9 Fun Facts about the GMAT

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Happy 60th Birthday GMAC!

To celebrate GMAC’s 60th birthday, we’ve compiled the following fun GMAT facts from the GMAC site:

1. In 1953, nine b-schools met with ETS to create what would later become the GMAT. Those schools were Harvard, Rutgers, Columbia, Northwestern, Chicago, Seton Hall, Michigan, Washington University (St. Louis), and University of Pennsylvania.

2. Pre-1976 the GMAT was known as the Admission Test for Graduate Study in Business (ATGSB).

3. The question formats on the 1954 exam were Best Arguments, Quantitative Reading, Verbal Omnibus (Sentence Completion, analogies, Antonyms), and Quantitative Reasoning (Problem Solving, Data Interpretation). On today’s exam we have Integrated Reasoning, Verbal (Critical Reasoning, Reading Comprehension, Sentence Correction), and Quantitative (Problem Solving, Data Sufficiency). As you can see, Problem Solving is the only question format present on today’s exam that was also used on the original test.

4. In 1997 the GMAT exam became computerized.

5. The GMAT was the first standardized test to use palm vein readers – this analyzes specific hand vein patterns of users to ensure security and catch proxy test takers. This was introduced in 2008 and 2009.

6. The first five countries to offer the GMAT (which was then the ATGSB) were the U.S., Canada, England, France, and India.

7. The exam was offered in Hawaii five years before Hawaii became a state.

8. The GMAT is currently available in 113 countries – on every continent except Antarctica.

9. The Official Guide for GMAT Review was introduced in 1978. It’s now in its 13th edition.

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What Do B-School Alumni Think?

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95% of alumni said they would recommend their MBA program. Not bad.

GMAC released its 2014 Alumni Perspectives Survey this week – below are the highlights from the report:

•  21,000 b-school alumni from the classes of 1959-2013 responded to the survey.

•  83% of alumni from the classes of 1959-2013 reported that their graduate management degrees played an essential role in finding a job.

•  91% of 2010-2013 alumni rated their management education value from good to outstanding when compared to the cost of the degree. This compares to 95% of graduates from the classes of 2000-2009, and to 98% of alumni from the 1950s-1990s.

•  95% of alumni said they would recommend their MBA program, another sign of very high satisfaction.

•  45% of self-employed alumni who graduated in 2010-2013 started their businesses at graduation. Before 1990, that number was at just 7%.

•  66% of 2010-2013 grads say that their management education was financially rewarding. In the 1990s, the percentage was at 84%, and prior to 1990, it was at 87%.

• 77% of alumni give financially to their alma mater.

•  83% of alumni reported that they are satisfied with their jobs.

•  20% of alumni work in finance and accounting and 20% in products and services.

See the 2014 Alumni Perspectives Survey for more details.

Take-aways from the 2014 GMAC Alumni Perspectives Survey.

•  The main conclusion to draw from this alumni survey, as with previous ones, is that alumni are overwhelmingly satisfied with their graduate education in business. Other graduate educational categories would love to be able to report the kinds of numbers that GMAC routinely presents.

In short, reports of the MBA’s demise are greatly exaggerated. (While the survey includes responses from non-MBA graduate management alumni, approximately 75% are from MBA alumni and more than half of the MBAs were enrolled in two-year, full-time MBA programs.)

•  Cloud hidden in all the glitter. GMAC attributes increased satisfaction with the degree and specifically with the value of graduate management education among more senior alumni to the passage of time. The more senior the grads, the happier they are that they invested in an MBA.

However there could be a much more concrete contributing factor: Perhaps those changing numbers over time are also due to the increased cost of the degree over the last thirty years. In other words, more recent alumni see a lower ROI and are consequently slightly less ecstatic simply because the cost has increased.

This development doesn’t mean that the degree lacks value for you applying now or in the next couple of years. It means you need to do your homework and look at expected return on your MBA investment, just as you would analyze expected return on any other investment.

If schools don’t get tuition under control and MBA salaries stay relatively flat, those satisfaction stats will decline over time.

•  MBAs are increasingly, although still in fairly small numbers, starting their own businesses upon graduation. In the past the overwhelming majority of MBAs worked as employees for at least three years before starting their ventures. However, since 2010, 45% of self-employed alumni started their own business immediately upon finishing their MBA.

•  “Soft skills” taught in business school are among the top five skills business school alumni use on the job regardless of the alum’s job function. Perhaps critics who say you can learn what business schools teach from books or by taking a few business functional courses are missing key benefits of the education.

This Special Report will help you navigate the MBA Maze.

Linda Abraham By , president and founder of Accepted.com and co-author of the new, definitive book on MBA admissions, MBA Admission for Smarties: The No-Nonsense Guide to Acceptance at Top Business Schools.

2014 Hiring Outlook Looking Good

Interested in a maters in management? Check out our interview with Sheryle Dirks of Duke's MiM program!

MiM Grads Seeing the Greatest Increase in Demand.

The most recent GMAC press release shared new data from the company’s Year-End Poll of Employers, including the following highlights:

• 72% of employers polled plan to hire b-school graduates, up slightly from this past year’s 71%.

• 87% plan on hiring direct-from-industry hires in 2014, up 5% from 2013’s 82%.

• The percentage of those who plan to hire master in management grads in 2014 also increased 5%, from 37% in 2013 to 42%.

• 87% plan on increasing (43%) or maintaining (43%) the number of hires in 2014 from this past year.

• 56% of employers plan on increasing annual base salaries for MBAs in 2014. 45% plan this increase at the rate of inflation and 11% plan to increase above the rate of inflation.

• 61% of employers plan on hiring MBA interns in 2014

• 85% of employers met or exceeded their MBA hiring plans for 2013.

Take-aways

While it’s not time to break out the champagne, these stats show a steady and solid state in employer recruiting of business graduates with basically marginal improvement in hiring numbers. Salary stats are pretty flat. Continuing a trend I commented on last year, masters in management grads are seeing the greatest increase in demand. For college seniors and early career applicants, that program could be a really attractive option. (For more info on Duke’s MiM program, please see Admissions Straight Talk: Interview with Sheryle Dirks.)

To me this report says that b-schools are going to have to pull back on tuition increases, which have exceeded the rate of inflation for years. If they don’t, they will kill the ROI that lay the golden egg called the MBA.

But for current MBA students and probably for this year’s applicants, ROI is positive, employers are hiring, and things are looking good. Just not yet ready for the bubbly or excessive exuberance.

View the recording of our free webinar: Career Strategy for MBA Applicants!

Linda Abraham By , president and founder of Accepted.com and co-author of the new, definitive book on MBA admissions, MBA Admission for Smarties: The No-Nonsense Guide to Acceptance at Top Business Schools.

The GMAC Summit

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Prep Matters

I spent last Friday at the GMAC Test Prep Summit in Los Angeles. The conference was mostly for test prep professionals, but GMAC invited admissions consultants and I decided to go. I’m glad I did.

I am keenly aware of both the rise in test scores over the last 20 years as well as the importance of a competitive test score in the evaluation process.  The session presented by Dr. Larry Rudner, GMAC’s VP of Research and Development and Chief Psychometrician, highlighted factors for success on the GMAT. They may not be news, but they are critical to achieving a high score. They are also worth highlighting and repeating. Here goes:

1. Prep matters. Dr. Rudner showed us data on the nationalities that score the highest on the GMAT, specifically on the quant section of the exam. He also showed us data by nationality on self-reported prep time. Those nationalities with the highest scores also spent the most time preparing for the exam.

2. Pacing correlates to a high score. The first questions are not more important than later questions, especially if you end up guessing at the end just to finish.

3. Guessing is better than omitting. If you run out of time, you are better off guessing than simply leaving questions blank. However, see #2.

4. It usually pays to retake. If your score is not competitive at your target schools and you scored less than 700, then you should retake the exam. Among U.S. test takers who scored 700 or more on their first GMAT, the average increase was less than 10 points. Of all U.S. test re-takers, 55% increased their score by 30+ points. If you aren’t happy with your first score given your target programs, are willing to put in the time and effort to raise your score, got less than a 700, and are applying to a school that, like most, uses the highest score, then you should give it a second shot.

Thank you GMAC for holding the informative conference!

Got GMAT Questions? Visit GMAT 101 for advice.

Linda Abraham By , president and founder of Accepted.com and co-author of the new, definitive book on MBA admissions, MBA Admission for Smarties: The No-Nonsense Guide to Acceptance at Top Business Schools.

Positive Employment Feedback from B-School Class of 2013

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90% of 2013 graduates were employed by September

In September, the Graduate Management Admission Council (GMAC) polled graduates in the b-school class of 2013 and found overall success when it came to finding jobs and valuing their degrees. Here are some highlights from the Global Management Education Graduate Survey:

• 90% of 2013 graduates were employed by September. By world region, U.S. respondents fared the best with 95% employment; this is followed by 92% of Latin Americans, 87% of Indians, 85% of Asia-Pacific citizens, and 82% of Europeans. 92% of full-time, two-year MBA alumni were working at the time of the alumni poll – the highest level since the class of ’09.

• In 2009, only 84% of respondents were employed by the September following their graduation; in 2012, that figure was at 92% (slightly higher than this year).

• 74% of those queried said that they would not have gotten their jobs without their business degree.

• 15% of class of 2013 grads entered the technology sector, compared to 12% in 2009.

• 5% of 2013 alumni reported that they were entrepreneurs or self-employed.

• An eye-popping 96% of 2013 grads declared that the value of their business degree was “outstanding, excellent or good.” This is comparable to past years.

• Median full-time salary for two-year b-school grads (U.S. citizens) in 2013 was $90,000 with additional compensation/bonus of $10,000; for Indian citizens in this category, the starting salary was $34,988.

• For citizens of European countries who graduated from full-time one-year programs, the median starting salary was $101,093.

• Median part-time salaries for U.S. citizens came in at $85,000.

See the GMAC press release, “Nine Out of 10 Class of 2013 Business School Alumni Employed, Poll Finds,” for more info.

Takeaways

The #1 lesson from this data (and the Forbes ROI ranking) is that reports of the MBA’s demise are greatly exaggerated. There are very few initiatives, educations, or projects in life that get the kind of approval ratings and can report the kind of results that GMAC is reporting here. Now is it possible that the 915 responses are somehow positively biased? Yes, but GMAC had a healthy 19% response rate and sent questionnaires to graduates of 129 business schools including the 10% that report they are not yet employed.

For the first time, GMAC also studied entrepreneurs (5% of the class) and asked about their plans. However, the interesting entrepreneurial data from my perspective was the entrepreneur’s view of the MBA. 87% reported that “their education provided them with the essential knowledge, skills, and abilities to develop their business.” Given the small sample size (approximately 46 MBA entrepreneurs), I’m not sure this is quite as compelling as the other data, but it does give an indication that MBAs find their education valuable in an entrepreneurial setting.

Is the MBA a great investment for everyone? No. Poets & Quants recently ran an article on a new book, The MBA Bubble by Mariana Zanetti [Disclaimer: I have not read the book]. According to P&Q and the comments Zanetti posted on P&Q, she acknowledges she went to business school for the wrong reasons and now she has written a book claiming that the MBA is not worth the money and time it requires.

For some people and some business schools, she’s right. For others, she’s wrong. It’s up to you the applicants to make sure that you apply to programs that will help you achieve your professional goals with a strong likelihood of positive ROI. If you do, chances are high that you will graduate into the happy 90% of employed and the 96% of satisfied b-school grads.








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Application Volume Up at Full-Time MBA Programs, and Other Fun Facts

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56% of 2-year MBA programs saw an increase in international applicants

A GMAC press release reports the results of its 2013 Application Trends Survey. 683 graduate business programs participated in the survey – this breaks down into 328 business schools in 42 countries.

Here are some of the highlights:

• 52% of two-year MBA programs reported an increase in applications in 2013 over 2012; 4% of programs said they received the same amount as last year.

• Among one-year MBA programs, 49% reported an application increase; 4% of one-year programs reported the same volume as in 2012.

• Last year, only 43% of two-year programs and 47% of one-year programs said they experienced an increase in volume in 2012 over 2011.

• Among two-year MBA programs, 56% saw an increase in international applicants; 59% saw a decrease in domestic applicants.

• Only 29% of part-time MBA programs received more applications in 2013 than in 2012; 53% received fewer applications this year; and 18% received the same volume as last year.

See the GMAC press release for more details.







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MBAs Become More Popular in Eyes of Global Companies

HiringThe latest GMAC survey reveals that MBAs are starting again to steal the hearts of recruiters worldwide. Recruiting is up and expected to improve further according to GMAC. You should review the whole report, but in the meantime, here are a few highlights from the 2013 Corporate Recruiters Hiring Report.

• 75% of the 900+ companies surveyed worldwide plan to hire recent MBAs in 2013. This is up from 71% in 2012.

• Furthermore, companies plan on boosting the number of MBAs they hire in 2013, from 11.4 in 2012 to 14.6 in 2013 – a 28% increase.

• MBA graduates are starting their jobs with a higher salary this year than last year, up to $95, 000 in 2013 from a median salary of $90,000 in 2012.

• The Northeast region of the U.S. is home to the highest number of companies looking to hire fresh MBA or business masters graduates, at 92% of those surveyed.

• The South is expected to see the greatest increase in non-MBA masters hiring.

The industries experiencing the greatest increase in demand for MBAs are energy/utilities and health care/pharmaceuticals sectors – ironically, not the industries traditionally dreamed of by MBAs. See this helpful chart, and then the actual report, for more info.








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Introducing GMAC’s New Reflect Self-Assessment Tool

Reflect Self-Assessment Tool

“Reflect.”

GMAC has just launched a self-assessment and development tool called Reflect™. The online program will help MBA applicants and MBA graduates discover and strengthen their professional and personal strengths, measure soft skills, identify and improve weaknesses, and create an action plan to help boost job performance. The tool will help put incoming students on the right path to find and then advance in their ideal careers.

John Byrne from Poets & Quants offers a thorough review of Reflect. He explains how the assessment works – 574 questions, some of them “rather silly or frivolous” (you can see his examples on his post), to be completed and then analyzed by the program. The user than receives grades in 10 different competencies. Bryne likens Reflect to the Myers-Briggs test, but instead of focusing on psychological preferences focuses on soft skills solutions. Applicants can use the tool to showcase their leadership qualities to graduate school adcoms, while graduates can gain a new way to present themselves to corporate recruiters.

One benefit of Reflect (compared to other assessment programs) is that the tool can be used effectively without a coach or facilitator – all you need is a computer.

Once you receive your scores, you’ll also gain access to 200 learning resources to help you develop a customized work plan, 300 tips, and guidance on career benchmarking in various job functions.

The Reflect tool costs $99.99.

See GMAC’s Reflect™ Self-Assessment and Development Tool for more details.





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B-Schools Get Global

Global BusinessThe most recent GMAC press release reveals how graduate management programs are becoming more diverse and more global, with more students from around the globe sending GMAT scores to more diverse parts of the world.

Here are the highlights from the GMAC’s The World, Asian, and European Geographic Trend Reports:

  • In the last year (2012), 831,337 scores were sent to 5,281 programs, up 21% from 2008 and a new record.
  • 59% of total GMAT volume from 2011 to 2012 came from outside the U.S. That’s up 19% from the previous year.
  • 29% of scores were sent to specialized MA programs, up 17% from 2008.
  • 43% of exams were taken by women, a high for the third year in a row. The majority of test takers in China, Taiwan, Thailand, Russia, and Vietnam were women this past year.
  • 47% of test takers were below age 25; in 2008 only 38% were in that age range.
  • 98% of test scores sent to U.S. programs in 2012 came from U.S. test takers. 75% of the total scores worldwide were sent to U.S. programs.
  • 20% of global test takers are Chinese, the largest citizen group after Americans. Chinese citizens took 58,196 GMAT exams in 2012.
  • The third largest citizen group is the Indian group that took 30,213 GMAT exams in 2012.
  • Europeans took 24,847 GMAT exams and sent more than 60% of scores to European programs.

In October we posted an article on GMAT volume in general (not diversity-related), which you should also take a look at.






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Busting Two MBA Myths

MIT

“Assess your needs.”

Thanks to those of you who stopped at Accepted.com’s table at the Los Angeles MBA Tour event a couple of weeks ago and shared your thoughts, doubts, questions, and experiences. I enjoyed meeting you.

I was bothered, however, by a certain refrain I heard a few times during the evening. Basically two related MBA myths that deserve busting:

Myth #1: Once you attend an MBA program outside the Top 10, it doesn’t matter which school you attend, so you may as well go to the cheapest one you get into.

Myth #2: It doesn’t pay to get an MBA outside the M7/Top 10.

When asked my opinion of these MBA memes, I politely explained why I thought they are utter nonsense, the product of lazy minds. Nothing more. The reality is much more complex.

Schools inside and outside the Top 10 vary in terms of their approach to management education and their strengths. Some schools outside the Top X may be excellent for a given specialty. For example, Smeal and Broad are generally not in any overall Top 10 ranking. However, both programs are very well regarded for supply chain management and logistics. They may be excellent choices if that’s your interest. Babson is renowned for teaching entrepreneurship; it is usually in the bottom half of the top 50 overall. Similarly Thunderbird is excellent for international business. For those specialties, these schools may be better programs than programs ranked overall in the Top 10.

Obviously there are a lot more schools outside the top 10 than in it, and the differences among all the schools are many. Applicants need to understand those differences and seek schools with the curricular, extra-curricular, and career management strengths to help them achieve their goals. Then applicants can compare costs and anticipated return. If applicants choose a school based on Myth #1 and without the analysis I suggest, applicants are simply basing a major investment in time and money on folklore.

Whether it pays to get an MBA at School X, regardless of that school being in the Top 10, Top 20, or Top 50, depends on both the school and on you. Here are a few questions that you need to answer:

  1. How much are you making currently? (That will determine your opportunity cost if you are considering a full-time program.)
  2. What is the typical salary of MBA grads from your target program who found a job in your area of interest? (School averages are much less worthwhile.)
  3. Is there a non-financial benefit that you seek in addition to classic financial ROI? (Moving into a job you will enjoy, for example.)

While it is true that average salaries at different schools tend to decline as you go down the rankings, for the overwhelming majority of MBAs, ROI is positive and MBA alumni satisfaction per GMAC surveys is overwhelmingly high despite two recessions in the last ten years. And that data includes survey responses from non-Top 10 schools.

Don’t trust myths about rankings to determine where you invest your time and money. Don’t rely on fable and fantasy to make a major life decision. Do your homework, as the applicants at The MBA Tour were doing. Learn about the schools; don’t focus on their rankings.

Assess your needs. Determine your investment including opportunity cost. Evaluate probable return – both financial and non-financial – at schools that meet your needs.

Then, and only then, decide whether your MBA is worth the cost and which ones are right for you.





Linda Abraham By , president and founder of Accepted.com and co-author of the new, definitive book on MBA admissions, MBA Admission for Smarties: The No-Nonsense Guide to Acceptance at Top Business Schools.