New Study Explores the Role of Grades in MBA Recruiting

Grade-nondisclosure (GND) policies have been around since the mid-1990s. The policies refer to how students at some of the nation’s top business schools, including Wharton and Columbia, collectively agree not to tell recruiters what their grades are until after they are hired.

While critics argue that GND policies cause students to spend less time on coursework and hurt employers, proponents say GND policies reduce competitiveness, encourage collaboration, and allow students to pursue a more well-rounded extracurricular activities and courses. A new study, which examines the effects of GND policies at highly ranked business schools, finds both arguments to be true.

LESS TIME IN CLASS, MORE TIME IN EXTRACURRICULARS

According to the report, students who adopted GND policies spent 4.9% less time on courses when compared to peers at the same school who took classes part-time and didn’t adopt GND policies. However, the report also found that because GND students took harder classes, the time they spent on academics overall wasn’t statistically different from their peers. Additionally, GND students were also 7.6% more likely to engage in extracurricular activities.

“Between the extracurriculars and the difficult classes, what we say isn’t all time spent away from academics is lost time,” author Daniel Lee, of the University of Delaware – Alfred Lerner College of Business and Economics, tells The Wall Street Journal. “But we can’t really comment on the good or bad effects.”

After business school, GND students were 7.7% less likely to stay at their first job for longer than a year, with 12.8% less likely to stay longer than two years.

“Specifically, we study the tenure lengths of students’ first employer matches following graduation,” the authors write. “Reduced information under GND might reduce the effectiveness of employers’ recruiting filters, leading to poor hiring decisions. On the other hand, if GND facilitates students’ self-discovery of their talents and interests, GND might lead to more stable matches by reducing student-employer mismatch. The results suggest that the reduced information effect dominates the self-discovery effect: tenures at first employers following graduation fall by roughly 3.7 months. However, GND might also facilitate broader skill development and networks, which could reduce turnover by increasing employee mobility rather than reducing match quality.”

Read the full study here.

Sources: The Wall Street Journal, MBA Crystal Ball, SMU Cox School of Business Research Paper

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