Internal practices within organisations and companies have, for good or bad, the ability to transcend and shape not only the present of those organisations but the future of the sector they represent. Business schools and other management development institutions are no different, and, as we have observed in our recent research, some practices could be lethal to the sector in the long run.
One of such practices is how business schools incentivise and reward faculty for the research they produce. Though much of the sector would agree that research is the beating heart of higher education, it is interesting to note that the way we encourage research output differs vastly from one organisation to another and even from one country to the next.
Our research, published in the Journal of Marketing, looked at the different systems business schools use to incentivise and reward professors for their research. We also looked at how research contributes to what we call “business school health”, this is, how well schools operate across three dimensions: technical, institutional, and managerial. Finally, we also analysed the viewpoint of the faculty itself.
Overall, we found that research incentives are greatly misaligned hurting business school health, creating jeopardy to individual organisations and, more importantly, to the entire sector.
Let’s start with faculty rewards and incentives. Though business schools appear to acknowledge the need to encourage research development, many put emphasis on quantity over creativity and quality, putting faculty under pressure to produce as much research whatever means necessary. Unfortunately, this has led to many academics increasingly adopting unfavourable practices such as “vita gaming” or “farming numbers” and focusing on “output”, almost regardless of the actual content. On top of this, business schools’ stakeholders like corporate clients or students are also voicing concerns about faculty being “out of touch” with the world, the businesses they speak about, or even the subjects they teach. These voices might not immediately attribute the problem to the research incentives model but do see and fall victim to the schools’ shortcomings.
As one can expect, these practices are having a direct and damaging impact on the health of business schools. Our analyses clearly show that research rigour and practical importance – two critical dimensions of research quality – contribute to the overall business school health across all its dimensions, while the quantity of research did not impact business school health beyond ‘research health’.
On the question of faculty perceptions, we saw a stark contrast between the opinions of business schools’ managers, deans and directors, and research faculty. And whilst the first believed that faculty remuneration was in fact too generous, academics thought that they were being paid too little.
You cannot correct what you can’t measure
Problems with business schools’ research models have been a recurring topic of debate in academic circles. However, we believe that it was important to offer business schools and the wider academic community factual information on the problem. Measuring what was really happening, we thought, was the first step to tackling these issues. In gathering this data, we surveyed over 230 professors from close to 170 business schools, 64% of which are ranked Top 100 in the Financial Times Global MBA ranking, and completed more than 20 interviews with associate deans and external institution stakeholders.
The data we collected showed us that these issues are widespread, even though less severe in elite business schools than in second-tier business schools.
Business schools’ arms race to produce piles of papers and studies which do not address real-life problems is also taking a toll on the quality of education they offer. For instance, ideas with low practical importance may start to permeate the teaching materials used in class and have an impact on teaching itself. Students, who are trained in this environment, will go out to the job market out-of-touch with reality. It is only a question of time until recruiters close to the door to graduates from school operating under these practices. When this happens, what would be the value of those organisations or, in fact, of the business school sector?
In regard to faculty remuneration, if misperceptions are widespread, the motivation of faculty to perform at their best will be patchy, with many academics feeling undervalued and overworked. We are not advocating that the answer is, in fact, better pay for faculty members – according to the deans we surveyed, some of these salaries events went clearly astray-, but for business schools to welcome an open debate where both leadership and academics understand where they stand and where the school is heading. Schools’ managers could even consider opening the door to professors looking for complementary activities outside the school. However, we don’t suggest going back to the outdated consultant-turned-professor model of the 80s and 90s, but perhaps stimulating faculty to regain real-world experience.
Of course, it would be oversimplistic to conclude that the research model is behind all failings. However, with research spending at around 30-50% of schools’ budgets, one would expect that research would be a solution and not part of the problem. In order to change this, we believe that schools should start taking steps in the right direction. Though we cannot expect change overnight, we believe that pinpointing the issue and providing some research around it is a good start.
Stefan Stremersch is a professor at IESE Business School and at Erasmus School of Economics, Nuno Camacho is associate professor of marketing at Erasmus School of Economics, and Russell S. Winer is a professor at NYU Stern School of Business.
Photo by Suad Kamardeen.