Should MBA programs make the GMAT & GRE optional?

(John A. Byrne for Poets and Quants)

When the dean of the Darden School of Business was a senior in high school, he did what everyone who wanted to go to college has to do: He sat for the SAT exam. Scott Beardsley remembers it well. It was the start of the winter in Anchorage, Alaska, and he got through the math part of the exam and then fell sound asleep. “I drooled on the verbal answer sheet,” he recalls. “I got a very bad score on the English section because it was all blank. And I was one of the top students in the school. I often thought should your whole life be linked to a standardized test? In my case, it wasn’t.”

Beardsley would ultimately go onto Tufts University, join McKinsey & Co.  where over a 26-year career he would rise to the status of senior partner at a firm that puts nearly all of its focus on brainpower. So when he finally became dean of a business school in 2015, it did not take him long to come to the conclusion that GMAT and GRE scores were being over-indexed by most MBA programs. In fact, a survey by Poets&Quants of MBA admission consultants found that the single most important metric in MBA admissions is the three-and-one-half-hour standardized test, weighted more heavily in their opinion than the four years of undergraduate work by a candidate.

The overreliance on standardized test scores in MBA admission decisions– partly a result of their use in U.S. News rankings–not only puts at a disadvantage students from lower-income backgrounds, first-generation college applicants, and some international applicants who have learned English as a second language; is it blatantly unfair. At many schools, moreover, admission officials are literally buying high GMAT candidates, offering them the lion’s share of scholarship funds to bump up a class average for ranking purposes. So more financial support is going to people who may have less a need for it, merely because they have 700-plus scores.

‘IF YOU GOOGLE STANDARDIZED TESTS AND RACISM, IT IS VERY WELL DOCUMENTED’

Darden School of Business Dean Scott Beardsley

Beardsley points out that prospective students from low-income families are less able to pay for prep classes or tutors who can cost up to $500 an hour or can take time off from work to study for the exam. “A friend jokes that our job is giving advantage to people who already have every advantage,” says Dan Edmonds, a master tutor at Noodle Pros, who charges $500 an hour for his services. “And there is a certain truth to that. I’ve made peace with that but as the child of lefty professors who is himself pretty left of center, it does bug me at times.”

Whether one can afford one-on-one tutoring with Edmonds or his rivals is just one way the test is unfair. Students who come from lower socio-economic backgrounds, born to uneducated parents, tend to score lower regardless of whether they are tutored or not. “If you look at the data for the SAT and ACT by ethnic group, it is absolutely shocking,” he says. “It shows that underrepresented minorities score between one to two standard deviations below the average. If you Google standardized tests and racism, it is very well documented. I don’t want to reward only people who spend tons of money or have tons of time studying for standardized tests. We appreciate the people who have gone through all those hoops as well. But there are many indicators of success. If you graduated with the highest honors in engineering from Carnegie Mellon, I don’t need a GMAT to tell me you can do the math in an MBA program.”

So this coming admissions cycle, the University of Virginia’s Darden School of Business is making the GMAT and the GRE test-optional. Darden made the announcement in early June. In less than a month, well before the first application deadline of Sept. 2, some 72 candidates submitted applications with requests to waive the tests. “The evidence is so compelling that we can waive the standardized test,” says Darden admissions chief Dawna Clarke, who admitted more than 50 MBA applicants last year without a GMAT or GRE when the school, among several other elite MBA programs, added more flexibility to its admissions procedures when test centers closed due to the pandemic.

MORE THAN HALF OF ALL FOUR-YEAR COLLEGES IN THE U.S. ARE NOW TEST-OPTIONAL

Darden’s decision to make the GMAT and GRE test-optional reawakens an age-old debate about both the usefulness and the fairness of standardized testing. This year, in fact, the Wisconsin School of Business, Rutgers Business School, and Northeastern University are among several B-schools that have gone test-optional. And when the outbreak of COVID-19 in the spring shut down test centers, a number of schools, including Northwestern University’s Kellogg School of Management and The University of Texas-Austin McCombs School of Business, began offering test waivers for applicants directly affected by the pandemic.

Truth is, many of the top business schools have been inching toward test-optional admission policies mainly in their Executive MBA, evening MBA and online MBA programs. Only this week, Emory University’s Goizueta Business School joined the bandwagon, making GMAT and GRE scores optional for applicants to both its evening MBA and Executive MBA programs, saying they are “unnecessary barriers” for working professionals.

Most applicants to elite MBA programs find the admissions process opaque and random. It is, after all, a highly subjective process to evaluate large numbers of qualified candidates for relatively few classroom seats. When Julie R. Posselt, an associate professor of higher education in USC’s School of Education, delved into the workings of admissions committees for her 2016 book, Inside Graduate Admissions, she found a number of issues that impacted the diversity of the admitted pool. Posselt discovered that graduate admissions put undue focus on easily observable qualities such as standardized test scores, undergraduate grades, and the prestige of a person’s alma mater. That emphasis systematically disadvantages women, racial minorities, and students from lower socioeconomic backgrounds. Admission officials, she found, often justify largely subjective judgments by the apparent objectivity of test scores and GPAs that were difficult to contest and often concealed biased misguided perceptions. Her conclusion: Where admission officials draw the line between admitted and rejected candidates is “as much a reflection of who is doing the evaluating as much as who is evaluated.”

Those underlying issues have prompted hundreds of undergraduate institutions to adopt test-optional admissions policies. In fact, more than half of all four-year colleges and universities in the U.S. will not require applicants to submit ACT or SAT scores for fall 2021 admission, including Brown, CalTech, Carnegie Mellon, Columbia, Cornell, Dartmouth, UPenn, Virginia, Washington University in St. Louis, and Yale. In May, the University of California Board of Regents voted 23-0 to no longer require applicants to such schools as UC-Berkeley and UCLA to submit an SAT or ACT score for admission.

IF BERKELEY & HARVARD CAN MAKE THE SAT OPTIONAL, WHY CAN’T B-SCHOOLS MAKE THE GMAT OPTIONAL?

It is a movement, clearly accelerated by the pandemic, that is being watched closely by many business school deans and MBA admission officials. After all, graduate schools have access to far more information to evaluate applicants than undergraduate admissions officers. “If three-and-one-half years of high school is more than sufficient to replace a test score at the undergraduate level, graduate schools need test scores even less,” says Bob Schaeffer, interim executive director of the Boston-based National Center for Fair and Open Testing. “They have the work experience to look at and fewer feeder schools to evaluate. There are 30,000 high schools in the U.S. but only 2,300 undergraduate colleges that could possibly feed a graduate school or business school. That makes it easier for admission committees to follow and know about the quality of an undergraduate program.”

At a recent MBA Summit panel discussion, Associate Director of MBA Admissions at Columbia Business School Michael Robinson acknowledged that he was among those eager to find out what the best undergraduate schools will discover in going test-options. More schools are “deemphasizing the importance of standardized testing in the context of the admissions process,” he says. “I’m actually watching that with lots of curiosity, and then just add one more data point. I’ve led the recruiting efforts in Africa for over a decade at Columbia. There are some very, very big cities. So, let’s say Lagos, Nigeria, that has over 20 million people. There’s one test center. There’s very little in the way of test prep resources and so on, so a 700 in Lagos is not the same thing as a 700 in New York City, just in terms of access to resources, but the way we’re kind of judging (the candidate, it) is the same. So, for us in admissions, it’s not that we want to basically admit people with the highest test average. It’s more about whether this person can succeed academically in that class. There are ways to get the right answer to that question without a GRE or GMAT or executive assessment. So I’m really curious to see what’s happening there. We’ll see what that looks like.”

Beardsley agrees. “We are in the middle of an experiment and I have watched this very carefully in the undergraduate sphere,” he adds. “There are hundreds and hundreds of colleges and universities that now have text flexibility. That list (of test-optional schools has been growing and growing and growing over the years. One of the first that did it was Bowdoin College which I view to be one of the most outstanding undergraduate institutions in the country that made the SAT optional. Now Berkeley, UVA, and Harvard have made standardized tests optional.  So what about business school? Why can’t we?”

THE GMAT IS BIG BUSINESS: TEST OPERATIONS AT GMAC BRINGS IN NEARLY $80 MILLION ANNUALLY

It’s a big question–and a somewhat terrifying one for the Graduate Management Admission Council whose primary existence is to administer the GMAT exam. GMAC’s test operations brought in nearly $80 million of the council’s $95.4 million in total revenue in 2018, the latest year for which figures are available. That is also a drop in the bucket compared to the overall revenue of the ecosystem of test prep classes, software platforms and tutors that exists to boost one’s scores. Overall, students and their parents spent a record $1 billion on test prep services last year, according to one study.

The best argument for the exam is that it offers admissions staff reasonable confidence that an applicant can get through the core MBA curriculum, even though everyone agrees that does not require a GMAT score of 700 or above. “GMAT and GRE scores help to predict an applicant’s ability to take on the rigor of full-time MBA courses,” believes Soojin Kwon, director of MBA admissions and the MBA program at the University of Michigan’s Ross School of Business. “They are an objective and verifiable component of our evaluation.” Besides, Kown maintains, moving to a test-optional strategy may have unintended consequences. “While some candidates may view it as removing an obstacle to admission, it could be a disadvantage, For example, for candidates without business backgrounds or quantitative majors since there won’t be an objective data point that demonstrates a candidate’s potential for academic success in an MBA program.”

In the past, however, critics have questioned the validity of the GMAT test itself. In earlier years, GMAC has conceded that the GMAT can predict less than 17% of the variation in these grades on average. Some independent researchers have put the percentage much lower, at between 41 points before they indicate a difference in the abilities measured by the test. The upshot: A business school cannot rely on the test to determine the better qualified of two students whose scores are 530 and 570. GMAC believes the exam is predictive of a candidate’s ability to handle the core curriculum. “Business schools are looking at a global diverse pipeline and for over 65 years the GMAT has successfully helped evaluate a wide spectrum of admissions decisions in a common measure,” said Vineet Chhabra, senior director and head of the GMAT product at GMAC. “GMAC constantly performs rigorous validity studies to refine the perspective schools gain into how well a candidate will perform in their program and helps candidates gain insight into how well they’ll perform in the classroom. Further, nearly 30% of recruiters leverage the GMAT score in their recruiting process.”

A test-optional admission policy, however, doesn’t mean an applicant cannot submit a GMAT or GRE score. Nor does it indicate that an admissions staff is lowering its standards. Darden, for example, is telling applicants who apply without a GMAT or GRE that “meeting only one criterion is insufficient to receive a test waiver” and that “any waiver be supported by substantive evidence.”

DARDEN’S NEW TEST-OPTIONAL POLICY REQUIRES APPLICANTS TO PROVE THEIR ACADEMIC ABILITY

One obvious “criteria” would be an applicant’s undergraduate transcript. But the admissions staff at Darden will comb through your transcript looking for your performance in analytical coursework to make sure you can handle the quant in an MBA program. An engineering major’s GPA would obviously count more than an English major’s grades.

Darden also notes that if you don’t submit a test score, your grades will loom larger in an admissions decision. The average undergraduate GPA for the Class of 2021 at Darden is 3.5. “So to be ‘strong,’ your undergraduate GPA would likely need to be higher than a 3.5,” according to Darden. “How much higher? Once again, it depends. Being granted a waiver means meeting more than one of the criteria outlined, and the stronger the case you make (both generally and by criterion), the more likely you are to receive a waiver.”

The full criteria for a test waiver?

• A strong undergraduate and/or graduate record, including performance in analytical coursework or disciplines
• CPA or CFA designation or other professional certification
• Master’s or advanced degree in an analytical discipline
• Seven or more years of progressive, professional work experience in an analytical field
• Strong performance on a U.S. college admissions test (SAT or ACT) or a national exam administered for admission to bachelor’s study in other countries

‘THE MOST SHOCKING SURPRISE FOR US WAS HOW CLOSE TO IRRELEVANT THE GMAT WAS’

Dawna Clarke, Darden executive director of MBA admissions

Evaluating an MBA candidate in the absence of a GMAT or GRE score is likely to be more time-consuming. After all, admissions would have to place greater reliance on other aspects of a candidate’s application. It requires more due diligence as well as a broader assessment of a candidate’s academic abilities, agrees Clarke, executive director of admissions at Darden.”It is time-intensive on the part of our team,” she notes. “It is high touch. The way an admissions committee assesses leadership or work experience is quite broad. But historically the way admissions committees have assessed academic preparedness has been limited to GPAs and standardized tests. We are broadening the criteria. We are not making a statement against the tests. The majority of our applicant pool will still submit them. But this moves acknowledges that there are many other ways to prove your academic ability. If we deny a waiver, we will offer a counseling session for any applicant who requests it to explain why.”

Darden’s new policy also underlines the fact that standardized test scores may not be as predictive as many believe. Five years ago, the University of Toronto’s Rotman School of Management did an extensive study of the admission files and employment outcomes of more than 1,000 MBA graduates at Rotman over a five-year period from 2008 to 2013. The research found that the GMAT was essentially worthless in predicting the employability of the school’s graduates—even though that is exactly why most students enter an MBA program.

“The most shocking surprise for us was how close to irrelevant the GMAT was,” said Kevin Frey, then managing director for the full-time MBA program at Rotman. “The one proviso is that GMAC has never claimed the GMAT exam is predictive of employability. It’s predictive of your ability to perform in the program. But schools that are just trying to measure how their applicants will perform in the classroom are measuring the wrong stuff. We have a moral obligation to these students. They are going to invest a quarter of a million dollars into this degree. When we accept them, we need to feel very confident they are going to get the career outcomes they want. But the GMAT cannot be used as a proxy for employability.”

“What shakes out are a set of five variables that are significantly predictive of employment,” he says—and not one of them is the GMAT. “It’s an exciting finding because the whole industry pivots around the GMAT and it was at best marginally significant. We don’t have hard statistical confidence the GMAT actually matters at all and if it does, it doesn’t matter very much. It had a very small effect size.”

‘WE DON’T BELIEVE THAT ANY SINGLE INDICATOR HAS A MONOPOLY ON EXCELLENCE’

What does matter? The five most significant warning signs that an applicant is most likely to be an employment risk, in order of importance:

• Citizenship from a region of the world for which Frey declined to identify.
• Years of work experience.
• Admissions interview scores for candidates.
• Analytical Writing Assessment (AWA) test.
• Undergraduate grade point average.
• Then, finally, came an applicant’s GMAT score—barely.

“Some statisticians would not even include the GMAT score because it was only marginally significant,” added Frey. “It’s barely in the score.”

In adopting its test-optional policy, Darden also did a study to track the academic performance of past students against their standardized test scores. “We looked at the students who came and the indicators of those who struggled and the predictors of academic excellence,” says Beardsley. “The truth is that there were multiple predictors of success and parts of the standardized test were not. We found that a person’s ability to communicate, participate in the classroom and their qualitative abilities are more relevant than their quant scores. The verbal test score had higher relevance, and undergraduate grade point averages were very relevant. We are open-minded to excellence, and we don’t believe that any single indicator has a monopoly on excellence.”

No less problematic is the concern over whether standardized testing is fair. In testing year 2019, ending June 30th, the average GMAT score for a Black American on the GMAT was 459, more than 100 points lower than for Caucasian Americans who on average scored 570. Hispanic Americans averaged 504 on the GMAT, with the highest scores reported by Asian Americans at 593. “Whatever their failures, the tests are a pretty good measure of the opportunities people have had from before birth,” says Schaeffer. “Young people who have had every advantage in life are more likely to be born to mothers who have had excellent prenatal care. They have a leg up from the womb. They grew up in houses with more books, more words spoken and more opportunities throughout their lives. When you look at backward-looking assessments like a standardized test, you end up excluding many kids who could succeed if given the chance to catch up. A person who went to a poorly resourced high school and did adequately in an undergraduate college may still be an exceptional candidate in a graduate program because the arc of their life is getting beyond where they started from.”

HARVARD BUSINESS SCHOOL ONCE MADE THE GMAT OPTIONAL FOR 11 YEARS

The late Harvard Business School Dean John McArthur made the GMAT optional for 11 years

Darden is not the first elite business school that has made the GMAT or GRE optional. In 1985, Harvard Business School did the same thing for pretty much the same reason. Then Dean John McArthur worried that the use of standardized tests put applicants who could not afford expensive test prep courses at a disadvantage. For the next 11 years, Harvard did not ask applicants to take a standardized test. It was optional.

It was a courageous move, in part, because no other prominent business school followed Harvard’s lead. Yet, McArthur held firm. “He firmly believed that what makes a great leader isn’t a test score,” remembers Angela Crispi, executive dean for administration at HBS. “It was a belief that there are all kinds of people who should be here and their test scores shouldn’t define them. It definitely was a catalyst for how to make HBS more inclusive.”

John Lynch, then the admissions director who would later become a four-term governor of New Hampshire, was outspoken on McArthur’s behalf. He pointed out that in a blind test, HBS found that admissions decisions made with and without the GMAT were essentially the same. Success at Harvard depended on intangibles such as motivation, interpersonal skills, perseverance, and hard work – all factors not measured by GMAT. Looking at the undergraduate grade-point average, ethics, leadership, community activities, prior work experience, and the interview made GMAT scores “superfluous.”

‘AN ARTIFICIAL BARRIER TO THE ADMISSION OF QUALIFIED BUT POORER STUDENTS IS UNACCEPTABLE’

Lynch made clear that Harvard also was concerned about the perceived emphasis applicants place on the GMAT and that strong applicants with scores below the 99th percentile were intimidated from applying. Reinforcing McArthur’s position, Lynch also pointed out that an “artificial barrier to the admission of qualified but poorer students is unacceptable.” It wasn’t until 1996 when McArthur’s successor, Kim Clark, reinstated the test.

Ultimately Darden is trying to do what Harvard wasn’t able to accomplish: To get other schools to follow its lead in recognizing that standardized tests are over-indexed in admission decisions, less predictive than previously thought, unfair to certain segments of the prospective student population, and a barrier that prevents many highly qualified young professionals from pursuing a selective MBA degree.

“There are people who won’t apply because of the GMAT,” believes Beardsley. “So they say, ‘Maybe I won’t even go to school or I am going to apply for a different degree.’ We know we need more leaders in the world and there are many pathways to it. The GMAT or the GRE shouldn’t be the knockout factor, the single gateway to future success. I don’t think it would be the primary determinant of what makes a business school excellent or not.”

Beardsley relates that one person recently told him the biggest competitor to the MBA is no MBA. “I think that is true,” he says. “If you have to study for many months to take a standardized test, that becomes the main barrier for you and your family. I thought, maybe we are missing the point here. Maybe we are missing out on a whole category of people who are truly excellent, who were the stars of their undergraduate class, and clearly have leadership capability. Instead of asking how do we triple down on a narrow group of people who have a certain test score, we want to give people the chance to put their best foot forward. If you have a 770 GMAT and did well during your undergraduate studies, you are still a great candidate. But we want to hear all the things about your readiness to pursue an MBA and not be exclusionary by over-indexing on one factor when there clearly are other factors to assess a person’s success.”

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.  View all posts by John A. Byrne