The GMAT test and MBA Admissions

It is estimated that there are over 4000 business schools in India that produce about 350,000 graduates annually. If the innumerable press reports about these graduates are to be believed, only a miniscule fraction are employable”, or possess the specialized skills that are necessary to work in areas such finance, information systems, marketing and supply chain. There are many reasons for this paltry state of affairs, but the primary one is that a significant number of these business schools are underequipped for providing quality graduate education. This problem persists on both the demand and supply side. The supply side problem pertains to the paucity of well trained and experienced faculty while the demand side issue relates to the quality of admitted students and their ability to become effective managers in the future.

From the demand side, a major drawback is that most of these business schools cater to students who lack the basic skills required for graduate work, including an ability to communicate effectively in a business setting. In addition to language fluency and the ability to speak and write in a clear and logical manner in formal and informal settings, communication skills include the ability to hold people accountable to standards of performance and to ensure compliance. However, as is widely reported, other than the major business schools which screen students based on rigorous tests such as CAT or GMAT, most Indian business schools don’t test applicants on verbal and written English. This is a major disservice to students who lack such skills and are therefore being admitted based on unrealistic expectations of their employment prospects. In addition, these very students are often exposed to faculty and course work that do not meet international standards, leading to underprepared graduates suffering from the double whammy” of inadequate verbal and analytical skills.

Confirming this serious quality gap, a recent article in the Wall Street Journal quoted a study by Aspiring Minds, which tested 32,000 MBA graduates across India on analytical and verbal skills and found that only 10% of these graduates had the necessary skills to compete effectively in the current business environment. Remarkably, a third of the finance majors did not know what an IPO stood for. While, one solution is to increase the supply of qualified instructors, this is a long term remedy that requires extensive investment and support from both the private and public sectors. On the other hand, the demand side problem can be more readily addressed by using reliable and valid testing procedures for screening students. While a number of alternatives exist, the GMAT has a proven record of helping business schools with screening applicants on the basis of their verbal and analytical aptitude, precisely the qualities that are needed for developing into effective managers and highly sought by recruiters. While it is true that the GMAT can only predict academic success, it is also true that no single test can predict future managerial success as the latter depends on an untold number of factors, including serendipity. However, the GMAT can also serve as an effective devise for screening students, who for a variety of reasons, may not be suitable for pursuing an MBA degree. Widespread usage of rigorous aptitude tests, including but not limited to the GMAT, can help alleviate some of quality problems that plague the MBA landscape in India. The biggest advantage of the GMAT may be that it can serve as a self-diagnostic tool: students who perform poorly in such tests should think carefully about pursuing an MBA degree. If they do, then such tests have the ability to not just weed out unqualified students but more importantly, they can contribute to shutting down those schools that are unable to provide quality education and should not be operating in the first place.

The MBA program can be a very valuable experience for many students, but only if
schools do their homework and select students who have the skills needed to succeed. There are many criteria that can and must be used, but a rigorous aptitude test such as the GMAT is an important diagnostic tool, not just for schools but also for the applicants themselves. Corporations that recruit MBAs are the primary customers of B-schools and these educational institutes owe it to their stakeholders to be just as selective about whom they train as recruiters are about who they hire.

Dr. Rajiv Sinha, Dean, MYRA School of Business, Mysore.
An alumnus of Delhi School of Economics, and Ph.D from the Pennsylvania State University, USA, he holds the Lonnie Ostrom Chair in Business, W. P. Carey School of Business, Arizona State University.