SUPPLIER AND TECHNOFIN®

Responsible education to prepare future managers for the challenges of the financial sector

A growing number of financial experts are stressing the need for more responsible managers in order to rebuild a stable and trusted financial environment.

Management schools are the ones that have to carry out the difficult task of educating the future managers of the financial sector.

Today more than ever, our management education system is put to the test.
The markets are more volatile. The strongest companies are cutting jobs and posting losses.

According to Chicago-based Challenger Inc., US January job cuts tripled from one year ago.

Because of bad loans and toxic assets, write downs are more and more frequent.

Financial scandals are more and more frequent. Enron, WorldCom, parmalat and more recently the Ponzi scheme has been severely blamed for its devastating impact.

In addition, the case involving Bernard Madoff who was a former non executive of the National Association of Securities Dealers Automated Quotations (NASDAQ) an American Stock Exchange; the largest electronic screen-based equity securities trading market in the United States.

All in all it resulted in almost a $50 billion scam which led to one of his biggest investors, Rene – Thierry Magon-de-Villehuchet committing suicide after suffering great losses leading to insolvency.

The fact that CEOs are being sacked for poor performance is becoming broken records. But it doesn’t mean that the situation is easy for medium managers. All fear losing their jobs.

Obviously, nobody managed to meet the 08 targets. According to Grant Thornton, the outlook is bleak for medium managers; an average of 2,466 people currently made redundant across the UK everyday.

Can managers be held responsible for the economic turmoil?
 
Specialists are not only questioning the global economic system, but also the human failures that led to such a crisis. Recently risk managers have been blamed for not forecasting the subprime crisis.

More generally, according to a survey carried out by the Times Higher Education in December 2008, 40 per cent of employees feel that their leaders have “high concern for the task, low concern for the people".

Of the 145 participants, 65 had significant concerns about poor leadership and a lack of knowledge among managers.

More and more financial experts speak about the need for more responsible managers in order to rebuild a more stable and trusted financial environment.

Therefore, business schools are put to the test. Indeed, business schools have to carry out the difficult task of educating the future managers of the financial sector.

In what way are business schools liable for the training of effective and reliable managers?

The business school rankings made by the most famous financial magazines often give the priority to similar criteria:

today’s salary, weighted salary, salary increase, and value for money.
These are the main criteria when it comes to classifying schools.

Those criteria don’t tell us whether the graduates are good managers or not. Nevertheless, other interesting criteria are more and more taken into account:

career progress, aims achieved, placement success, alumni recommended, international mobility, number of languages, faculty research.

Those criteria seem to be relevant and could be used to evaluate the capabilities of an individual.

Why doesn’t the reality of the market  match what has been viewed for decades as the best business education?

In the majority of cases, students are selected first on the basis of academic background and then an interview helps the jury decide whether the personality of the candidate corresponds to the values of the business school.

After this selection, the administration of many business schools is less demanding with students.

What students have to do, is to attend classes and validate a certain number of credits, in addition to completing several internships.

So what’s wrong with the management courses the present education system provides? In what way should business schools improve their learning package?
HR managers and economists usually agree on the need for qualified and experienced managers.

This means that when they graduate, students must have strong accounting, finance, and operational management skills.
 
In the seventies, Peter Drucker had already pointed out that we live in a globalised economy where knowledge resources such as know-how, expertise are critical.

Business schools responded quite well to this need.

However, the transfer of how-know is the best achievement of business schools:

the priority is often given to work experience and contact with professionals, and the fundamental courses of management are well organised and relevant.
Yet, the existing education requirements prove to be too narrow.

Indeed the lack of macroeconomic knowledge of some managers is quite worrying: how can we understand risk managers giving mortgages to poor households whatever the consequence is?

Do we have to consider these failures as a result for a lack of sense of responsibilities or a lack of awareness of the major global stakes?

The point is, today the question of an education that follows closely the evolution of the future managers’ personality and awareness of his environment is burning.

Business schools are now facing a big task. In a two to four years track, they should teach their students not only a practical, but also epistemological and personal education.

Firstly, an epistemological education would definitely help the students understand the macroeconomics trends.

Then they would be perfectly aware of global stakes such as conflicts, poverty, and sustainable development.

And secondly, a personal in depth education would help the students build a coherent career path and a balanced life.

Regarding the epistemological education, the biggest problem we are facing is the separation between political and economic sciences.

All too often students have to achieve a double diploma if they want their education to be meaningful regarding macroeconomic issues.

In business schools indeed, the macroeconomics lectures are quite uncommon. Nevertheless certain schools are leading the way.

The University of Chicago has an entire economic department focusing its pioneering research honouring the memory of the most famous economists and trying to update the economic theories written by the economic masters of our time.

The Cardiff School of economics organised a Macroeconomics and Econometrics research group that studies the relationship between the macroeconomics and monetary policy, fiscal policy and growth theory and taxation.

The personal education of future managers, sadly is non-existent in many business schools. But the graduation period is for students a time of in depth questioning and doubt.

If we want to have responsible and reliable managers leading our companies, don’t we need to give them the required psychological strength?

Let’s have a look at promising examples from global business schools.

The EU-China International Business School (ECIBS) provides students with personal development coaching and mentoring for up to two years after the completion of the course.

The IFS School of Finance organises Mind Mapping, Problem-Solving, Essentials Think and Unleashing Creativity courses.

Schools such as INSEAD in France and Singapore, HEC Paris, and the Judge Business School in Cambridge are also trying to give their students more personal development opportunities.

Psychology and career building classes seem to be necessary. “The mission, the duty and the value of an MBA is to help people reflect on what they can become,” says Valérie Gauthier, associate dean of the HEC MBA programme.

The credit crunch and global crisis following have highlighted the weaknesses of our financial education system.

More than ever, the business magazines that are classifying the schools need to review their criteria.

The Business Schools’ programs should now include macroeconomic courses and personal development support.

The word “credit” comes from the Latin verb “credere” which means “to believe”, “to trust”.

This allows us to think that trusting the way Business School educate our future managers must allow us to look forward to a better financial and economic future.

Is it ironic that students also have to “validate credits”? These credits must also be trusted and meaningful.

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