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What’s Up With GMAT Scores? (Part II – What Goes Up Must Come Down)

By Ajay Amar, Ph.D., Feb 24 2016 04:08PM

Since 1996, the GMAT scores at Top 10 business schools have risen by 58 points, on the average. Is that escalation likely to continue, or are we nearing the end of the ride? I believe it's the latter. Here are some reasons that the factors that have pushed up GMAT scores are beginning to lose steam.

“Stop the ride. I want to get off.” As I wrote before, a business school’s average GMAT score not only contributes to its placement on various MBA rankings, but also has become a status symbol in the eyes of board members, alumni, recruiters, and even potential MBA applicants.

However, some deans would like to reverse this trend. A few business deans went on the record in 2015 to say that GMAT scores have become much too dominant in the admissions process.

Dean Richard Lyons of Berkeley-Haas:

“Over 80% of the applicants with GMATs of 750 or above are not getting admitted to the school because we are trying to find the most balanced candidates who bring a lot to the dynamics of a class … The GMAT is just one element of the application.

Departing Dean Mahendra Gupta of Washington University’s Olin School of Business:

“There is a race to higher GMATS and GPAs and it is now having a significant impact. It’s not that schools are rejecting applicants with lower scores. It’s that the high averages are discouraging students from applying. I worry that we are making ourselves unapproachable. The walls are getting taller and taller. I don’t find it a productive race because business leaders are not defined by their GMATs and GPAs.”

Here’s my perspective: The effort that you put into achieving a high GMAT score is not wasted effort. GMAT prep readies you for the academic rigors of your first-year core business classes, and it sharpens your skills in logic and reasoning. Nonetheless, I also believe that you should not be primarily defined by your GMAT score … nor should a business school.

Specialty rankings, which could replace the standard "one-size-fits-all" rankings, will provide more useful information about schools to prospective MBAs. It seems obvious to me that a business school might produce sharp financiers or excellent consultants, and that school might be very different from one that produces savvy entrepreneurs. A school might be best at creating bankers or marketers or logistics experts or data analysts or general managers or operations pros or do-gooders or tech innovators or health professionals or strategists or CEOs … and so on and so on. Hopefully, you get the point. When viewed through the lens of specialty tracks or concentrations, two schools that rank comparably in generic rankings may be vastly different.

At their best, specialty rankings would incorporate the data points that really matter. For example, GMAT scores have little to do with the smarts, savvy, or survival skills of MBA entrepreneurs. Ranking business schools’ entrepreneurship programs generally require gathering more pertinent measurements, such as the number of startups created, five-year success rates, and amounts of venture capital raised.

Already the MBA rankings editorial teams at U.S. News and Bloomberg Businessweek have begun slicing and dicing data to look at certain aspects of programs. Some specialty websites, magazines, and organizations, such as efinancialcareers.com, Entrepreneur Magazine, Military Times, SCM World, and PayScale, have also begun producing their own rankings. That’s what people want – information that better pertains to their candidacies and career goals. I predict that we’ll see more specialty rankings emerge and increasingly take preeminence over the broader, more generic rankings that so often rely on GMAT scores.

Most MBA applicants don’t actually select business schools based on rankings. We all know that publications like U.S. News and Businessweek once had large, captive audiences, but no more. It seems that people have their own methods of selecting schools. A 2015 GMAC survey of prospective applicants found that U.S. citizens who were researching U.S. schools looked at factors such as accreditation, the programs offered, faculty quality, and – probably a big consideration – the amount of tuition. These prospective students also thought that local respect and recognition was important. A school's national ranking wasn't even a top consideration.

And how did prospective students research MBA programs? They primarily went online to look at school websites, and they asked their family and friends. Only 39% looked at the published rankings – though for those who did, a very high 64% felt that the rankings had influenced their decisions.

Dean Glenn Hubbard of Columbia Business School:

“Plenty of people apply to a school because it has reached the summit of a ‘best-of’ ranking, just as many people will see a movie or buy a book after it wins an award. That’s human nature. We want to experience the best. But if you are looking for a particular type of career… or you know that location will be important for your future job prospects, some schools will meet your needs better than others. In which case, your needs should trump the seal of approval of any publication.”

So, although many business schools are still focused on rankings, most of their prospective customers are not. The big, generic ranking has probably outlived much of its usefulness.

There are good reasons you might want to reach for a very high GMAT score, but propping up a school’s reputation is not one. You should definitely aim for a high score if one or more of the following apply to you: you did not reach your academic potential as an undergraduate (specifically, you have a low GPA); you come from a non-traditional business background and want to demonstrate your quant skills; you are several years out of school and need to validate that your academic skills are still sharp; or you just like a challenge. Beyond a certain point, however, the GMAT score doesn’t distinguish you as a candidate.

And the business school to which you are applying? If the school’s average GMAT score falls above or below another school’s average by a few points – that does not help you distinguish between schools.

The GMAT is an excellent, well-conceived exam, and my students learn much in preparing for it. However, it is just an exam. My hope is that the GMAT average will become less of the mark of prestige that has contributed to skyrocketing scores. My belief is that we are seeing signs of positive change in this direction. Let’s get back to earth.

Austin GMAT Review is the premier GMAT test prep company in Central Texas, offering structured GMAT courses and GMAT tutoring to professionals preparing to enter full-time MBA or executive MBA programs. Austin GMAT Review caters to busy professionals who don't have the time to sort through masses of generic study materials. Meeting with an experienced professor face-to-face in limited-size GMAT classes, students receive the personalized coaching that they need and strategies to excel on the GMAT.

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