Pivoting From a Two-Year to a One-Year MBA

• The Smeal College is transitioning its two-year residential MBA to a one-year STEM-designated program.
• School leaders used multiple communication efforts to address the potential concerns of every group of stakeholders.
• The school will use an annual brand tracking survey to determine ongoing implications for brand health.

 
The Penn State Smeal College of Business in University Park, Pennsylvania, has announced plans to transition its two-year residential MBA to a residential one-year, early-career MBA with a STEM designation. The program replicates the curriculum of and replaces the master’s in management and organizational leadership (MOL). Historically offered as a fifth-year, early-career master’s degree, the MOL consists of the same courses that compose the first year of the residential MBA program.

The program is aimed at students pursuing early career leadership and management positions in fields such as information technology, architecture, and engineering, among others. The new degree targets a tuition-paying audience and does not offer full-tuition fellowships and stipends as is common with two-year residential MBA programs. Smeal initially will offer two sections of the program. The goal will be to grow each section to 55 to 60 students over the next three years.

School officials chose to make the transition in response to changing market trends in the U.S. that show the steadily decreasing popularity of two-year residential MBA programs, accompanied by growing interest in one-year programs and more flexible learning options. According to the Graduate Management Admission Council, 54 percent of the U.S. MBA programs ranked in the top 50 by U.S. News and World Report reported a decline in application volume between 2021 and 2022. Among programs ranked 51 and below, 69 percent reported a decline in domestic application volume compared to the previous year.

In choosing to make the change, school leaders also weighed the impact of the financial incentives needed to maintain the traditional two-year residential MBA. According to Charles Whiteman, John and Karen Arnold Dean of the Smeal College, “Even upper-tier schools are increasingly subsidizing significant portions of their tuition and offering living stipends to attract students with satisfactory credentials for rankings purposes. Institutions in this situation essentially face three options: Continue to run the program at a substantial cost to the college, discontinue the program, or transform the program into one that appeals to a financially viable audience.”

Communicating the Change

To announce the impending transition, Whiteman and other administrators prepared a communication plan that anticipated the concerns of each group of stakeholders. College leaders sent emails, held open forums, and conducted one-on-one and group meetings to explain the decision. Leaders also brought in key stakeholders and subject matter experts to reinforce their message and counteract resistance.

In addition, officials positioned the launch of the new degree program as part of Smeal’s ongoing transformation of its curriculum, which has included the introduction of a new DBA program, a master’s degree in accounting analytics, the redesign of the EMBA, and a portfolio model of interrelated stackable microcredentials.

The majority of stakeholders expressed either positive reactions or ambivalence about the change, but some worried that it could have an adverse impact on the college’s brand.

The majority of stakeholders—particularly those with no direct connection to the two-year MBA program—expressed either positive reactions or ambivalence about the change, says Brian Cameron, associate dean of professional graduate programs and executive education. However, some faculty, some alumni, and second-year MBA students were worried that the decision could have an adverse impact on the college’s brand.

“Many of these individuals lacked a complete understanding of the market dynamics that have challenged two-year residential MBA programs for some time,” Cameron adds. “With the benefit of time, data, and further discussion with college leaders, most have demonstrated a willingness to consider the underlying rationale.”

The college will use its annual brand tracking survey to obtain an objective measure of stakeholder opinion regarding this decision, as well as any short-term implications for brand health.

Making the Transition

Fall 2022 marks the final intake for the two-year residential MBA before the new program debuts in fall 2023. The school plans to take two years to redeploy the faculty and staff resources impacted by the transition. The first year of the two-year residential MBA program will stay intact in the new one-year program with little disruption to faculty teaching loads. Because the second year of the two-year program is mostly elective courses, the faculty who teach these courses will begin teaching elsewhere in the college’s professional graduate portfolio and college.

“Change of this nature is never easy and it is impossible to successfully implement something like this in a manner that satisfies all stakeholders,” says Whiteman. “With a solid business case, leadership must push forward and not allow detractors and fans of the status-quo to derail what is in the best long-term interest of the institution.”