MBA apprenticeships are not a scam

At first glance, an MBA apprenticeship would appear to be something of an oxymoron.

When, last year, the UK government began requiring all employers with a wage bill of more than £3 million a year to pay a “levy” to fund apprenticeships, many observers assumed that the money would be spent on the stereotypical apprenticeship involving a school-leaver being initiated into work. Accordingly, universities that offer “degree apprenticeships” have faced claims that we are exploiting a loophole in the system to tap into funding that would be better spent on lower-level programmes. That is especially true for universities like my own that are offering access to top-end qualifications such as MBAs.

However, it is worth noting that there are also concerns about some lower-level apprenticeships – which, by the way, remain much more frequent – with reports of apprentices being required to make coffee and clean floors. In contrast, degree apprentices benefit from rigorous, high quality university education while simultaneously applying their new knowledge in the workplace.

Such programmes offer a clear advantage when it comes to injecting talent into the areas experiencing the largest skills shortages, a key one of which is management. The shortage of management skills has been recognised as a significant issue in the UK economy – with four in five managers having had no formal training prior to taking on the role. Research by the Office for National Statistics, published earlier this year, has shown that a 0.1 per cent increase in management expertise yields a nearly tenfold increase in business productivity.

The apprenticeship levy has encouraged employers to reflect on the capability gaps that are holding them back, and to spend their levy accordingly. Indeed, in its document setting out its vision for the apprenticeship system, the government explains that employer-designed standards will “focus on exactly the skills, knowledge and behaviours that are required of the workforce of the future”. If employers find that management and leadership skills are lacking in their organisations, universities have a responsibility to use their expertise to address that gap.

This assumption that firms are best placed to judge where to invest their levy to address their skills needs is a key advantage of the new apprenticeship policy. It puts industry in the driving seat, rather than having government impose what it thinks is best. In any organisation, this is likely to include investment in a range of skills, and involve the development of both new hires and existing staff. Given the rate of change imposed on organisations by technology, internationalisation and competition, keeping existing staff’s skill levels up to date is likely to be a major priority.

Management skills are particularly important for small businesses, which account for more than half of UK GDP. However, research undertaken by the Chartered Association of Business Schools and the Chartered Institute of Management shows that weaknesses in management and leadership are constraining the growth potential of such firms.

Despite evidence showing that improving management capability is the most important driver for growing medium-sized businesses, the study also found that SMEs are less than half as likely as large businesses to provide management training: only 42 per cent of them do so, compared with 89 per cent of bigger firms. Poor management was identified as the leading cause of small business failure, and has been blamed for 56 per cent of insolvencies.

Many critics seem to see an MBA apprenticeship as some sort of wasteful executive trinket. In reality, MBA candidates are generally early to mid-career staff, with a median age in the late twenties to mid-thirties. These are staff aspiring to senior management roles, and this training is vital for preparing them to adopt the significant responsibilities that such roles involve. 

Universities have faced criticism in the past for not listening to businesses. But drawing on our experience to precisely address the skills gaps in our economy is exactly what government, businesses and society should expect of us.

Firms have done well to identify the benefits that MBA apprenticeships can deliver, and government has done well to develop a policy that provides them with an opportunity to act on that intuition. Universities should be recognised for fulfilling their side of the bargain.

Alec Cameron is vice-chancellor of Aston University.