Aspiring Minority MBAs Casualties of Ranking?

Why has minority enrollment at the nation’s 50 top business schools remained so persistently low, with virtually no improvement in more than a decade? Peter Aranda, the chief executive of The Consortium for Graduate Study in Management, is blaming B-school deans and admission officers for their obsession with rankings for the lack of progress.

Schools are so focused on grabbing students with the highest possible undergraduate grades and GMAT scores to improve their rank that it has made it harder to make progress in diversity, he says.

“In general, our B-school environment has become overly focused on GMAT and undergraduate GPA. People who could complete the MBA and go on to have very successful careers aren’t considered anymore because they might lower a school’s rankings,” says Aranda.

When Aranda became CEO of the Consortium nearly eight years ago, the percentage of minorities in the nation’s top 50 business schools was roughly 6%. Today, it’s exactly the same. If you subtracted the impact of the Consortium on those numbers, Aranda says, you could slice another two percentage points off the 6% to bring the total down to a woeful 4%. Typically, the 17 schools in the Consortium report minority MBA enrollments that are 38% higher than non-Consortium business schools.

The non-profit group of leading business schools, including Cornell, Yale and Michigan, work to increase the presence of African, Hispanic, and Native Americans in MBA programs and the corporate world. The Consortium hands out more than $20 million in merit-based scholarships each year to more than 300 MBA candidates with outstanding academic credentials who also prove a commitment to diversity.

“It’s frustrating,” concedes Aranda. “When I look at the stats, 13% of our [national] population is Hispanic, another 13% is African-American, and 2% are Native Americans. And then I look at enrollment of MBA programs, and we are not anywhere near 28%. I’m not arguing for quotas, but that is a very big gap.”

The U.S. News & World Report’s MBA rankings, which came out earlier this month, relies heavily on a school’s GMAT and GPA averages, with nearly 25% of each school’s standing based on those figures. Both measures have been drifting higher and higher for more than a decade — partially a consequence, Aranda believes, of the increased pressure on admissions officials to achieve higher rankings.

Some 15 years ago, no U.S. business school reported an average GMAT score for its entering class above 700 (the highest possible score is 800). Now, 13 of the top 15 schools in the U.S. News survey all have average scores ranging from 728 at the Stanford Graduate School of Business to 714 at the University of Michigan’s Ross School of Business. For the class entering the University of Pennsylvania’s Wharton School in 1994, for example, the average GMAT score was 650. Today, it’s 718.

“Institutions of higher learning are non-profit organizations and have a social responsibility bigger than competitive forces,” Aranda says. “The schools tend not to do much outreach with younger people. The schools should have some responsibility to address that problem but, by and large, they operate like for-profit companies.”

According to the Graduate Management Admission Council, which administers the GMAT, the average score of an African-American in the last testing year was 431—113 points below the 545 average for all GMAT test takers. Scores for Hispanic Americans was 490—some 55 points below the average—while scores for Native Americans was 500—some 45 points below the average.

“On average,” says Aranda, “these candidates are less well heeled. They come from family environments that don’t understand the reasons why you would go to a graduate business school. So there is family pressure for these young people to keep the jobs they have because they are considered already successful. So they don’t go to school unless they get funded or they go to part-time programs.”

Aranda says he firmly believes that the two most important things that can be done to improve the MBA enrollment of minorities are both related to problems caused by rankings.

Business school deans, he says, should pressure the organizations that rank business schools to both reduce the importance of GMAT and GPA scores and include other factors that would promote diversity. Aranda says schools that perform well on a diversity measure should be awarded on that metric. “It doesn’t cost money and would change the game a little bit,” he says.

As for the quantitative metrics, “I’m not saying we should let people in who struggled to maintain a 2.2 GPA. But I believe 570 to 580 GMAT candidates can complete their MBA programs without significant difficulty. You don’t need to have a 750. The rankings system needs to be adjusted and the schools should exercise some clout to make that happen.”

Increasingly, he says, there is “tremendous pressure on applicants to know exactly what they want to do when they grow up. In my opinion, graduate school should also be a time for exploring alternatives and expanding your mind.”

Aranda says that schools are putting applicants under such pressure to limit risks to their job placement stats, which can also hurt a school’s ranking. In the U.S. News’ survey, employment at graduation and three months later accounts for 28% of the weight of a school’s rank.

Both of these issues have a disproportionate impact on minority candidates because, on average, they tend to score lower on quantitative tests and are less certain how they will use the degree when applying to a business school. “We have an African American president, but it doesn’t mean that racial issues have gone away,” he says. “It doesn’t mean we have addressed all of the past wrongs that our society imposed on these groups of Americans.”