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GRE v. GMAT: Battle of the B-School Gatekeepers

The battle between two of the largest graduate school testing giants has been heating up recently as more business schools warm to the idea of providing students with an alternative to the Graduate Management Admissions Test (GMAT). Now another top-ranked business school is weighing in. The University of Pennsylvania's Wharton School(Wharton Full-Time MBA Profile) plans to allow MBA applicants to submit the Graduate Record Exam (GRE), for admission in the fall of 2010, says Admissions Director J.J. Cutler. It's part of a move by the school to attract a broader applicant pool, including dual-degree students, younger applicants, and international applicants from far-flung countries without GMAT access.

"We are trying to open up a little bit the different types of people that we want to apply to business school and we don't want to create additional hurdles for them to do so," Cutler says.

More B-Schools Embrace the GRE Wharton is following closely on the heels of Harvard Business School(Harvard Full-Time MBA Profile), which made waves this spring when it announced that it would allow applicants to submit the GRE for admissions. The institutions are joining the ranks of a small but rapidly growing number of business schools that are embracing the GRE, a standardized exam that students use to apply to a wide variety of graduate schools. The movement comes at a time when younger applicants—fresh out of college or just a year or two after graduation—are showing an increased interest in business school. For these applicants, many of whom have already taken the GRE, business schools that accept the test allow them to transition into an MBA program without studying for and taking another exam.

There are now more than 250 MBA programs that allow students, some on a case-by-case basis, to submit GRE scores with their applications, including most recently the University of Virginia's Darden School of Business(Darden Full-Time MBA Profile), Queen's School of Business(Queen's Full-Time MBA Profile) and Tulane's Freeman School of Business (Tulane Full-Time MBA Profile). While most of the schools say they still prefer most applicants to use the GMAT, they say the GRE is becoming a valuable tool in attracting sought-after and unconventional business school candidates who might not otherwise apply.

"The GMAT is a very successful standard for business schools, but that is certainly not the only standard," says Bill Sandefer, director of graduate admissions at Tulane's Freeman School.

This type of attitude represents a seismic shift in business school admissions. For decades, the GMAT test, given by the Graduate Management Admission Council (GMAC), has been the undisputed king of the management education world. The exam has been used since 1954 by business school admissions officers to evaluate candidates on their math, verbal, and critical-thinking skills.

Opening the Door to CompetitionUp until recently, the GMAT exam had a virtual monopoly over business school standardized exams. That all changed on Jan. 1, 2006, when GMAC cut its ties with the Educational Testing Service (ETS), with whom it had a decades-long partnership to develop and deliver the GMAT exam, moving instead to a new testing administrator, Pearson VUE. The severing of ties meant that ETS no longer had to abide by a noncompete clause with GMAC, giving it the green light to court business school admissions officers and promote the GRE as an alternative exam. Under the previous agreement between ETS and GMAC, this type of activity was forbidden.

"Once they ended the contract with us, we were able to move into this market," says David Payne, head of the GRE program for ETS.

To capitalize on the opportunity, ETS has been aggressively marketing the GRE to B-school admissions officers in recent months, placing advertising campaigns in key business publications, paying visits to business schools admissions teams, and developing new testing tools that it hopes will convince more schools to use the GRE, says Payne. ETS has also been promoting the exam as a more affordable option for students; it costs $150 to take the GRE, versus $250 for the GMAT.

Top Schools Sign Up for GREETS made headway several years ago when the Stanford Graduate School of Business(Stanford Full-Time MBA Profile) and MIT's Sloan School of Management(MIT Sloan Full-Time MBA Profile) announced they'd allow students to submit the GRE instead of the GMAT. The testing group's most significant coup to date was convincing Harvard Business School this spring to accept the exam for its MBA, as well its 2+2 Program, which accepts students straight out of college on the condition that they get two years of work experience before enrolling. Payne hopes that will have a ripple effect in the business school community.

"Now that Harvard has accepted it, I anticipate over the summer and into the fall we're going to see a rapid increase of other business schools accepting it," Payne says.

The University of Virginia's Darden School is one of the schools that have recently become more open-minded about accepting the GRE. For the first time this year, the school allowed joint degree candidates to submit the GRE in lieu of the GMAT , says Darden Admissions Director Sara Neher, who herself took the GRE exam this year to assess whether it would be an appropriate assessment for Darden applicants. "I wouldn't accept the GRE if I didn't understand what it was asking people to do," Neher says. "It's definitely not as complicated of a math test, but it still tests logic, general analytic ability, vocabulary, and reading comprehension in the same way the GMAT does," she says In addition, the school is willing, on a case-by-case basis, to allow younger business school applicants who might have taken the GRE in college to submit those test scores for admission. For example, Neher says she'd talk to an applicant who took the GRE in anticipation of pursuing a master's degree in English, but then had a change of heart. "I don't want a test to prevent someone from pursuing business education," she says.

Widening the Applicant PoolThat is also a mindset shared by Scott Carson, director of the MBA program at the Queen's School of Business, who allowed students to submit the GRE for admissions the first time this past school year. School officials recently decided to expand its class size from 75 to 110 or 120 students and felt they needed an alternative admissions exam to help attract unconventional students, such as dual-degree students from the school's law school, students with PhDs in other disciplines such as engineering, as well as more international students and women, he says. He expects only a handful of students to actually submit GRE scores—just one student submitted them this past school year—but says it is important to give students options.

"I think that business schools in general are looking further afield and trying to be more creative in ways that they source students," Carson says. "The acceptance of the GRE is probably just part of that overall trend."

At the moment, GMAC President Dave Wilson does not appear to be worried that some of the top MBA programs in the world are starting to embrace the GRE. His organization is busy working on expanding GMAC's reach in the business school world, he says. There are now 4,700 business schools around the world that use the GMAT test for admissions and the organization recently added 363 schools to its roster this year. That's a number far greater than the number of business schools ETS has signed on so far, he notes.

"I'm not going to let somebody else's game plan dictate my value system," Wilson says. "My job is to make sure that we continue to offer the best test and eventually the market will figure that all out."

Measuring IntangiblesOne tool ETS hopes will be particularly effective in helping it make the case to business schools is a workbook it developed called the "GRE Comparison Tool and Table." The tool is based on the test scores of 525 students who took both the GRE and GMAT between January 2006 and July 2008. It allows an admissions officer to look at an applicant's combined verbal and quantitative scores to predict the score they would have received on the GMAT. For example, a student with a verbal score of 490 and quantitative score of 680 on the GRE would have a predicted GMAT score of 570, according to the tool. This type of information is a "critical link" for b-school admissions officers, who up until recently were uncertain how to compare the results of the GRE to those of the GMAT, Payne says.

In addition, ETS also just released a new component to the GRE, the Personal Potential Index (PPI), a new evaluation system—offered at no additional charge to future test-takers—that it hopes will make the GRE more competitive in the graduate school testing market, especially in the business school sector. The index is a Web-based tool that debuted this month that allows recommenders to rank students based on six key personality traits: resilience, teamwork, planning and organization, knowledge and creativity, ethics, and communication skills. Students can elect to send the results of the 24-question standardized assessment to up to four schools, at no additional charge. ETS is billing the system as the first large-scale use of noncognitive measures, or soft skills, for admissions in higher education.

"Business schools have been telling us for years that they want to have this type of noncognitive information," Payne says. "The index allows students to document these attributes in a way that is standardized and reliable."

It remains to be seen just how valuable the tool will be to business schools and how much weight it will have in the admissions process. Many business schools say that their comprehensive application process already allows them to glean this type of personal information from candidates, whether through the detailed letters of recommendation or face-to-face meetings with promising applicants.

"I think that tool for us may be less useful than for a school that didn't have an interview option or a school that didn't have an opportunity to get a more 360-degree picture of a candidate," says Kathryn Bezella, associate director of MBA admissions at Wharton.

But some think that it could eventually catch on, as more students and admissions officers become familiar with the PPI evaluation system over the next few admissions cycles.

"I think that business schools will see the value of it," says James Wimbush, a dean at Indiana University's Graduate School and the past chair of the MBA program at the Kelley School of Business(Indiana Full-Time MBA Profile). "They won't do away with letters of recommendation, but I think this will be an additional tool to help them identify students likely to be very successful in MBA programs and thereafter."

GMAC doesn't have a similar assessment tool, thought GMAC's Wilson says the organization has been searching for over a decade for a way to provide admissions officers with a reliable way of evaluating applicants' noncognitive skills. None of the more than 200 assessment tools that the organization has examined has so far met GMAC's stringent standards, Wilson says.

"If we can find something that will meet our criteria of being reliable, secure, consistent, and objective, than we will implement it, but to date we haven't been able to find it," he says. "If the [ETS] instrument works, than they have really improved the entire decision process." GMAT Studies for a New ExamThat's not to say that GMAC is sitting on the sidelines while ETS makes inroads into the testing arena. The group is hard at work on developing a new-generation GMAT exam. GMAC recently asked 740 business school faculty around the world about how the exam could be enhanced and improved. The results of the redesign will be unveiled in 2013, Wilson says, and will result in a test that is "better tied to skills students need in this new era."

For now, it appears that the majority of business schools are still playing it safe, with most of GMAT's 1,700 member schools using the GMAT exclusively. But hundreds of business schools are watching carefully from the sidelines to see how the turf war between ETS and GMAC plays out.

Stuart Lipper, dean of Fordham University's Graduate School of Business(Fordham Full-Time MBA Profile)—which allows applicants to submit only the GMAT for admissions—is one of these spectators. For now, he says the school is taking a "wait-and-see attitude" about allowing students to submit the GRE.

"I think you have some of the leading schools that can afford to play around a little," Lipper says. "We can't afford to do that. At a school like ours, I think we feel we sort of have to play by the rules a little more."
Damast is a staff writer for Bloomberg Businessweek.

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