reason for the popularity of part-time MBAs is that students can carry on working while they study. They also enable people to apply what they learn straight to their job, which appeals to employers. Most students on part-time and distance-learning programmes are fully or partly sponsored by their firms as part of management development training.

Arthur Andersen, for example, has around 60 of its potential high-flyers doing a sponsored part-time MBA at Warwick. In Europe, the Rotterdam School of Management is running an even bigger part-time MBA for KPMG, with more than 200 participants.

Some employers see sponsorship as away to retain talent. The rapid turnover of high calibre employees means that sending them on a part-time programme which takes, on average, three years to complete, is a good way of holding on to them for that length of time. They are also likely to feel obliged to stay on for at least a year or two after getting their MBA, although employment lawyers report that making sponsorship a golden handcuff has proved difficult to enforce.

There is, however, an added benefit built in for sponsors. After the first two stages, MBA students move on to do electives, studying in more depth a range of topics, usually between four and six, that particularly interest them. Self-financed students tend to choose electives related to their career objectives, but sponsoring employers may suggest subjects that are aligned to their company's business needs and objectives.

This is even more true of the last phase of the programme: the project with its accompanying 10,000-15,000-word dissertation. Although it is academically rigorous -- business schools are, after all, centres of academic excellence not vocational institutions -- this is not an academic exercise, but a live business assignment, such as devising an entry strategy for a particular product or market, and it is supervised by a faculty member.

The sponsor normally has a considerable say in the choice of this project, which can result in a piece of work that would cost a great deal of money if it was commissioned from a consultant -- arguably more than the cost of full sponsorship. But the schools are extremely sensitive about sponsor interference, especially in matters such as monitoring students' performance during the programme.

THE FT's BRITISH FIRST 11 FULL-TIME MBAs

* London Business School

* Oxford: Said Business School

* Manchester Business School

* Warwick Business School

* Cranfield School of Management

* Edinburgh University School of
Management

* Imperial College Management School

* City University Management School

* Ashridge Management College

* Nottingham University Business School

* Strathclyde Graduate School of Business

Other students prefer to leave their options open and pay their own way. The costs of doing this vary widely. At the top of the range in the UK is the London Business School whose two-year, full-time programme costs 32,000 [pounds sterling], slightly more than its 29,000 [pounds sterling] part-time MBA. That is in line with the fees charged at leading US schools but, prestigious as LBS is, this is more than most British students are prepared to pay. If you have the money, however, and want to develop a network of global high flyers, you will find them at LBS.

But if you are looking for an international career, there are several good European schools that teach in English and whose fees, because of the strength of the pound, are reasonable. INSEAD and IMD are the best known names, but Rotterdam and Nyenrode in the Netherlands, IESE, ESADE and IE in Spain, Bocconi in Italy and HEC and ESCP/EAP in France all figure in the influential Financial Times ranking of the world's top schools.

In the UK, fees for full-time MBAs at schools of that rank range between Leeds' modest 10,000 [pounds sterling], to 18,000 [pounds sterling]-20,000 [pounds sterling] at places such as Imperial College, City University and Cranfield. Part-time programmes cost slightly less.

All these schools also offer part-time MBA programmes, but the list does not cover purely distance-learning providers such as Henley (10,500 [pounds sterling]) and the Open University (9,500 [pounds sterling]). Like all ranking systems, it also omits many perfectly sound and respected names. But does it matter if you have not been to the "right" school?

"That depends, according to Hamish Davidson, head of search and selection at PricewaterhouseCoopers. "If you want to get into the frame of big starting salaries and golden hellos, the question of where you got your MBA will arise. But if you want to broaden your skills, open up wider career prospects, and learn new and interesting things in the company of bright people, a lot of programmes will do that. Also, you will find that employers are impressed by candidates who have invested possibly money and certainly time in their careers."

So does the financial investment pay off? AMBA regularly surveys its members on this point. The 2000 survey, based on 1,344 replies from 6,400 members, indicates that it does. The average before and after salary rise was 40.7 per cent, with the biggest percentage increases going to two-year, full-time MBAs, probably because schools such as LBS attract headhunters and recruiters from big global companies that pay US-style salaries.

Among functional areas, the upper quartile in finance was a rather low 53,000 [pounds sterling], but in general management and corporate strategy, which attracts a lot of MBA students with an accountancy qualification, the upper quartiles were around 70,000 [pounds sterling].

More and more people are doing an MBA, so will the law of supply and demand affect rewards? With the fight for talent hotting up, there is little sign of this happening. Furthermore, as Davidson points out, as more senior managers have MBAs they tend to recruit in their own image and from their own network. In fact, the networking aspect of doing an MBA is perhaps as important as having the letters after your name; or to put it another way, who you know is ultimately as important as what you know.

Godfrey Golzen is a visiting fellow at Cranfield School of Management and author of AMBA's Official MBA Handbook (FT/Prentice Hall)