The Obama effect

The election of Barack Obama as the 44th president of the United States has drawn strong interest around the world. For MBAs it could have a profound effect too. What impact will Obama’s election have on MBA programmes? What are the major hopes and concerns of the deans of top MBA schools, and what do they want the new administration to change?

US immigration policy
From a desire for changes in US visa policies to hopes for a more internationally aware presidency, the needs and expectations of senior US business school administrators are wide-ranging.

Immigration policies make it challenging for foreign students to obtain visas to enter the US to attend university and even more challenging to remain in the US for employment. Restrictions in the numbers of work visas available have caused many US employers to shy away from hiring foreign nationals. For the past five years the US government has capped the number of work visas at 65 000, with significantly more than that number requested. Forecast demand for these visas is forcing the US citizenship and immigration service to allocate them via a lottery in 2009.

But according to Phillip Phan of the Johns Hopkins Carey Business School: ”Immigration reform will likely focus on illegal rather than legal immigration. The number of employment visas is unlikely to increase under Obama. In the extreme case, they may even decrease as a response to job protection sentiments.”

But Jim Olver, assistant dean at William & Mary’s Mason School of Business, sees things somewhat differently: ”Based on his voting record and platforms, I think President Obama understands that yielding to protectionist urges damages the long-term competitiveness of the US. I would expect him to favour expanding visa opportunities for highly skilled internationals.”

Rethinking traditional MBA programmes
”Obama’s global upbringing and world view will hopefully result in business schools taking a more multilateral approach to business education, using business cases from around the world, not only from North American schools,” says Bill Bigoness, managing director of Duke Corporate Education.

Thomas Moore, dean at the Northeastern University School of Business, believes that Obama’s stance will benefit US MBA programmes by strong leadership in sustainability and environmental issues. ”US business programmes need to educate students to develop sustainable business models that don’t drain financial and environmental resources. Europe has been ahead of the US in this area for some time, and MBA programmes in the US need to respond to this ever-increasing need.”

Obama has said that he would like to spend $150-billion developing alternative energy over the next 10 years. ”Now is the time to declare our energy independence once and for all,” he said in October 2008. Universities with specialisations that align with the president’s priorities hope that this synergy will enable them to move their initiatives ahead further and faster.

According to Debbie Berechman, executive director of the MBA programme at the Sloan School of Management, Massachusetts Institute of Technology (MIT), ”Obama’s commitment to lessen the US dependence on fossil fuel and MIT’s alternative energy initiatives are good examples of a potential partnership forged from a common vision.”

Economy trumps all
Most onlookers agree that the economic downturn is going to be Obama’s biggest challenge in the short term. ”The crisis seems sure to dominate [Obama’s] agenda,” Olver says, ”and it will likely increase competition for US MBA admissions slots, as a large and growing pool of skilled but displaced managers take the opportunity to retool while waiting for a better economy. If that assessment is correct, the next couple of years could present challenges for internationals looking for a US MBA and subsequent US-based employment.”

There are estimates that the US unemployment rate could rise to 9% by the end of the year. The shrinking job market, the squelching of credit by banks and a plunge in consumer spending all conspire to create a challenging climate for business schools. At the Kellogg School of Management at Northwestern University, ”corporate recruitment is happening, but it’s much more conservative than it has been”, says Roxanne Hori, director of career management. And although she has not yet seen companies rescind offers, she anticipates that some will.

At the Sloan School of Management ”a few companies are delaying or cancelling visits, and some that had planned to hire second-year students now say they have filled their slots with summer interns”, according to Jacqueline Wilbur, director of the career development office.

To help finance his education priorities, Obama supports cutting banks out of the student loan system, thereby eliminating billions of dollars in government subsidies to private lenders. ”It’s really important that we revamp our college loan programmes to free up more money for students. If we consolidate programmes under the direct-loan programme, we would save $4.5-billion,” he says.

At Northeastern University, Moore reports that an unpredictable number of students will be forced to leave school because they cannot secure student loans. According to Phan, ”if job prospects continue to be poor, enrolments will drop as people consider the costs. As large corporations cut back on expenses, things like tuition reimbursement will get put on the shelf.”

All the top university administrators hope the Obama administration will implement an economic stimulus Bill that will include money for research, campus infrastructure and student aid. Dean Paul Danos of the Tuck School of Business at Dartmouth sees the need for global monetary authorities ”to come together to create a safe, predictable and steady regulatory system in order to build back confidence in the world’s financial institutions”.

On election night Obama acknowledged that he faces a daunting set of problems — ”two wars, a planet in peril and the worst financial crisis in a century”. Washington, January 20 2009, was an extraordinary inauguration day and marked the start of Obama’s efforts to meet these unprecedented challenges. The expectations of the MBA community are high. —

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