The GMAT’s Value in Business School
This article, written by Eric Caballero, was adapted from our upcoming book, The GMAT Roadmap: Expert Advice Through Test Day. The full book will be available mid-November.
Make no mistake about it. Business Schools love the GMAT. And despite admissions officer statements that the GMAT score is “only one piece of your application,” it is a huge piece. Since its inception in 1953, the Graduate Management Admission Council (GMAC) – creator of the GMAT – has studied the desires of Business Schools. In fact, GMAT content is refined by intelligence gathered from frequent surveys of MBA faculty around the world. Additionally, GMAC sets aside profits to fund management education research — since 2005, GMAC has awarded $1.3MM in grants and fellowships to business school faculty and PhD candidates. The lesson? Take your GMAT seriously. Here’s why:
Your GMAT Predicts How Well You Do In Business School
Validity is the degree to which GMAT scores predict first-year MBA grades.
It turns out that GMAT scores and first-year business school grades have an average correlation factor of 0.48 (where 1.0 indicates perfect accuracy of prediction).
In contrast, the average correlation between undergraduate GPA and first-year business school grades is 0.28.
Therefore, GMAT scores are generally better than undergraduate GPAs for predicting average grades in business school.
In 2009, INSEAD performed a survey of several years’ worth of its MBA graduates. INSEAD confirmed that the closer one’s GMAT score was to 800, the higher his or her MBA GPA tended to be.
However, before you assume that Manhattan GMAT drinks its own Kool-Aid exclusively, allow us to share this curveball: the INSEAD study also confirmed that the closer one’s GMAT score was to 600, the higher his or her post-MBA salary tended to be!
The Problems You See On the GMAT Can Mirror The Problems You Will See At B-School
If you desire evidence that GMAT concepts are directly relevant in business school, consider the following math problem adapted from Wharton’s official 2010 Mathematics Self-Assessment Test©:
Let-it-Ride Lucas invests $100,000 in a bank. If he requires his investment to grow to $140,000 after six years, what nominal annual rate, compounded continuously, must he receive? What interest rate would Lucas have to receive if the money were compounded annually?
And here is an actual GMAT problem:
Leona bought a 1-year, $10,000 certificate of deposit that paid interest at an annual rate of 8 percent compounded semiannually. What was the total amount of interest paid on this certificate at maturity?
While the problems are not identical, both require related compound interest formulae, namely Pt = P0(1 + r)t and P0ert. There are many examples where GMAT know-how overlaps with business school concepts. So readers might be wise to resist burning their GMAT books after their exam is complete.
Studying for the GMAT Can Help Increase Your Intellectual Curiosity & True Grit
Okay, so we agree that you will witness content similarities between the GMAT and business school coursework. But perhaps the greatest justification for the GMAT’s relevance to business school is the shared character traits required of both.
We posit that great business leaders who earn their rank do so by leveraging a blend of intellectual curiosity and true grit. Business Schools desire alumni who demonstrate an insatiable desire for learning and a relentless pursuit of victory.
The GMAT will push you to your limits in this regard. Most tough GMAT problems are so sophisticated that they require (A) a openness to ‘tug at a thread and see where it goes’ and (B) you to power through several small steps before the silver lining begins to show. Both of these stages will test your intellectual curiosity and true grit.
Your GMAT journey may require more memorization than you wish to give. Your journey may necessitate more reading and note-taking than you can stomach. Your journey may require more problem solving and repetitive problem-review than you have energy or patience to extend. Each of these stages will test the depth of your intellectual curiosity and true grit.
So when find yourself questioning how GMAT concepts – such as geometry – will ever be used by a CEO and then wanting to throw in the towel, realize that it is your reserves of intellectual curiosity and true grit that are really being measured.
So, please! Stay the course, earn your MBA, and set the world on fire.