Nothing like a juicy scandal involving prestigious universities, wealthy parents, and vlogging teenagers to tank workplace productivity this past week. Come on. You know you were watching Olivia Jade showcase her luxury Christmas haul vs. banging out that metrics report!
Here’s the deal.
More and more there are discussions around the “value” of a 4-year degree to both graduates and the corporations who hire them, not to mention the return on investment of one at Yale, Georgetown, Stanford and others.
I was fascinated by this story in the “Institutional Investor” that starts: “In 1990, Harvard Business School professor Michael Jensen co-wrote an article making the then-bold claim that CEO compensation should be tied to stock price performance. The point, Jensen and his co-author, argued it was better to align incentives to ensure corporations were able to attract ‘the best and brightest individuals to careers in corporate management.’”
It’s a lengthy read, but the data analysis is worth pondering, especially in the context of this recent scandal. It asks, “what if the ‘best and brightest’–those executives with the most dazzling CVs and track records–don’t perform any better than less credentialed executives?”
Spoiler Alert: The study found “no statistically significant alphas – despite testing every possible school with a reasonable sample size. MBA programs simply do not produce CEOs who are better at running companies, if performance is measured by stock price return.”
Similar regressions were run controlling for industry and found that “elite MBAs did not produce positive statistically significant alpha.”
In other words, the perceived quality of each prestigious university appeared to have no correlation with stock price returns.
I was facilitating a discussion with a group of CHROs recently and the conversation turned to the future workforce and talent shortage. We spoke about what used to be a coveted resume: pedigree university, step-ladder rise in a career with a brand name company or two. Long-tenure was not necessarily part of the perfect resume of the future (especially in HR).
While I doubt we will have resumes much longer, what will be cataloged and digitally shared will be the skills, experiences, gigs, thought-leadership, community leadership–and likely more than Instas of our personalities–that will then role up to display the whole person candidate.
I believe in education and the value of the social experiences gained by going to college. But higher education will need to continue to evolve and become more agile ( btw–the word quickly replacing “strategic” as my least-favorite term of the moment). Corporations (and parents) must demand our educational institutions produce a workforce ready to hit the ground running.
The 3-hour biology lab I sat in while watching the TA play paper football with the cute guy in class, was, well…worthless.
Is your degree better than mine?
Possibly, but does it really matter in what makes us ultimately successful? Why should we be so hung up on where someone went to college–or perhaps even that they did?
I’m still hoping that Olivia Jade sees the value in education and finishes– somewhere. If not, at least she’s got her luxury hauls to hustle in order to make ends meet.