Who pursues a business master’s degree? In a new report, the Graduate Management Admission Council has the most comprehensive answer yet.
GMAC, the organization that administers the Graduate Management Admission Test that most business schools still require for admission to MBA and specialized business master’s programs, estimates that of the 329 million people worldwide ages 18 to 44 who hold at least a bachelor’s degree, 76 million — more than 23% — are considering a master’s degree in some field. Of those, 15 million — nearly 20% — are actively thinking about getting a business master’s. Last year, 1.3 million did.
What do each of these populations — particularly the latter two — look like? GMAC tackles that question in its massive new Diversity in Graduate Management Education 2020 report released late last month. The report, divided into sections on Gender, Race/Ethnicity in the United States, Nationality, Undergraduate Major, and Work Experience, breaks down each section into three markets: the Addressable Market, the Serviceable Market, and the Served Market.
Seventy-six million considering a master’s degree in some field — that’s the Addressable Market. Fifteen million eyeing a business master’s — that’s the Serviceable Market. And the 1.3 million who actually earned a master’s-level business degree in 2019? That’s the Served Market.
WOMEN MOVING INTO THE GME ‘SERVICEABLE MARKET’
GMAC defines diversity as “the representation of variation in peoples’ identities, backgrounds, and experiences.” Report authors Matt Hazenbush, research communications senior manager, and Gregg Schoenfeld, senior director of research, write that as companies become more aware of the value of diversity in their ranks, GME — graduate management education — becomes appealing across wider swaths of the Addressable Market, potentially moving them to the Serviceable Market.
Nowhere has that growing appeal been more apparent than with women.
Gender makes up the largest section of the GMAC diversity report, which makes sense because gender issues are among the most predominant in graduate business education over the last 10 years. Hazenbush and Schoenfeld write that while progress has been slow, it is measurable: In the Fortune 500, the number of female CEOs and women in board seats is steadily rising. Meanwhile, women now make up nearly half of all those who take the GMAT, and they are at or near parity in several types of business master’s programs. Still, there is work to be done: Women make up only 41% of applicants to executive or professional MBA programs, and just 39% to full-time MBAs.
In its section on Race and Ethnicity — demographics it is really only possible to examine in the U.S. because some countries, notably France and elsewhere in Europe, do not report race and related biographical information for a variety of reasons — GMAC finds a rising number of test takers of Hispanic descent, and a flattening or even shrinking proportion of black examinees. Most black GMAT takers hail from New York, Texas, and Georgia; the three largest states for Hispanic GMAT exams taken are Texas, California, and Florida. GMAC also reports strong preference among black and Hispanic candidates for MBA programs over other graduate management options, as well as a preference for “small, close-knit” classroom settings.
A MAJOR SHIFT COMING IN GME?
In terms of Nationality, huge changes are underway. A decade ago, nearly half of GMAT exams were taken by U.S. citizens and less than one-fifth by East and Southeast Asians. But in 2019 that reality has been upended, with the proportion of exams taken by citizens of East and Southeast Asia growing to 38% and the proportion taken by U.S. citizens declining to 28%. “International student mobility in GME is in the midst of a rapid shift, as a growing number of Asia-Pacific candidates are opting to stay either in country or in region, and internationally minded candidates are sending more applications to Europe and Canada and fewer to the United States,” GMAC reports.
Work Experience is perhaps the category most likely to be impacted by the coronavirus pandemic and ensuing (and ongoing) economic downturn. “Demand for experienced management talent varies in different economic and cultural contexts,” GMAC reports. “Regions with greater economic development, employing a greater proportion of the workforce in the services sector rather than agriculture and industry, typically have a greater demand for the type of experienced managers produced by the world’s leading business schools.” Low unemployment has put downward pressure on demand for GME, with a strong economy having a depressing effect on demand. But the coronavirus and resulting high unemployment have changed the outlook entirely.
We can forecast a major shift in interest in graduate management education in the next year because, as Hazenbush and Schoenfeld write, “In times of economic expansion — like the last decade-plus following the last major global recession — the opportunity cost of pursuing a degree is higher and candidates are less likely to opt to leave the workforce and pursue a degree.”
See the next pages for data from the Graduate Management Admission Council in each of the five diversity categories: Gender, U.S. Race/Ethnicity, Nationality, Undergrad Major, and Work Experience.