What is M.B.A. Disease? Know the Signs

What is M.B.A. Disease? Know the Signs

October 21st, 2022

Long-time consumer advocate, podcaster, and radio personality Clark Howard arguably coined the term M.B.A. disease. In short, the affliction is associated with a person taking over a company’s management and viewing their job as cutting costs while adding fees without increasing sales performance. Howard’s term gained more traction with the release of research by Daron Acemoglu, which introduces data suggesting that people with advanced business degrees primarily decrease workers’ wages without increasing revenue.   

Acemoglu, a professor of economics at the Massachusetts Institute of Technology, has been challenged on his premise. But, some important aspects need some unpacking. Real wages for workers have barely increased since the 1980s. Before the 1980s, the % of individuals with advanced business degrees who ran companies was 25%. Since then, workers’ wages have struggled to keep up with the inflation rate while the number of people with “MBA-like” degrees running companies has increased to 40%.  

Don’t get me wrong; I think advanced degrees are beneficial. My wife has an M.B.A., and it has served her well. So, I am not disparaging individuals with that degree. I am more annoyed with companies adding unexplainable fees or using overly complicated contracts to increase their bottom lines without adding value. 

One of the most common and regular offenders is AT&T. AT&T cable, phone, and cellular services have settled multiple class action lawsuits over the last ten years, totaling hundreds of millions in fines. I realize major corporations are often the target of class action lawsuits. But, the examples by AT&T get to my point. In August 2022, AT&T agreed to settle a class action lawsuit for adding a $1.99 monthly administrative fee to its phone customers for each additional phone line. Consequently, AT&T agreed to pay $14 million, which, let’s face it, doesn’t even qualify as a slap of the wrist for the mega-corporation. Other settled litigation against AT&T includes charging customers for unauthorized third-party services, advertising unlimited data plans, and slowing customers’ service as data usage increases.

Signs of M.B.A. Disease in Digital Marketing

Digital marketing is complex. That’s why it’s easy to charge hidden fees or wrap them up in long-term agreements without a customer’s knowledge. If you are considering starting a digital marketing project or strategy (e.g., web development, SEO, Google Ads, etc.), here are a few items to help you avoid working with a company suffering from M.B.A. disease. 

Ownership of Your Website and Hosting: The issue I harp on the most is ensuring you own your website. I’ve met with potential clients who believed they owned their website, and when they attempted to move it to another company, they found out they didn’t own the website. So, if they wanted to leave, they had to build a completely new website or pay an additional fee to buy the website.   

Usually, the company building your website will also host your website for a monthly fee. With some digital marketing companies, if you attempt to move the website to another platform, they will add a fee. Since they host your website, they may hijack it and take it down if there is a dispute. Another covert tactic occurs when you try to move your website to another provider, and the company charges you to pack up the files and send them to the new company. Always ask:

  1. Will I Own the Website?
  2. If I move the website, how much does it cost?
  3. What is the process for moving the website?

Fees for Payment Online: Not all online payment fees are bogus. However, a digital marketing company should have already factored that into the overall cost. So, if you are paying by A.C.H. or credit card, ask if there will be additional fees before you sign your contract.

Setup Fees: Setup fees will occur on almost every SEO, Google Ads, or email marketing campaign. In some cases, companies will charge exorbitant amounts for setup fees since the potential customer has no idea how much work goes into the elements of SEO, Google Ads, etc. Ask upfront if there will be a setup fee and what is involved. It’s also important to shop around and determine how much other companies charge for the same setup fees.

Auto-Renewing Contracts (A.K.A. Reading the Fine Print): Most companies use one-year or two-year contracts for services like SEO or hosting. Some digital marketing companies will have clauses buried in the legal agreement stating the contract will automatically renew without written notice. Auto-renewals can be a massive headache if you have to pay for an extra year or two of a service you don’t want because you didn’t send a written notice before the term ends.

Adding confusing legal language and unexplainable fees to agreements at some point became acceptable. Of course, every business has to monitor the numbers to maximize revenue. But more focus should be on retaining customers and expanding the product/services rather than deceiving people.