Inside The $20 Million MBA Draft

Jennifer Arriola is headed for Cornell's Johnson School on a full fellowship.

Not much more than a month ago, Jennifer Arriola and Anthony Webb received the kind of news that would put anyone on cloud nine. Both had already been accepted into top MBA programs, 23-year-old Arriola at Cornell University’s Johnson School of Business and 30-year-old Webb at Yale University’s School of Management.

Now, however, Arriola and Webb discovered that they wouldn’t have to pay a penny toward the nearly $100,000 in tuition fees to attend those schools. Instead, they would get full fellowships from the largest single MBA scholarship fund in the world, The Consortium for Graduate Study in Management. This year, the group offered nearly $21 million in fellowships to 323 B-school applicants, mostly under-represented minorities.

How Arriola, a Mexican American marketing manager at a Silicon Valley start-up, and Webb, an African-American attorney in Atlanta, got those generous awards is an intriguing story, one that includes a secret draft in a St. Louis hotel where admission officials from top-tier business schools gathered to select the fellowship winners. Both Arriola and Webb were first-round selections by Cornell and Yale, respectively, their preferred schools.

Anthony Webb is headed for Yale's School of Management on a full fellowship.

The draft itself, held in early March, is the culmination of a long, often tortuous process for candidates who must go through all the typical hurdles to get into a top business school: prepping for and taking an entry exam, either the GMAT or the GRE, completing applications to numerous MBA programs, doing follow-up interview rounds with some schools, as well as convincing The Consortium of their proven commitment to diversity—a required element to an application for the fellowship.

Webb, for example, met the requirement by being co-chair of his law firm’s diversity and inclusion committee as well as the founder and CEO of Boys Speak Out, Inc., a non-profit that brings together disadvantaged adolescents with professionals in law, medicine and business. Arriola, who had an undergraduate degree from Stanford University, was a member of the school’s Latino Business Student Association, a group that helped to connect students with companies devoted to having diverse workforces.

Arriola applied to seven schools: Cornell, Yale, Berkeley, Carnegie Mellon, New York University, UCLA, and the University of Southern California—all Consortium members. Webb, who went to Dartmouth before getting a law degree at the University of Chicago, applied to five Consortium schools–Yale, Virginia, Berkeley, Michigan, and Emory—but also Harvard, Stanford, Wharton, and MIT Sloan.

All told, this year there were 980 applicants who filled out the common application sent to one or more of the 17 member business schools in the Consortium. Just over half of of the applicant pool, 491 applicants, were admitted to at least one of the schools. Some 323 were offered fellowships, roughly a third of the applicant pool and two-thirds of the admit pool. Another 152 were offered membership in The Consortium, which also helps connect students with potential employers and serves as a networking hub for minority MBA students and alums.

The Consortium was founded by a Washington University professor, Sterling Schoen, who had done a study on diversity. Schoen, a white man, launched the program in the summer of 1967 with three schools and 21 African-American men. In the 1970s, the organization’s mission was expanded to include African-American women, Hispanics and Native Americans. In 2004, the Consortium allowed any U.S. citizens to apply for a fellowship to comply with a year-earlier Supreme Court ruling. This year, in fact, 14 applicants offered fellowships were not under-represented minorities. Six were Asian Americans, and another six were Caucasian. Since its founding, The Consortium has handed out over $225 million in scholarships to more than 6,000 MBA students.

The benefit to member schools, which ante up the money for the scholarship fund, is obvious. “It’s like having an extra set of arms and legs in the recruiting process,” says Wendy Huber, associate director of admissions for Virginia’s Darden School of Business. “And membership demonstrates an extra level of commitment to diversity.” More than 80 corporate sponsors, ranging from American Express and Starbucks to Target and Wal-Mart, help to support career networking activities in exchange for early access to minority MBA candidates.

The Consortium’s biggest event, however, is the annual draft, where admission officers essentially dole out the nearly $21 million in free tuition awards over six separate rounds. “We do liken it to the NBA (National Basketball Association) draft,” says Huber. “It’s an exciting time, but it’s not about competition. We’re just trying to make sure people end up in the right places.”

Adds Peter Aranda, CEO of The Consortium: “It’s a little bit like the old days of the New York Stock Exchange. There is a lot of scrambling going on because if you are a school admissions person you don’t know who will pass or not pass on candidates. There is a lot of groundwork leading up to the draft so the schools are all well prepared when they get into the conference room.”

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