Applicants and MBA Programs in 2014: GMAC Interview

The contrasting fortunes – in terms of applications received – of the one and two-year MBA program was a standout feature in a report released by GMAC this fall.

An annual survey of trends among those applying to business school and MBA programs around the world, the report’s insights largely stem from GMAC’s knowledge of those who sit the GMAT exam each year, and the schools and program types that ultimately receive the resultant scores.     

GMAC’s director of research communications is Michelle Sparkman Renz. She explains what this change in applicant numbers says about today’s prospective MBA students and the appeal of the one-year MBA and two-year MBA. She also discusses what the latest data might tell us about two topics that continue to stoke the business education debate: the number of women in business school and the importance of MBA internships. 

International students are behind application drift   

This year, the two-year format seemed to claim a clear victory – for now, at least – against the one-year MBA in the ongoing battle to become the preferred program in the hearts and minds of prospective MBA students around the world.

Of the 129 two-year MBA programs assessed in GMAC’s 2014 Application Trends Survey, a majority saw a growth in applications. Meanwhile, among the 90 one-year MBA programs surveyed, the majority saw a decrease in applications.

Sparkman Renz says that, while a sample can never give a complete picture, GMAC’s data shows that international students are the principal cause for this shift: “It really was a comparative drop in the foreign talent that one-year programs received in their pipelines compared to two-year programs.”

She says this is particularly significant in Europe, where one-year programs traditionally have much higher proportions of international students. One obvious reason for this is simply the short distances between countries home to the region’s leading institutions and the relative freedom of EU citizens to travel and study across its borders. Even so, program percentages of international students across the one-year format have been falling over the past five years.   

“In 2009, the share of foreign [non-citizen] candidates for one-year programs was 65% and today it’s 56%,” Sparkman Renz says. In the same timeframe, international students rose from 48% to 52% of the total applying to two-year MBA programs.

Are one-year MBA programs losing appeal?

The implication is that the one-year MBA is losing its appeal in the eyes of international students, whether they live in a neighboring country or further afield.

One possible reason that has been put forward is that students want the longer experience a two-year MBA brings – with ample time available for networking in a new country and undertaking a summer internship that could help secure a full-time offer for those looking to stay on in their country of study. 

But that’s not to say that any increase in two-year appeal must come at the expense of its one-year alternative. For one, the loss in earnings from committing to two years of full-time study will always be a decisive factor for many one-year applicants.

Instead, growth in the number of different programs available in a region like Europe may simply be increasing the choices available to international students, which in turn causes their numbers to spread out across a wider selection. Sparkman Renz points to partnerships and annex programs as influential factors in what she refers to as “intense competition” between programs in Europe – something that logically, could end up helping international students to secure places.

MBA internships – ‘networking from the inside’

It is clear, however, that MBA internships – traditionally undertaken in the summer break that splits the first and second year of a two-year MBA (although equivalents for one-year MBA programs are often available) – have become of increasing use to students.

Employers today don’t just want a piece of paper with a promise of your credentials attached, they want tangible evidence of these skills being put to use before making a hiring commitment, and this is where MBA internships come in.  

“The internship is an ultimate opportunity to prove one’s skills with the employer – it’s networking from the inside,” says Sparkman Renz.

Employers operating in cost-driven environments like being able to ‘try before they buy’. Plus, the odds of securing a full-time offer are high for students completing MBA internships. Three-quarters of employers who take on MBA interns will subsequently hire an intern on a full-time basis, according to the respondents of an employer report released by GMAC earlier this year.

This makes it an important consideration among prospective students right from the off. Anecdotally, Sparkman Renz says she has heard of a lot of students placing “a lot of eggs in the basket of internships” by way of back-up in what remains a tight job market.

“Students are very savvy and focused on job outcomes according to our survey data, so we know that a candidate today is going to be looking at the employment profile for a school,” she adds.

An approach that puts job-hunting at its core may be pragmatic, but it’s certainly not without its critics.

Robert Howell, an experienced Dartmouth Tuck professor who has also taught at Thunderbird, NYU and Harvard recently wrote that “Many of today’s students put primary emphasis on finding a job from their first day on campus,” before contending that this can cause them to lose sight of the main benefits of pursuing an MBA and ultimately “drift through their business school education experience.”

It’s a fair point, and one which questions whether a person’s motives for attending business school are fundamentally to learn and better themselves or simply to get a better job.

But, MBA internships aren’t always about securing a job and knowing that you can start making good on that student loan as soon as you graduate. For many, its primary purpose is to get a taste of a whole new walk of professional life and a chance to put those MBA teachings into practice.

“Students see the value in them because they’re also looking to test out different industries, types of companies and they’re eager to demonstrate those [newly-acquired] skills,” says Sparkman Renz.

Applications and the number of women in business school

On the question, and continuing concern, of the number of women in business school, many had hoped that 2014 would bring rises in female MBA enrollment rates, in light of the past year’s talk of initiatives and the need to do more. However, with a couple of notable exceptions, there was disappointment for the most part among class percentages.

But, what of the application stage? GMAC’s figures point to continued growth in female test takers. Globally, 43% of those sitting the GMAT exam in its latest testing year were women – a number that is comparable to the 40% proportion found worldwide in QS’s Applicant Survey 2014, but remains higher than the average number of women in business school classrooms, especially when you look at individual regions.

Is there a delay before female applicants and GMAT exam takers make an impact on class intakes? Sparkman Renz isn’t so sure: “GMAT scores are valid for five years. There is some score banking, particularly among younger candidates, but that’s true for men and women.”

However, more time is needed, she feels, before school initiatives can really start to redress the imbalance: “I think schools perceive these as challenges that will take a few years. First there has to be inspiration and, to some extent, perhaps some partnership work with undergraduate programs or with employers,” she says before adding: “It’ll be interesting to see what will happen as there are more women appointed to corporate boards.”

Wide usage of GMAT exam complicates analysis

Of course, those taking the GMAT exam aren’t applying exclusively to MBA programs – they could be looking at a range of master’s programs all of which target different types of applicants at different stages in their careers and subsequently, will put a different stance on gender levels if assessed individually.

“Just talking about women in business school may not be enough anymore. Diversification in learning opportunities in management education means that data has to be sophisticated when you talk about gender dynamics,” Sparkman Renz explains, adding that focusing on program types, and on different parts of the world, might ultimately be more instructive in seeing where gender imbalances are more pronounced.

India’s track record in supplying high numbers of quality male candidates, but not nearly as many women, is mentioned by way of example: “It’s worth talking about what efforts are being made when a school is taking a road trip to India to reach female candidates,” Sparkman Renz reasons.

Even then, upping application numbers isn’t the only thing to bear in mind. Finance can also play a part – according to Sparkman Renz, a greater proportion of female candidates are looking to grants, scholarships and family members to help them attend business school, which in her eyes means that: “There are more people to talk to when it comes to engaging a potential applicant who is a woman.”

Closing remarks…

On the whole, improving the numbers of women in business school classrooms around the world may seem more complicated than one might expect. But the message is resoundingly clear – greater levels of parity are sought in the business world and that means ensuring business schools start delivering a more equal campus environment for future leaders now – regardless of the importance students are placing in MBA internships or whether they want to study two or one-year MBA programs.