Romanian training and MBA markets seek to get back on right track

With a drop of 30-50 percent in the training market value and a decrease of 40-50 percent in the local MBA/EMBA scene last year on 2008, both industries are hoping to see the first green shoots. This year should bring a slow increase and specialists expect these markets to bounce back from 2010.

Anda Dragan

The current crisis did not spare either the training or the Romanian MBA/EMBA market. The industry has been directly hit by the severe cost-cutting measures taken by many companies as a result of the significant decrease of their budgets during 2009.

But while organizations will remain cautious this year, industry specialists expect a slow recovery in both training and MBA/EMBA programs. According to Daniel

Read more about

Adrian Grancea, Highberg Solution: speaker at Real Estate & Construction Forum & Awards 2024

read more

Micu, development manager of the Romanian-Canadian MBA at Bucharest School of Management (BSM), although there are no official statistics, the company estimates that the Romanian MBA/EMBA market dropped by almost 40-50 percent last year.

As for the evolution of the local training market, it seemed it was in line with the general market, posting a slump of 30-50 percent last year, says Sergiu Teodosiu, associate consultant with Ascendis. But there is also good news. “This year looks better and we hope that the market will recover,” adds Teodosiu.

According to him, the Romanian training market was worth EUR 20-25 million last year and he expects an increase of 10 percent in 2010 based on the infusion of European financing.

Overall, in the first half of 2009 training market revenues were hit by the freeze of training and development budgets. But the third quarter brought some promising signs for training suppliers.

“Companies active in fields less affected by the current crisis and also large private firms with state subsidies rolled out some auctions that were worth several million euros,” says Viorel Panaite, partner at Human Invest. According to him, the local training market reached about EUR 15 million last year but he added that this value was very hard to estimate because the sum includes programs that are different from one training supplier to another.

Last year customers became much more selective in buying training programs that were suited to their more modest budgets. As a result, the sales cycle increased and the criteria of selection were consolidated and diversified, with market consolidation a natural step.

As for the Romanian MBA/EMBA market, Oliver Olson, country manager for Romania of CEU Business School, identifies through the company he manages some market specifics.

“First, applicants to MBA programs are more price-conscious than ever. It does not matter if it is company sponsored or privately financed. Second, the raw number of applicants has decreased, but not as much as we would have expected during the recession. It seems for every candidate that we lose due to nervousness about the economy, we find another who views the market slowdown as an ideal time to further their training,” he says.

Candidates train sights on practical solutions?

Although the market shrank in 2009, candidates interested in following a training program were focused on courses whose main aim was to increase individual and group efficiency. Performance and processes management along with management through objectives were among them.

“Centers for personnel evaluation have been very much in demand. This is where organizations start when they intend to invest in their people. It is useless for them to send an employee to follow a training course that improves a capability where he or she is not deficient,” says Teodosiu.

For example, the most popular training programs at Human

Invest remained those to develop leadership skills, based on their impact on the efficiency and productivity of the employees, even in times of crisis. Also interpersonal skills and time management solutions have been requested by students. Oliver Perkins, managing partner at Brainovate, says that innovation workshops, sales and

leadership and culture workshops have been the best sellers for his firm.

As for the ratio between training financed by companies and that paid for by students themselves, the former was the main source of revenues for the majority of top training companies in Romania both in 2009 and in previous years. And specialists do not see this changing in the near future.

“But starting last year more and more individuals began to allocate a part of their budget to their personal education. And we are talking about people who know what their professional path will be in the future and devise their own development plan that involves both training solutions offered by their employer and courses financed from their own money,” adds Panaite.

Although the current crisis has exerted great pressure on companies’ budgets, the interest in training hasn’t waned. As Teodosiu of Ascendis says, it is ever greater, as organizations are aware that human capital makes the difference between success and failure.

“It was budgetary constraints that diminished the demand,” he says. Although there are still

many companies that have not set their budgets yet, the future is brighter than last year from this perspective.

“The first months of the year do not generally see a peak in demand for training services. But it is bigger at the moment than in the same period of 2009,” says the Human Invest representative.

He adds that there was still increased interest from employees in developing their professional skills especially at a time when they

are seeing their responsibilities expand while the available resources to complete their tasks are decreasing.

How will the training market evolve?

Specialists foresee better times for the local training industry this year, with an increase of 10 percent expected. “It could grow more, but it depends on the degree of the absorption of the European funds rolled out through AMPOSRU,” predicts Teodosiu. In Panaite’s opinion, two major changes will take place on the local training market. First, the transition of training suppliers toward a branding and specialization process in some specific areas – sales, time management and leadership. As a result, both the quality and the way training processes are formed will be improved because suppliers will have greater expertise than if they spread their effort to cover a wide range of specializations.

The second change will be in the supplier-customer relationship. “Both human resources managers and training companies have become more interested in developing some long-term partnerships rather than building a precise collaboration related to implementation of a training program,” says the Human Invest partner. Such a partnership also brings some long-term benefits for both parties. So, the customer enjoys lower costs, a more dedicated supplier of education services and trust, cooperation and transparency. On the other side, the supplier will amass a number of strategic customers, which allows it to sell more easily and focus on improving and developing more efficient training programs.

Perkins of Brainovate also thinks that the training industry needs to be more transparent while training companies should have more open lines of communication between themselves. Plus, they have to clarify what exactly each of them is offering the market in terms of differentiating factors or unique selling points. “The reality is you can’t be an expert in everything and too often I hear stories of companies being able to do whatever the client asks for. Not only does this lead to quality problems but I believe it is increasingly difficult for customers in Romania to understand what makes each company unique. Consequently the only way they can differentiate is by price,” says Perkins. He adds that a sensible evolution would be the formation of a training body that protects the interests of companies as a whole, with a common set of values and clear understanding of where they as an industry are going. “I feel that the generic world of ‘training’ will fragment as it has done in other countries, as the market becomes more sophisticated. Buyers will choose more specialized companies or perhaps ensure that training suppliers’ values align themselves as much as possible those of their own,” he adds.

The local mba/emba market

An interesting shift on the local MBA/EMBA market compared with recent years is that time – so often an obstacle to enrolment in educational programs – has become a reason to sign up for the courses. “While during 2007-2008 companies were afraid that once managers who had benefited from a sponsored EMBA and graduated from the program would leave the organization, this year employers are paying attention to costs but also to the low morale of managers who need to adopt new leadership approaches. While salaries are so restricted an EMBA program can be a good motivator and help retain staff,” says Bianca Ioan, marketing director of the EMBA program at Asebuss, the Institute of Businesses Administration. So the companies’ tendency to sponsor key people through MBA and EMBA programs is still in play, as it is both a tool for managerial development and for retention of the most talented managers in the company. Evidence that the local MBA/EMBA market is moving is found in the fact that, for example, the intake of the WU Executive Academy EMBA Program Bucharest increased by more than 20 percent in 2009. “We expect more students than last year. We have 50 places available in the program for managers from Romania for the 2010/2011 academic year that starts in October 2010,” says Alina Vasile, country manager at City College, the international faculty of the University of Sheffield. She adds that more and more managers have decided to apply for the program because they realize that in order to compete in the market place for good management positions and to advance in their careers they need to have the knowledge and skills to solve complex business problems and make informed decisions. For Sheffield, the annual average of students in Romania was around 50 in the past three years. In order to adapt to last year’s difficulties, Sheffield kept the same admissions standards and organization and has introduced a new specialization: the MBA in Health Care Management for the health care industry. Choosing an MBA or EMBA program is a long-term decision – between one and two years – so for this reason it cannot be said that 2009 had a major influence on the choice for a specific program. “It is possible that some people delayed the decision to take an MBA program last year as a result of the current financial crisis,” says Micu of BSM.

At Asebuss, for example, Ioan says that last year in particular price was one of the most important criteria for selecting a program, although it reflects the quality and the benefits of an MBA, such as study visits abroad, collaboration and access to the resources of the partner universities, residential periods and the like. “This year I’ve met many managers willing to make up the shortfall from the sum covered by the company to participate in a premium program,” says Ioan.

Who is paying the piper?

At BSM Romanian Canadian MBA program over 70 percent of the students have financed their MBA studies from their personal resources. “This ratio is completely different from 2005-2008 when the majority of students were financed – partially or totally – by their employers,” adds Micu. It is also true that a difficult economic period persuades many managers to think more than ever of changing their job – but not all. In such a period, good people in particular will be headhunted and they will want to see some consideration from their employer.

“As for the market segment at Asebuss – managers or entrepreneurs – approximately 70-75 percent of the students were financed by their companies.

The rest of them prefer to pay the cost of the program themselves, which allows them to benefit from greater flexibility in making decisions and in their relationships with their employers,” says Ioan. According to her, for the 2009 EMBA course, 35 percent of the students are self-financed. She also adds that another significant trend is for the student to pay the fees for the

first year of study while the company finances the costs for the second one.

Demand remains high

Although many professionals have put their MBA plans on the backburner, demand for this kind of education service is still high. As Micu says, an MBA certificate is no longer an indulgence. It is a guarantee of some quantitative and qualitative accumulation of knowledge in order to better manage and run a business. “The demand is definitely still there. There may not be as many ‘casual’ shoppers, but there is still strong demand,” says Olson. According to the data available on the market, there are approximately 300 new MBA students each year, and specialists expect this amount to stay fairly consistent in the coming years.

At Asebuss enquiries into its programs decreased by 10-15 percent last year on 2008, but for the first months of this year the figure is about the level it was in the same period of 2008. “Besides, the number of those interested in signing up for our EMBA programs organized monthly starting February 2010 indicates their interest is returning and they can now afford it,” says Ioan. In the future, Asebuss intends to address managers from other cities in Romania through an adapted program that keeps the advantage of presence on the courses and direct discussions with students from other industries. Moreover, it will soon start the “Year of Romania” project, organized in Kennesaw State University campus, Atlanta. From September 2010-April 2011, Romania will benefit from weekly dedicated sessions on culture, history, religion, geography, economics and social-cultural themes. It also includes an event for American companies in Romania and other firms from diverse industries interested in discussing investment opportunities on the local market.

CV boosting

Specialists think that in these difficult times in particular, an MBA program helps students to learn new concepts and business methods in order to survive the crisis.

Plus, companies want to have very efficient employees that are able to capitalize on their resources. “An MBA program is an added value for an employee which becomes an added value for the company. More than this, there are many firms – Romanian and multinationals – where a MBA is a ‘must have’ for any top manager and not a differentiation element,” says

Micu.

A good MBA will always be a help for executives, non-executives, entrepreneurs, doctors, lawyers and architects, because it gives a global perspective of business and the tools to improve it.

According to Olson, its effect on the CV should only be a secondary concern. Even though the company has withdrawn its MBA in Romania, the same team and the most important faculty that worked with the CEU Business School will continue to offer the MBA, starting September 2010, in cooperation with the Maastricht School of Management.

The current crisis has driven many managers and entrepreneurs to identify new ways to become better prepared for an uncertain future, and an EMBA program could be one of the solutions. “An MBA is an additional advantage for many of the key management positions at the moment,” says Ioan of Asebuss.

She adds that while many companies don’t want to hire overqualified people who demand higher salaries because of the crisis, there are still some firms that choose to invest more in their employees, being aware that this is the main way to ensure their recovery or help boost the economy.

“If we look at it from the employer’s perspective, an MBA/EMBA program is an investment in personal development, which means an added value which, even if it can’t be immediately capitalized upon, will be a competitive advantage as soon as the market recovers,” says Ioan.

“This is also the strategy of many managers from Western countries: they are using this period to learn and ‘to be in the market’ in 2010 and 2011 when many industries will begin to grow again.”

But the added value that an MBA/EMBA program brings to a CV depends mainly on the position that the students hold. “MBA or EMBA study is not comparable with any course you are attending. It matters a lot at which university you took the course, the teachers you had, what colleagues influenced you, rather than having any old MBA on your CV,” say representatives of WU Executive Academy. According to them, there is a lack of qualified managers in Romania at present.

“The downside is that business schools are very different in the quality they offer. Many students didn’t follow a course at a high level, they don’t have professional experience, capabilities to manage, they don’t speak foreign languages so they are not competitive and nowhere near overqualified.

In their case, an MBA on the CV is useless. They are not comparable with the graduates of an (E)MBA at the high international level,” they add.

Case study

Serban Toader, senior partner with KPMG, alumnus of EMBA from Ecole Nationale des Ponts et Chaussees, Paris.

“My EMBA taught me valuable skills, which certainly helped me on my way to becoming senior partner of KPMG in Romania. However, there were many other factors. I also obtained the UK based Association of Chartered Certified Accountants (ACCA) qualification, which was essential to the progression of my career. As well as academic and professional qualifications, there is no substitute for in-depth industry knowledge, management experience and people skills for those who want to rise to top positions. Of course an MBA or EMBA can be helpful, but it is only one of many factors. At KPMG, our staff takes a wide range of training courses, on both technical subjects and soft skills. All our audit staff and most of our tax staff study for ACCA. When we hire people, we take many different issues into account, including academic and professional qualifications, experience, and also how well we think they will fit into our team. We have employees with many different types of qualification. For example, last year we hired somebody with a doctorate in Mathematics from Harvard, who has won several international prizes for mathematics. We also have a British employee with a doctorate in British-Romanian relations, who has chosen to work for KPMG in Romania. So we have an extremely wide range of qualifications among our staff. An MBA or EMBA can be helpful regardless of the general state of the economy. So I wouldn’t say that it is more or less useful now than during the boom years. The real key to success in the current economic downturn is to be flexible and adapt closely to the needs of the market. In some cases this might necessitate acquiring new skills. However, there is no point in gaining qualifications for the sake of it, as having letters after one’s name is in itself no guarantee of successful employment. So anyone planning to take an MBA or EMBA should do careful research and only embark on it as part of a well thought out long-term career strategy”.