GMAT as a Predictor of Success

GMAT Validity Studies and GMAC

The Graduate Management Admission Council (GMAC) has conducted or funded research on the GMAT for much of its existence. A 1985 study examined the GMAT's ability to predict business school grades for international MBA students at 59 U.S. graduate business programs. This research concluded that GMAT quantitative scores more effectively predicted first-year grades than GMAT verbal scores. In 2005, GMAC released a summary report of 273 studies of over 41,000 students between 1997 and 2004. Among the major conclusions of this report were the following: the verbal and quantitative sections of the GMAT each had higher individual predictive validity of academic performance in graduate business school than undergraduate grades, the GMAT analytical writing assessment had "modest average validity value," and GMAT total scores had a much stronger "validity coefficient" than undergraduate GPA (.459 versus .283). A 2009 study of the GMAT and non-MBA business degree offerings found the GMAT to be less valid in forecasting success for these types of students. The resulting coefficients in this study were .331 GMAT verbal, .204 GMAT quantitative, and .397 GMAT total, compared with .431 for UGPA.

Independent GMAT Validity Studies

Because the organization has a vested interest in promoting the value of its own test, research on the GMAT published by GMAC should obviously be taken with a grain of salt. The results found by independent researchers often paint a less flattering portrait of the exam. For example, a 2012 article appearing in the International Journal of Business and Systems Research concluded that female business students in the study's sample had both lower average GMAT scores and higher MBA program grades than their male counterparts. The National Center for Fair and Open Testing has documented significant gender and racial disparities in average GMAT scores, and criticized the practice of using GMAT cutoff scores for admission and financial aid. Finally, a 2013 doctoral dissertation written at the University of Georgia directly contradicted GMAC's earlier findings, concluding that undergraduate GPA was the "strongest standalone predictor of graduate academic success."

The GMAT and Career Success

There is a correlation between the GMAT and career success in the sense that high GMAT scores make acceptance to top business schools more likely, and graduates of these institutions generally fare the best in the job market. However, no direct link between career accomplishment and GMAT scores in and of themselves has been established. GMAC has conceded this point, asserting that the GMAT does not measure "every discipline-related skill necessary for academic work, nor does it measure subjective factors important to academic and career success." Yet in some cases, there may very well be an inverse relationship. GMAC has stated that GMAT scores tend to decline for older students (age 32 and above). These types of students bring more work experience to MBA programs, and therefore graduate with more favorable resumes than their younger colleagues. Lower-scoring students of this variety are thus more desirable job applicants. A 2012 article in Forbes magazine was dismissive of the GMAT's ability to predict career success: "Our research has found that the GMAT has shown no validity in identifying who will be the most successful managers after graduation." In the final analysis, prospective business students should regard the GMAT as an admissions test and not a determinant of their future career potential.

Job Prospects for MBA Graduates

As noted above, the GMAT functions as a "gatekeeper" for selective business schools, which place the highest percentage of their graduates in lucrative jobs. New MBAs should also consider the cost of graduate business training when making decisions on their future. According to a 2015 article published in U.S. News & World Report, the Foster School of Business at the University of Washington offered the best balance between average starting salaries and average student debt ($105,680 and $29,720 respectively). Graduates of the higher-ranking Stanford Graduate School of Business earned better average starting salaries of $129,618, but also graduated with a much higher average debt rate of $77,559. At some of the top programs, such as NYU's Stern School of Business and Duke University's Fuqua School of Business, student debt actually exceeded first-year salary. High-earning MBA graduates, especially those who are young and single, can rather easily absorb these costs, but expenses and benefits should be weighed carefully before beginning an MBA program. Compensation levels associated with specific business schools should also be compared to overall pay averages for MBAs, which a recent PayScale survey put at $54,005 (less than one year of experience), $58,653 (one to four years of experience), and $99,156 (ten or more years of experience). Assessing the ultimate worth of a graduate business degree can be a time-consuming process, but it is an effort that will pay great dividends.