Does the GMAT Matter?
UPDATED FOR THE NEW GMAT IN 2024
If you either know me personally or are a regular reader of our older GMAT articles, you know that I’m not always fond of the GMAT. I honestly enjoy some of the intellectual and psychological challenges presented by the exam, but I often cringe at the actual content of the test. I’m simply not convinced that your knowledge of number properties or modifier placement will ever help you to become the CEO of a successful company.
And that brings us to a (somewhat unanswerable) question: what is the GMAT good for, anyway? And can we prove that the GMAT is a useful measure of… something?
What Your GMAT Score Predicts
Despite my occasional cynicism towards standardized testing, I’ll readily admit that the GMAT has some predictive validity. It’s just we can debate the value of what, exactly, it predicts.
If you read the fine print on GMAC’s website, you’ll notice that the GMAT’s creators spend a lot of time trying to prove that the GMAT is “valid”, and they’ve run countless studies to demonstrate the test’s “validity”. GMAC’s definition of the word “valid” is interesting, though: most GMAT validity studies simply examine the correlation between GMAT scores and students' grades during the first year of business school.
By this measure, the GMAT is a solid exam that does an nice job of predicting test-takers’ academic performance upon entering business school. If you feel like geeking out on some of the numbers, you can check out a classic GMAT validity study here.
Independent academic studies seem to confirm GMAC’s claims that the GMAT is a valid exam. This 2008 paper found that the GMAT was even better at predicting MBA performance than GMAC had originally thought.
To be fair, we could certainly split hairs over some of these studies. Depending on the exact study, correlations between GMAT scores and first-year MBA grades generally range from 0.3 to 0.55. If you’re a skeptical statistics geek, you might argue that these correlations aren’t THAT high. But by the general standards of test validity studies, these are solid numbers, and it’s safe to say that the GMAT does a credible job of predicting MBA students’ academic performance in graduate-level coursework.
What Your GMAT Score Doesn’t Predict
Sure, the GMAT correlates strongly to your grades during your first year of business school. But it isn’t really designed to predict anything else.
For the GMAT to be truly useful, we would ideally want to prove that a high GPA in first-year MBA classes – or high GMAT scores themselves – actually correlate strongly to success in the business world. And here’s the thing: neither do. We’ve known for decades that strong academic performance isn’t linked to strong business performance, and a recent article in Forbes found that the GMAT doesn’t seem to predict post-MBA salaries at all.
Modern research has even begun to point out the fact that GMAT scores also aren’t strongly correlated with employability. Rotman School of Management performed a massive employability study from 2008 to 2013 with GMAT scores as a variable, and they reported the “shocking surprise” of “how close to irrelevant the GMAT was.” The findings even led the school to abandon a complete reliance on the test and instead adopt other methods “to identify hidden talent” that wasn’t reflected in GMAT scores.
Some might argue that the GMAT is designed to test the qualities that are needed to succeed in a managerial position. That sounds great, but it’s also not the case. This study from 2012 found that the GMAT was a pretty awful predictor of key qualities “including communication, teamwork, decision making, leadership initiative, and planning and organizing.”
If the GMAT is meant to cut through all the BS and uncover whether you have the right stuff to be a successful manager, it’s not doing a very good job.
So… Is the GMAT Completely Useless?!
I understand that this article sounds pretty bleak. If the GMAT is unable to predict post-grad salaries, employability, or even key traits for business success, should we just collectively toss it in the trash and forget about it?
That might sound appealing, but that’s not the lesson here. For now, you’re stuck with an imperfect test of some sort (GRE, GMAT, EA, and even the LSAT in some cases) if you’re pursuing an elite MBA.
Instead, the lesson is that you should take your GMAT scores with a huge grain of salt.
Many of us have an unfortunate habit of blowing the GMAT way out of proportion, and we act as though it’s a measure of general intelligence or business acumen. It isn’t either of those things. The GMAT is a good measure of a specific set of quantitative and verbal reasoning skills, and validity studies have proven that those reasoning skills will help you get good grades in business school. Beyond that, the GMAT isn’t a great indicator of success of any sort.
So next time you get your butt kicked by some GMAT questions, don’t take it personally. The GMAT isn’t telling you that you’re stupid, or that you won’t succeed in business. It’s just telling you that you might not have the specific skills required to get a high score on a very specific standardized test. And even if you’re getting your butt kicked by number properties or modifier placement rules, you might still be an absolutely spectacular business mind, destined for a lifetime of financial success.