The GMAT Is Dead (Long Live the GMAT)

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The GMAT Is Dead (Long Live the GMAT)

The GMAT is a poor predictor of what most MBA candidates seek: successful employment after graduation.

The GMAT is a poor indicator of what most MBA applicants seek: successful employment after graduation.

Much like telling your mother you never liked her cooking over your Thanksgiving dinner, it takes a lot of conviction to walk into the annual GMAC conference and announce that the GMAT is irrelevant.

That’s not exactly what the University of Toronto’s Rotman School of Management said at this year’s conference in Denver, but Rotman’s acting admissions director, Leigh Gauthier, cited research that “shows that the GMAT, the de facto entry exam for admission into an MBA program, is essentially worthless in predicting the employability of a school’s graduates—even though that is exactly why most students enter an MBA program.”

Through a three-year study, Rotman administrators and researchers, including a full-time statistician, concluded that there is very little correlation between a candidate’s GMAT score and their chances of securing employment within three months of graduation. The catch, of course, is that this is not what the GMAT claims to do, and never has. The GMAT only claims to be a predictor of success in business school curriculum. While even that claim has its detractors, the question goes to the crux of what b-schools hope to provide to their students. Is a business school’s mission to provide a stellar education, with knowledge being its own reward, or do they owe their graduates a better future by providing the ROI of a great job at graduation?

Rotman’s presentation highlights the current GMAT arms race, with schools vying for and “buying”, via lucrative scholarship offers, the highest scoring test takers in an effort to move the needle on the U.S. News & World Report’s annual MBA ranking. Currently, GMAT scores count for 16% of each school’s ranking, far outweighing starting salaries or recruiter impressions. Rotman administrators contend, and rightfully so, that candidates with terrific resumes and potential are being overlooked due to lower-than-expected GMAT scores. Instead, Rotman sees future employment success tied to higher Analytical Writing scores and a great admissions interview.

Surprise! We agree. The GMAT is a rotten predictor of potential. So why should you take it seriously anyway? Let’s see what studying for, and doing well on, the GMAT is good for.

Showing your commitment to undertaking and conquering something difficult. The GMAT is de facto competitive. Unlike the SAT, which is taken by a large and diverse pool of test takers, those who sit for the GMAT are a much smaller, self-selected, and more focused cohort. Doing well requires time and commitment. Doing well on the GMAT shows admissions officers (and yourself) that you can take on difficult tasks and come out victorious.

Success on the GMAT does correlate to your success in business school. If you’re going to invest several years and tens of thousands of dollars into your MBA, you want to get the most out of your program. Many admission officials say that a GMAT score of roughly 580, with decent quant scores, would give them enough confidence that an applicant can do the work. The better you do, the more likely you are to be able to handle the rigors of a difficult program. Yes, that means quant proficiency, but it also means being able to articulate your thoughts eloquently and clearly.  Being a successful student will put you well on your path to being a highly recruited candidate.

While GMAT scores don’t predict an individual’s post-MBA salary, they are predictive of the future earnings of a school’s graduates. The financial success of MBA graduates can be measured by their “5-year gain,” which is their pay at graduation and in the five years post-MBA, compared to their pre-MBA pay. The Forbes 2011 ranking of Top 50 business schools lists both the median financial 5-year gain of each school’s graduates and that school’s median GMAT score. They are positively correlated. As a group, graduates of high GMAT schools tend to earn more at graduation and in the first five years post-MBA, compared to their pre-MBA pay.

What do you think? Does your GMAT score tell your full story? Share your thoughts in the comments!



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