Business Schools

GRE Eyes GMAT's Testing Turf


Can an alternative entrance exam break the GMAT monopoly at top business schools? The group behind the GRE is giving it a try

Josh Cincinnati is a member of a fairly new breed of business school student—one who has never taken the Graduate Management Admissions Test, better known as the GMAT. Cincinnati, who graduated from the University of Virginia last May, knew he wanted to go to graduate school, but wasn't sure what for. In a few years, he figured, he would apply to business school, but for now he kept his options open and took the Graduate Record Exam (GRE) instead of the GMAT. Much to his surprise, the 23-year-old discovered he could apply to Stanford Graduate School of Business with only his GRE scores, allowing him also to consider programs in politics and economics.

"It was a nice option to be able to apply to multiple programs at the same time," Cincinnati says. The Stanford application was a shot in the dark, but he got in.

While taking the GMAT, which is produced by the Graduate Management Admission Council (GMAC), is a time-honored rite of passage for virtually all students seeking admission to top business schools, the Educational Testing Service (ETS), which administers the GRE, is taking aim at the lucrative business school market by pitching the GRE, which is used by a wider range of graduate schools, as an alternative to the GMAT. In September, ETS began placing advertisements in publications such as The Chronicle of Higher Education with the message that MBA can stand for "More Business School Applicants" should B-schools choose to use the GRE.

ETS points out a handful of benefits to using the GRE: It has more test centers around the world, making the exam more accessible than the GMAT; it's cheaper—$140 vs. the $250 GMAT fee that brought in a total of close to $80 million in revenue last year to GMAC; and its status as the general standardized test for other graduate programs could attract more of the applicants business schools are clamoring for—women, minorities, and candidates with liberal arts backgrounds.

Fishing in the GRE Pond

"Once they realize that they don't have to take another test to apply to business school, they are going to hedge their bets and explore both opportunities," says David Payne, head of the GRE program for ETS.

GMAC, which has positioned the GMAT as the primary standardized MBA admission test since 1954, doesn't see it that way. GMAC President David Wilson acknowledges allowing the GRE for business school admission would likely expand the applicant pool, but a larger pool is not necessarily a better one, he points out. "If time were limitless, then the larger the sample, the better. But if time is a constraint, then you want to be sure you are fishing in a pond where there are fish you can eat," Wilson says. "Are some schools fishing in the GRE pond? Sure. We haven't seen results. We still believe we offer a stronger, better test."

It's not clear how many schools are accepting the GRE or considering it; the ETS says it doesn't track that statistic. Among those already fishing in that GRE pond are some top-tier business programs—namely Stanford and MIT's Sloan School of Management, both of which in 2006 announced they would begin accepting either test with student applications. But GMAC's near monopoly on the market has complicated the process. The council's membership policy states "requiring the GMAT exam as part of its admission process" is part of the minimum criteria for every GMAC member school, including Stanford and MIT.

Testing Policies Unclear

In response, MIT has reluctantly modified the language on its admissions Web site to place less emphasis on the GRE alternative, says Rod Garcia, director of MBA admissions. Along the same lines, Stanford has done little promotion of the change since its launch last year, so applicants will likely only discover the GRE option once they have already started the application process. In its first year in place at Stanford, just 2% of applicants took advantage of the new alternative, according to head of admissions, Derrick Bolton, who says Stanford's membership allegiances to GMAC prevent him from further discussing the matter.

Wilson says neither school is in violation of the policy, which while it "mandates the GMAT" also "allows for degrees of freedom."

Beyond marketing, ETS is working on improving the GRE in ways Payne says will better suit business schools. He plans to hold focus groups with business school deans to discuss the use of the GRE. A handful of modifications to the test are already in the works. The changes include replacing antonyms and analogies sections with more reading comprehension that tests inferential reasoning rather than the use of vocabulary out of context. The quantitative reasoning section will include more data interpretation questions and real-world problems, another way the exam will attempt to better suit business schools. "People applying to business schools are really going to see the relevance there," says Payne.

Perhaps the most drastic change will be the addition in 2009 of a soft skills measure called the Personal Potential Index. The PPI will provide a six-part evaluation completed and submitted by outside references who will assign numerical scores to knowledge and creativity, communication skills, teamwork, resilience, planning and organizing, and ethics and integrity.

Opening Doors

For the past year, the PPI has been piloted at Arizona State University's Project 1000, which helps minority students with admission to graduate programs. Michael Sullivan, who oversees the project for ASU, says the index encourages recommenders to write more introspectively about applicants and forces them to quantify their evaluations. Still, he says, "it's too novel and unusual at this point in the game" to determine its efficacy.

While research on the ability of the GRE to measure success in a graduate business program comes nowhere near the volumes of data collected on the GMAT over the years, admissions officers are not dismissing the test as a viable alternative for the future.

"I'm not certain that there's just one test to measure the ability of a student to be successful in graduate management education," says Rose Martinelli (BusinessWeek.com, 10/16/07), head of admissions at the University of Chicago Graduate School of Business, which only accepts the GRE in unusual cases, such as when an international applicant doesn't have access to a GMAT testing center. "I think there may be something there to explore," Martinelli adds. "It really can open up doors to students we don't get."


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