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Universities are the key to transformational leadership

'Culture' is the perfect scapegoat for many problems as it can seem as if no one is truly responsible for remedying the issue. In truth, it's up to leadership to make the necessary changes, so we need to make sure our business leaders are suitably trained to do so.

Associate Professor Ben Farr-Wharton. Associate Professor Ben Farr-Wharton.

Recently, the second report on sexual harassment in Western Australia’s resources industry, entitled ‘Enough is Enough’, was submitted to the State Parliament.

This report focuses specifically on the shortcomings of the State’s Fly-in-Fly-out (FIFO) mining industry in creating a safe workplace culture for female workers.

The report largely places the blame for a very poor record of sexual harassment, including sexual assault, on the ‘culture’ of the sector.

For the politically sensitive, ‘culture’ is the perfect culprit for any wicked problem.

When ‘culture’ is to blame, it can seem as if no one is truly responsible for the problem and also throws into question who is in charge of remedying the issue.

Leaders — senior and middle managers, as well as board members — are the stewards of workplace culture.

Indeed, WA’s Code of Practice for Psychosocial Hazards in the Workplace notes leaders and managers have a responsibility for remedying a poor workplace culture.

Management scholar Peter Drucker once wrote: ’No institution can possibly survive if it needs geniuses or supermen to manage it.’

And, while it is easy to place the burden of improving workplace culture on leaders and managers, we need to acknowledge Australia has some systemic issues impeding the potential of our leaders.

Leaders CAN be made

Master of Business Administration courses (MBAs) are touted as being a passport to a leadership role.

In 2001, roughly 12,700 Australians graduated with an MBA or equivalent business-themed postgraduate degree.

In 2019, that number was only 3 per cent higher (13,100), despite Australia’s population growing by 31 per cent in the same period.

Indeed, Australia lags significantly behind other OECD countries in relation to the proportion of the population with a postgraduate degree.

There is much fanfare regarding the personal benefits of obtaining an MBA: promotions, pay rises, new job opportunities etc.

However, research indicates these positive outcomes are influenced by individual factors such as a person’s drive for learning and the actual skills gained through the MBA.

Over and above the individual upside, those holding MBAs provide benefits to the companies employing them.

Specifically, MBAs learn the technical vocabulary of business. They also learn new methodologies for solving critical problems and the skills to identify and respond to opportunities others may have missed.

Increasingly, Australian MBA programs focus on building key ‘soft skills’ — chief amongst them, leadership capability.

What we lack in corporate Australia is a thorough appreciation for the positive impact good MBA graduates can have on the bottom line, workforce culture, and the environmental, social and governance (ESG) outcomes of sovereign companies, organisations and industries.

In international markets which view industry-university collaborations more favourably, such as the US and China, research has identified when firms are managed by a higher proportion of people with MBAs there is an increased focus on corporate social responsibility, and ESG investment.

There are some mixed findings when research has examined the impact of MBA holders on the bottom line of firms.

Some research has tracked the negative impact of a particular brand of USA-based free market-oriented MBAs on overall economic performance, however in the main there is strong support for the notion companies run by a larger portion of MBA-holding leaders perform better.

The money equation

MBAs are expensive and there is strong emphasis on the MBA students themselves bearing the total cost of the degree — though occasionally companies subsidise fees for their employees.

To date, the MBA cost imposition on the student has been justified, because graduates generally grow their income at a much higher rate following their award, thereby providing a good return on investment over time.

That said, given the need to upskill the leadership capability of sectors such as mining, it might be time we broaden the conversation and question who ultimately gains from an MBA: the individual, or the business?

And perhaps also, who should bear the cost?

It’s not only in mining; the current lack of workers across most sectors means a higher level of leadership capability is required across the board to balance the challenges of ‘doing more with less’.

Additional benefits

While increasing leadership capability through increasing the number of MBA-holding managers in Australian organisations will have a positive impact on workforce culture, it is also likely to have an added benefit of increasing the ability of firms to respond to new opportunities and champion novel ideas and products.

Currently, firms tend to invest in lower-scale, low-cost, low-intensity workplace leadership training on an ad hoc basis.

As more is expected of leaders, it’s clear a more transformational level of investment in leadership development is required.

Indeed, such investment may have benefit over and above what is currently available.

As such, there is an opportunity for the corporate sector to work more directly with universities to explore favourable terms, with the ultimate aim of subsidising capability-enhancing courses such as the MBA, for select employees.

It is important to note Australian universities have put in place a number of mechanisms over the last decade to ensure their degrees are of the highest quality and are relevant to industry.

Australian universities, in the main, are ranked very competitively globally – with a high portion ranked in the top 500 in the world, as per the Times Higher Education University Rankings.

This is a call to arms. Should corporate Australia wish to boost its productivity, performance and improve its ‘culture’, there is an amazing resource with transformational potential on their front doorstep.

Corporate Australia, it’s time to enrol in an MBA!

Ben Farr-Wharton
Associate Dean (Management), School of Business and Law

This article was originally published in The West Australian


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