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GMAT: The MBA Job Seeker's Best Friend

Elite corporate recruiters use GMAT scores to narrow the field of applicants. Some schools are advising low scorers to retake the test

by Anne VanderMey
Publication: BusinessWeek

October 19, 2009

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The primary purpose of the Graduate Management Admissions Test may be winning the favor of B-school admissions committees, but that's not all those four hours of geometry and critical reasoning questions are good for. For many students, the scores they get on the GMAT will reach an audience that might be even more important—job recruiters.

For a select group of companies, mostly top consulting, finance, and banking firms, employers routinely look to MBA graduates' GMAT scores as a reliable standard measurement of academic prowess—a fact that may be well-known to MBA students in the thick of the job search, but is relatively unknown among applicants when they're taking the test. Particularly when jobs are tight, and every element of each résumé takes on added weight, test scores can be the difference between an interview and the dustbin.

Of course, the chief use of GMAT scores are, and almost certainly will always be, admissions. But what happens when your score is good enough to get you into the MBA program of your dreams, but not the job of your dreams? For some ambitious students, and some career-focused programs, the answer is simple: You take it again.

For students with strong applications but lackluster scores, some career services directors will advise admitted students to retake the exam. New admits who go that route typically take the test after they have put down a deposit but before they start classes, says Stacey Rudnick, director of MBA career services at the University of Texas's McCombs School of Business. At McCombs, Rudnick says she's advised a few recent admits with mediocre GMATs and C-suite ambitions that it might be worth retaking the test if they think they can score higher. She says she's given that advice to more students than usual this year, thanks to the tough recruiting climate.

small piece of a big puzzle

At the University of Notre Dame's Mendoza College of Business (Mendoza Full-Time MBA Profile), university staff went one step further. Mendoza sent a letter to its 2011 class informing it of the test's importance in prestigious firms' recruiting processes and offered a four-day course for students wishing to retake the test. Five did, at their own expense, and increased their scores by an average of 19 points. "We see a large number of consulting companies, some investment banks, and a couple of corporations all looking at both GMAT and undergrad and MBA GPAs." says Patrick Perrella, Mendoza's director of MBA career development. "These companies are looking for a sustained record of academic excellence."

For any firm, particularly those with the most clout, a 19-point difference hardly guarantees a spot, however. At Bain & Co., senior director of global recruiting Mark Howorth says that most serious applicants get good scores, meaning that it's typically not a key differentiating factor. "Plenty of people here don't get interviewed who have an exceptionally high GMAT," he says. "It's easy to look at a score like a GPA or a GMAT, but in fact, what we teach our people is not to focus on those. Those scores don't capture the type of problem solving we do in our job." As proof, Howorth cited internal Bain research that shows there's "almost zero" correlation between GMAT scores and employee performance within the company.

Still, a person's quantitative GMAT score does seem to be linked to salary, while verbal GMAT scores appear to be linked to managerial status, says Andrew Hussey, an assistant professor of economics at the University of Memphis. This is true, he says, regardless of what school, if any, a student attends. Additionally, there's a wealth of information released by the Graduate Management Admission Council showing that scores have a high correlation with success in an MBA program, which in turn can be a determining factor of success in the job search. And there's a strong, if unsurprising, parallel between schools where graduates earn the highest starting pay and schools where students have the highest GMAT scores.

Not every company cares about GMAT scores, of course, and not every school considers them as being useful for anything but admission. At the University of Connecticut's School of Business it was such a non-issue that the executive director said neither he nor his staff had even encountered requests for scores. In many cases, companies seem to simply rely on the schools' admissions departments to do that kind of screening for them. Students' average GMAT score is a primary factor in deciding where companies choose to recruit, says Kip Harrell, president of the MBA Career Services Council and associate vice-president of career and professional development at Thunderbird School of Global Management. Accenture, for example, doesn't ask for students to submit GMAT scores, but by virtue of recruiting from top schools it assumes its new hires have done well on the test. Some schools accept students with low GMATs and actively try to vary the background of their class, which isn't a bad thing, recruiters say, as long as low scorers make it through the program. "They've kind of cleared the hurdle," says John Campagnino, Accenture's senior director of global recruitment.

getting the interview

But for companies that do request students' scores, often those that require lots of heavy quantitative lifting, the GMAT can be an equalizer in a world where traditional metrics are fairly nebulous. Many MBA programs have grading systems that vary widely or are solely pass-fail, making it difficult for recruiters to compare applicants from different schools, and others don't provide grades at all. Even at schools where grades are released, grade inflation may render As and Bs poor markers for actual skill. The tests can be a boon by virtue of their standardization, says Mareza Larizadeh, the founder of Doostang, an invitation-only career networking site popular with MBAs. Larizadeh, who is also a graduate of the Stanford Graduate School of Business, noted that while the GMAT is typically not the most important factor for recruiters, it can have a particularly large impact in the early going, when they're determining who should and shouldn't be called in for interviews. "The GMAT isn't going to get you in," he says. "But it's something that can prevent you from getting in the door."

After you're in, the GMAT offers little help. Says Bain's Howorth: "Once we've decided to interview a candidate, the GMAT score becomes almost irrelevant," he says.

But just getting an interview these days is no easy feat. In a sea of students with stellar work experience and strong leadership skills, how high is high enough is a hard question to answer, says Jack Oakes, director of career services at the University of Virginia's Darden School of Business. Oakes says he sometimes advises candidates with scores in the mid-600s—very good by most standards—to retake the test if they're hoping to land top-shelf consulting or banking positions. He notes that even some of his best students have GMAT scores he wouldn't recommend volunteering on a résumé. And with the average GMAT at top schools on the rise, even "slightly below 700 might not be a help," Oakes says. (A score that tops 700 is the 90th percentile.)

At Emory University's Goizueta Business School, Wendy Tsung, executive director of MBA career services, says she recognizes the GMAT is a standard way for corporate recruiters to sort through applications. "Because the economy is so bad, and there's so many people applying for positions, companies are looking for different ways to reduce the number of résumés that they go through," Tsung says. Of the reasons to throw out an application—GPA, undergraduate institution, years of work experience—the GMAT is an "easy one," she says.

But Tsung, along with most other career services directors, maintains that even in a recession, the more traditional and personal elements of the job search, such as interviews and references, will always be more important than the hard numbers. As for recruiters cutting off applications with low scores, "it's much easier to do that when you don't have anything to go on besides paper," she says. "What that means is that they all need to get out there and talk to people."