Carl Rhodes, dean of University of Technology Business School Sydney, Australia
It’s no secret that business schools, in common with all of higher education, are seeing considerable headwinds.
With declining birth rates and a shrinking college-age population, many business schools are facing an existential enrollment crisis. State and federal funding for higher education has been steadily declining, forcing many institutions to increase tuition or cut programs.
Rising tuition costs, combined with reduced financial aid, and increasing student debt, risk making business education a privilege for the few. With corporations investing more in internal training, online certifications, and alternative education models, will traditional business schools are outcompeted by industry-led education?
Given the combined pressures of demographic decline, decreasing public funding, rising costs, and corporate alternatives, is the business school sector heading toward a financial crisis?
We asked these tough questions to seven deans outside the U.S. market for their perspectives. For our first Q&A, we asked Carl Rhodes, Dean of the University of Technology Business School in Sydney. Australia, for his views. Rhodes became dean of UTS in August of 2021. Prior to that, he worked at UTS as Deputy Dean, Head of the Department of Management and professor of organization studies. Rhodes has also held professorships at Swansea University, The University of Leicester, and Macquarie University.
In this interview, he pulls no punches. “The golden age of business education that started in the 1980s appears to be ending,” he declares. “All indications suggest that the global business education market is declining.”
Rhodes predicts a financial crisis for many business schools. “It is hard to see a future that does not have fewer and smaller business schools.”
Poets&Quants: With declining birth rates and a shrinking college-age population, many business schools are facing an existential enrolment crisis. How is your institution adapting to this demographic shift, and do you foresee program closures, mergers, or a complete overhaul of the traditional MBA model?
Rhodes: There are many reasons for the crisis in business schools – falling birth rates, increasing cost of living, competition from outside of the higher education sector, falls in government funding, political barriers to international student mobility, and a culture that is questioning the value of higher education in general. If we remain wedded to the business school of the past, then the future looks extremely grim. What is needed is a new vision of the purpose of business schools, recognising that it is likely that number of students studying business can be expected to fall. But bigger is not necessarily better and now is the time to reevaluate what and who business schools are for. An overhaul of the business school model would mean moving away from the elitism that has long been associated with business schools, instead seeing ourselves as engine houses for class mobility and economic justice.
Ours is an increasingly divided world where higher education is being questioned at its core. According the US Vice President JD Vance, ‘the professors are the enemy’ – he was quoting Richard Nixon. By his account, Universities are the enemy of the politically populist ideology that he espouses. What he forgets is that Universities should not simply be judged by whether he or anyone else agrees with the knowledge they produce and disseminate. Academic freedom and freedom of inquiry are cornerstones of a healthy democracy, and that has too often been forgotten by business schools who see themselves as training grounds for the elite and an extension of neoliberal capitalism. Universities and their professors may well be the enemy of regressive populist political movements, but that is our value and strength. Business schools would do well to remember the democratic legacy of the institutions that house them and build that into their purpose and practice.
P&Q: State and federal funding for higher education has been steadily declining, forcing many institutions to increase tuition or cut programs. Given the growing skepticism about the ROI of expensive business degrees, how sustainable is the current financial model of business schools?
Rhodes: The current model is not sustainable at all, and for those countries like Australia, Britain and Canada that relied on international student fee income it is even worse. The model where business schools were a cash cow for their universities while being able to handsomely fund their own research and engagement activities is in jeopardy. Now is the time for re-invention.
P&Q: Rising tuition costs, combined with reduced financial aid, and increasing student debt, risk making business education a privilege for the few. How can business schools ensure accessibility and diversity in a sector where affordability is becoming a major barrier?
Rhodes: The answer is simple, we need to find ways to be able to offer education of high quality and high relevance at a lower cost. As I see it, the purpose of business school education is not to maximize the revenues and profits of the schools but to educate our students to be the responsible leaders of tomorrow. If only the elite few can attend business school, then this purpose cannot be achieved. We need to develop degrees that are both more accessible and more affordable. Advances in educational technology and online learning are an important dimension of achieving this.
The problem is more complicated than just being a fiscal crisis for business schools. Economic inequality is rising around the world, represented most starkly by the ever-increasing size and wealth of the billionaire class. This inequality has been created by business activity and government policies promoting rapacious global capitalism. Business schools are not innocent in all of this as we have long promoted the shareholder capitalist model that sees ordinary people’s labour being used to create extreme wealth for the few. Economic inequality is one of the reasons that so many potential students cannot afford business education. We need to look long and hard in the mirror to take responsibility for our role in today’s economic system as well as to radically rethink how we can return the world to a path of shared prosperity.
P&Q: With corporations investing more in internal training, online certifications, and alternative education models, do you see a future where traditional business schools are outcompeted by industry-led education? How are you preparing for this shift?
Rhodes: Yes, this is certainly a possible future. There was a time not so long ago when an MBA was seen as a mandatory point of passage for a successful career in business. Today’s employers are much less likely to fund or subsidize their employees’ post-graduate education, nor do they see having an MBA as being an essential criterion for recruiting new staff. Essentially business schools are facing a crisis of relevance. Addressing this is not easy. In our case, we have increasingly focussed student recruitment in specialist master’s degrees in traditional disciplines such as finance, accounting, marketing, and management, as well as developing degrees in newer areas such as business analytics, digital marketing, and FinTech. This includes post-graduate degrees below a masters level that can be completed much more quickly. We have also been investing in B2B education where we develop bespoke non-degree training programs for client organizations, also allowing students to use these programs as credit towards a full degree should they choose to do so.
P&Q: Given the combined pressures of demographic decline, decreasing public funding, rising costs, and corporate alternatives, do you believe the business school sector is heading toward a financial crisis? If so, what bold structural reforms do you think are necessary to ensure its survival?
Rhodes: All indications suggest that the global business education market is declining. The golden age of business education that started in the 1980s appears to be ending. This will become a financial crisis for those business schools that fail to adapt to the emerging world, arrogantly assuming that they are immune to change. It is hard to see a future that does not have fewer and smaller business schools. This does not need to be a crisis, however. It means being more focused. At present business schools are often among the largest faculty groups is their universities, so even if they become smaller, they will still be large. Moreover, becoming a smaller school does not mean being somehow worse. The assumption of endless growth that business education assumed for so long was never viable in any case. Addressing this situation can be a means of institutional redefinition as well as letting go of the excesses of the past. For any school, though, what will be needed is a strong sense of purpose that enables a school to know what it stands for and to deliver teaching and research that supports that purpose. Now is not a time to live in the past or rest on yesterday’s laurels.
This is the first in a series of Q&As on the head winds facing business education.
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