Sangeet Chowfla, president and CEO of the Graduate Management Admission Council (GMAC) does not think so. In an AACSB blog post, he explains why B-schools are not yet ready to abandon ‘selection’ that acts as a sieve to separate the right kind of candidates from among the thousands of applicants.

Why Adopt a Selective Approach?

• Selection enters the picture as soon as you decide to enroll for an MBA and draw up a list of schools that you hope would fulfill your educational and career aspirations
• As for the schools themselves, they are looking for candidates who could bring in the best mix of capability, experience, drive and diversity to fit within that program
• Enrollment-to application ratio for full-time MBA programs remains significantly high. In other words, demand exceeds supply
• This is despite the disruption caused by online or shorter duration programs leading to a decline in application volumes for full-time MBA programs in the United States

Chowfla quotes a recent GMAC analysis of 246 U.S. full-time MBA programs that disclose enrollment data on U.S. News & World Report’s website. It showed that out of 119,338 applications only 18,829 were selected, a ratio of 16%. The offer-to-application ratio was somewhat higher, at 31%, reflecting the need for a higher offer rate to offset yield losses as candidates apply to multiple schools.

Even in so-called less selective part-time MBA programs, the enrolled-to-application ratio was 58%, implying that there were nearly double the number of applications than available seats, he says.

While ratios will vary for individual schools, the need for schools to choose—or select—clearly still exists. This selection is often to find the best, Chowfla points out.

Some More Reasons

Chowfla says the schools also consider the following reasons:

• Whether the candidate is adequately prepared for the rigors of the program. If they have the reasoning, critical thinking, verbal or quantitative abilities to keep pace and contribute in the class
• Candidates in management programs are expected to learn from each other and draw benefits from the diversity of thought and experiences
• The candidate should be capable of completing the program
• They should have good employment prospects after completing the program as the school rankings are adversely affected by negative outcomes
• Signalling impact on candidates and employers. The brand value of a school and quality of the candidate and career progression affect the standing in the long run.

Chowfla concludes by saying that in today’s environment of enrollment pressure, the inclination to potentially open up and reduce the burdens of the admission process is natural. However, by staying true to selectivity, even in a dynamic, changing GME environment, schools can maintain and increase their signalling value, enhance cohort cohesiveness, improve employment outcomes, and protect the long-term value proposition of their brand.

Source 1

The global demand is up for the MBA and reports of the demise of the two-year full-time MBA are “greatly exaggerated,” says Chowfla in an article in BizEd, the bi-monthly magazine published by AACSB.

“We survey potential GME (graduate management education) candidates, current students, alumni, and corporate recruiters to compile global statistics on who is pursuing management education and why. Our most recent numbers tell us that management education is both more popular and more fragmented than ever before.

“We assess that every year up to two million people enter the GME market, defined as postgraduate programs in management, business, commerce, or administration. Currently, candidates can apply to more than 16,500 programs and institutions,” he says.

The business degrees that students pursue vary depending on their own career life stages, the situation in the globalized economy and the changes in the business cycle. “The MBA remains the most sought-after graduate management degree, but it no longer represents the only path to success. GME is no longer “one-size-fits-all,” he adds.

Chowfla points to three key factors, the first being the rising global demand for the MBA. While the reports about

declining application volumes in the U.S. and some schools discontinuing their MBA programs are true, the interpretation by some people that the traditional MBA (mostly 2-year programs in the U.S.) was on the way out to be replaced by shorter programs that produce job-ready graduates, would not be correct.

Globally, demand for the MBA is as strong as ever. A 2017 GMAC survey of 329 MBA programs showed that aggregate application volumes increased by 6% over the previous year. A separate study of alumni taken in 2017 showed that eight out of ten graduates rated their MBAs as excellent or outstanding.

Furthermore, Net Promoter Scores—which subtract the number of “detractors” from the number of “promoters” of any product or service—were in the 50-point range for MBA programs. On both measures, U.S. schools led their European and Asian counterparts, Chowfla says.

“There is a significant correlation between large class size and high rankings, and we conclude that students are signalling the importance they place on brand value. These larger, more recognized programs accounted for two-thirds of the total application volume in our sample,”

However, in 2017, applications to U.S. schools, constituting 44% of the total application volume, declined by 1.4%. The applications to schools with class sizes under 200 also declined by 11%. The survey found that these decreases were almost exclusively driven by the choices of international students and an interplay of increased availability of quality education and jobs in other regions. While in 2000, no Asian programs were ranked in the Financial Times top 40,  eight got ranked last year.

Negative perceptions about the U.S. as a study destination since the advent of Donald Trump as President, four in ten potential students have reconsidered pursuing degrees in the U.S. Recently launched programs in countries such as Germany, Spain, Singapore, and Japan are providing candidates with broader opportunities.

“Our application trends research shows that MBA application volumes grew by 3% in Europe, 6% in Canada and 13% in Asia,” Chowfla says.

In the meantime, international management programs have been expanding. In 2015, Saïd Business School at the University of Oxford in the U.K. increased its cohort of full-time MBA students by just over 40%. Within the past two years, Cambridge Judge Business School in the U.K. has increased its class size by 30%. In 2017, the Indian School of Business in Hyderabad admitted its largest class. Fudan University in Shanghai is building a new campus to accommodate 400 new MBA students within the next two years.

The second factor, according to Chowfla, is that the demand for full-time programs is reverting to its selective roots.

“Driven by brand, size, and rank, demand for MBA programs in the U.S. is showing great variation by the institution. While overall application volume for full-time two-year MBA programs in the U.S. declined last year, applications to large programs with 200 students or more grew by 4 % on the back of stronger domestic demand.

“There is a significant correlation between large class size and high rankings, and we conclude that students are signalling the importance they place on brand value. These larger, more recognized programs accounted for two-thirds of the total application volume in our sample,” Chowfla says.

As the third factor, Chowfla points out that pre-experience Master’s degrees are not substitutes for MBAs. An MS in management, or an MA in business, help launch a career, while an MBA is designed to accelerate a career. GMAC research shows that MiM candidates are distinctly younger and have less work experience by an average of 3.5 years. They also start out at lower places in the corporate hierarchy—55% of them are in entry-level positions, while only 13% of MBA candidates hold such jobs.

The difference is also seen in long-term earnings. Over a period of 20 years, European MiM graduates earn less than their MBA counterparts by a cumulative €1.1 million (US$1.28 million)—a difference of 48%. The gap is only 26% in the U.S., where master’s degree programs tend to attract older, more experienced candidates.

“Our survey data shows that program satisfaction is also much lower for MiM graduates, only half of whom rate their experiences as excellent or outstanding. It’s also worth noting that nearly 20 percent of MiM graduates indicate an interest in going back to school at a later date. Globally, one in five candidates for graduate business programs holds a prior master’s degree,” Chowfla says.

Interestingly, the demand for MiM programs may decline in the future, especially in Europe as Chinese students who form a large part of the applicants are now able to choose schools closer to home. “Between 2016 and 2017, applications to the same 160 master’s programs that we surveyed had declined by 8%, largely due to softer demand from Chinese students,” he adds.

“Schools around the world must continue to evolve. They must meet needs that are both global and local, must launch careers and accelerate them, and must adapt to the life stages of the individual. The MBA remains the appropriate choice for many, but may not be the right format for everyone.

“At GMAC, we are undertaking research that will help us understand candidates from a longitudinal perspective so that we can speak to them wherever they are in their career journeys. If one size no longer fits all, it behoves those of us in management education to segment offerings by candidates’ life stages, defines market positions, differentiates ourselves from the competition, and deliver value. After all, we teach our students to do the same,” Chowfla says.

Chowfla, in an interview with Joe Fox, Associate Dean and Director of Graduate Programs at the Olin Business School, Washington University at St. Louis, said while GMAT does a wonderful job in evaluating cognitive capabilities, it lacks in providing information about behaviour and experiences.

“Given things like gamification, big data, predictive analytics and all the technologies available now – are there other ways that we can develop tools to initially supplement the GMAT exam, but maybe even in the long term replace standardized testing? That is an important thing that we are looking at,” Chowfla said.

The GMAC, which started with nine member schools today stands at about 213 member schools. The growth and the globalization of the membership base has strengthened it considerably.

“Given things like gamification, big data, predictive analytics and all the technologies available now – are there other ways that we can develop tools to initially supplement the GMAT exam, but maybe even in the long term replace standardized testing? That is an important thing that we are looking at,” Chowfla said.

“One of the things we have been doing is redefining the GMAC brand. And like most brand initiatives, you start by looking at your history. We were founded by nine business schools 63 years ago to solve a common problem. And that manifested itself into the test, which then became GMAT exam. What unfortunately happened is that we shifted from an association of business schools to a testing organization,” he said.

“So one of the things we are doing as part of this redefinition of GMAC is to create a sense of balance. We are a global testing organization, there is no getting away from that, but we can balance that testing organization with the association of business schools. And if we do that then we can actually start bringing people together again to start solving common problems,” he added.

“A recent example is what we call the Application Process Advisory Group, where we started bringing I think 13 different schools together to again solve a common problem. In this case, the common problem is the application process, which creates incredible amounts of stress on the candidate population. If we can work together, we start hopefully creating this renewed sense of community” Chowfla said.

Asked whether the GMAC had shifted its focus from its three equally important missions – the test, research, and professional development, he said, “The three legs to that particular stool still hold true, but they are also evolving.

“The test (GMAT) continues to be our primary asset. But the question that we are beginning to ask ourselves is, what next? Are there other technologies that enable us to solve the same problems? So the test itself is beginning to evolve,” he added.

Chowfla said even the GMAC’s role in research as the premier provider to the community, needs to start evolving. He pointed out that not only have research technologies changed, but also the scope of the research.

“It can no longer only be about research around the GMAT testing base, which is a particular segment of a particular type of student applying to a particular type of school. If we really want to represent the global GME community, we have to expand our reach,” he pointed out.

“For example, we have to expand our research to include people who are testing domestically in China. That person is making a decision between a local Chinese school and one of our member schools either in China or elsewhere in the world,” he said.

Asked about the changes in the GMAC board that used to comprise mainly admission directors and program managers in the 1990s and which now have an influx of independent members from the corporate sector, he said, right now apart from he himself, there were seven dean directors, four representative directors and four independent directors.

“Even though we are a nonprofit organization, we run our board according to the standards of a public company. The reason is we generate significant revenue from around the world and as a result of that must hold ourselves to the compliance standards of a global corporation from a governance point of view. It is important that we have these independent directors who bring in perspectives of governance, which otherwise might not have existed,” Chowfla said. (Image Courtsey : twitter.com)