Exclusive Interview: GMAC President Sangeet Chowfla On The MBA’s Future

GMAC's Coffee Giveaway at the London School of Economics

GMAC’s Coffee Giveaway at the London School of Economics

Let’s look at GMAT test-taking and gender. Generally, male test-takers outnumber females by 30%-40% And men outscore women by roughly 40 points. Do you anticipate a day when you’ll have equal number of men and women taking the GMAT and scoring within range of each other?

This is an incredibly important area and the whole area of diversity is one where we’ve focused on. Let’s talk first about gender diversity. You’re right, about 40 percent of our overall candidate base is women and 60 percent is men. That has been shifting over a period of time, but it has not been shifting fast enough. That’s one thing we all have to do in the industry is to get greater balance between men and women in graduate management education. If you look at law schools, it’s about 50/50. In medicine, it may be more skewed towards women than men. It’s the reverse when it comes to graduate management education.

One of the things we need to understand is that there are very large regional differences. In China, for example, two thirds of candidates are women. In India, one third of the candidates are women. In the United States, about four out of ten candidates are women. So there are very large differences based on educational systems, societal patterns, etc. In Asia Pacific overall, the proportion of women among GMAT test-takers has grown by about six percentage points over the last decade or so. Interestingly – and quite counterintuitively – you will find the second-fastest growing region for women in graduate management education is the Middle East and Africa. It’s around 40% in those regions.

So we’re trying to understand regions and we’ve worked very hard to make certain there is no bias in the test structure and [that] all of our test items are measured for gender neutral behavior, if you will. As you know, our test items go through a pre-testing phase where we look very closely for the lack of bias.

The question is more complicated than just the test, depending on the society we are looking at. It has to do with the education patterns of the primary and secondary undergraduate education; the availability of role models; and areas like that. We’re not there yet, but I think we’re making progress.

Chowfla at the 2015 AACSB Deans Conference

Chowfla at the 2015 AACSB Deans Conference

On the topic of diversity, I’d also like to talk about any area where we may not be making all that much progress. And that’s the area of minorities. As you know, the growth of the populations, particularly in the United States has been overwhelmingly by what we currently call minorities, which will be the majorities or pluralities out into the future. And we just don’t seem to making that much progress in terms of getting African-Americans and Hispanic-Americans into graduate management education, both from the point of view of the mix of applications that are going into selective business schools, the mix of GMAT test-takers, and the score gaps between minority populations and white American populations in the United States – this needs to be an area of significant concern for all of us because as these populations become the plurality, and we don’t attract enough of them into the management workforce if you will, it has obvious implications in terms of the structure of business; the future of the quality of the managerial workforce that we are serving up into American industry; income inequality and equality and a variety of other things which we talk about in the political debate today. From our point of view, getting this right is of primary importance.

On underrepresented minorities, we are building strong relationships with organizations like the Historically Black Colleges and Universities and the Hispanic Association of Colleges & Universities On the gender side, we have a very strong relationship with the Forte Foundation, which is really working to attract women into management education. These are areas in which we are spending time and money in terms of outreach, research, resources, etc.

How has the profile of the GMAT test-taker changed in recent years? How do you see this profile evolving in the coming years?

We’ve been changing along with the broader trends in the global economy and graduate management education. There is increasing globalization of management education. If you look at the year 2000, three-fourths of GMAT test-takers were from North America – that’s down to about half now. We’ve also seen, in terms of the types of programs, in the year 2000, maybe nine out of ten scores were sent to what we’d call the traditional full-time MBA program. At this point in time, that’s down to 60%, with more scores going to specialized masters programs. As a result of that, what we are also beginning to see is a younger population. As the mix has shifted from an almost exclusive focus on candidates applying to MBA programs who tended to be older and in workforce, we’re seeing a mix of undergraduates who are directly applying to masters programs. We’re finding that average age of candidates is coming down and the number of candidates below 25 years of age is growing overall.

That’s from a demographic perspective. Five years ago, about half of the candidates described themselves as career switchers, people who are getting an MBA to change jobs to get into a new career. That half has dropped to about one third. The growth really has been in the number of candidates who identify entrepreneurship as a career goal. That doesn’t mean they are going to start a company in the Bay Area directly after they graduate. But at some point in their lives, they would like to start a company or be self-employed. We’ve noticed a fairly big market shift in students saying they intend to start their own businesses, with that proportion growing by steadily over the last several years to about 28% today. And that’s fairly significant.

Globalization is re-shaping everyone’s business models. And business schools are benefitting from an influx of ambitious young students in emerging countries. Recently, GMAC purchase the NMAT test in India. How is GMAC looking to appeal to growing markets in Asia, Africa, and the Americas?

The process really started a number of years ago, when GMAC started setting up regional offices around the world. Right now, we have offices in London, catering to the Europe and the Middle East regions. We also have offices outside of New Delhi for India. We have people in Hong Kong and Shanghai focusing on Southeast Asia and China. And we have someone focused on the Africa market at our headquarters in Virginia.

What people are really focused on is build relationships with candidates, test prep companies, admissions consultants, etc. Last year, we did over 200 specialty candidate events around the world. Pretty much every working day, there was a GMAT person at some candidate event talking to students not just about the GMAT, but also about graduate management education, the process of selecting schools, and the options that are available for somebody. So we are really trying to drum up, if you will, primary demand as a result of that. Our Americas team, which is based out here [in Virginia] takes a look at candidates in Canada and Latin America. We have people working in Africa – we don’t have an office there, but we have people looking at that. So we’re really trying to find where the pockets of candidates are and how do we educate them around not just GMAT, but the whole benefits of graduate management education, the options available to them, and the paths to actually apply and get there. So that’s the primary method that we’re doing to actually generate what we call primary demand.