GRE vs. GMAT – the battle for MBA admissions domination “What’s the synonym of ‘inchoate’?

”, “What’s the antonym of ‘pulchritude’?” – these are some of the questions running in a student’s mind few hours before her GRE. When I first heard about the recent push by Educational Testing Service (ETS) to convince B-schools to endorse GRE for their admissions, I wondered if there was any benefit an MBA student would gain by memorizing the meanings of such obscure words. An MBA’s work is to comprehend intricate scenarios and elucidate them in layman terms. Gaining vocabulary may not be of help to her and it may not even be the right method to test her competence for B-school. The question arises, should B-schools accept GRE scores also for their admissions? Having admitted to a top B-school through the GMAT, I was slightly biased against the GRE. Hence, in order to provide a neutral opinion on the topic, I decided to evaluate the question from the perspective of the stakeholders involved. So, who are the stakeholders here? The 3 most prominent are: the B-schools, the Bschool aspirants and the test administering organizations: GMAC (Graduate Management Admission Council) for GMAT (administered through Pearson VUE) and ETS for GRE. Let’s look at the inherent motivations of each of these stakeholders and benefits (if any) they derive by adopting GRE: 1) BUSINESS SCHOOLS More than 115 B-schools worldwide, including Harvard, MIT and Queens will be accepting GRE for their admissions this year. But this is a fraction compared to 1,800 schools that accept GMAT currently. Schools would consider the following factors in their decision: Test scores as performance indicators during MBA – The predictability of a test in future performance of a candidate is one of the aspects schools are interested in. GMAT, with its statistics showing a strong correlation between GMAT performance and MBA grades, takes an upper hand here. GRE would require more years to build up the same level of information. Stanford that adopted GRE in 2007 plans to study the students thus admitted to see whether there’s a correlation between their GRE scores and academic performance. Test scores as applicant differentiators – Given the diversity of the applicants, a standardized test such as the GMAT is the only common comparison parameter that admission committees have to pick the best among the applicants. Introduction of GRE thus adds additional complexity to compare GRE scores with GMAT scores. ETS tries to overcome this issue by providing a

GRE to GMAT conversion table. The process of developing this table is questionable. Secondly there could be a large margin of error in this conversion. GMAC mentions that a GMAT score is accurate up to 30 points, i.e. a person with a 720 score could have got a 690 or a 750. On the other hand, the ETS prediction for a 700 verbal and 700 quantitative scores on GRE is 690 on the GMAT. But statistically, the range is 110 points, i.e. there is 90% probability that the score would be between 800 and 580. This wider range of the predicted score makes it less accurate and less effective as a differentiating factor. Larger pool of applicants through GRE – ETS claims that one of its strengths is that GRE takers intend to apply to other graduate programs because of which B-schools can fish in a larger pool of applicants. While this claim is right and will lead to increased application fee revenues, it might lead to adverse selection – the school admits students who didn’t originally intent to be in Bschool but ended up accepting it because they didn’t get a graduate program of their choice. Students with little intention to do MBA would make them less prepared for the ups and downs of a B-school curriculum and thus eventually affecting the quality of the program. This outweighs the minimal gain in revenues. 2) STUDENTS 247,000 students took GMAT last year. With MBA education getting popular by the day, this number is bound to increase this year. If given a choice, what would motivate these people to switch from GMAT to GRE this year? Lower exam cost – GRE costs just $180, while GMAT costs $250. GRE has a cost advantage over GMAT. But GMAC claims that it charges high price to ensure the security, accuracy and reliability of its test. Is this worth a whole $110? This needs to be evaluated. One test serves all admissions – GRE is accepted by several graduate programs including those in economics, engineering and sciences. Thus the candidate may prepare for a single exam and apply for a wide range of programs. This is a strong convenience factor for all aspirants. Test format – In order not to provide undue advantage to students with prior business background, GMAT tests candidates in basic Math and verbal English. Although GRE also flaunts of similar sections, as mentioned above it doesn’t completely test an MBA aspirant’s time management and critical thinking skills. Therefore probably, GMAT is better testing tool. 3) TEST ADMINISTERING ORGANIZATIONS

Both GMAC and ETS are not-for-profit organizations that are in pursuit of developing the best programs to evaluate and discover talented students. But there are controversies surrounding both organizations for pursuing profitability. Increasing its user base and thus increasing its revenues seems to be the motivation behind both these institutions. This partly explains why ETS is pitching GRE so strongly to B-schools and why GMAC is cordoning Bschools from adopting the GRE. If indeed GMAC and ETS intend to provide the best service to the candidates, as per their mission statements, they must collaborate and develop better testing methodologies. CONCLUSION Competition is good in any industry. Economics theory suggests that oligopoly is better than monopoly. Hence adopting GRE is a welcome move. This might not only induce GMAC to make GMAT more affordable, but also improve its quality. Following are few suggestions to make GRE more adaptable for the B-school world: 1) ETS should develop a specific GRE tailor-made to test MBA aspirants, like the existing GRE Subject Tests. Since MBA entrants are from miscellaneous backgrounds, the test must be generic enough to cater to all students. 2) ETS should develop a better prediction model for GRE to GMAT conversion. In the meantime B-schools should employ admission committee members from other graduate programs to evaluate whether a candidate’s GRE score falls in the range the B-school is looking for. 3) Early adopters such as Harvard and Queens should follow the example of Stanford to measure the academic performance of GRE applicants. Over the years, this information can be used to determine the correlation between GRE score and MBA academic performance.

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