September 11, 2013

Why elite MBA schools ban disclosure of grades

In my Taki's column about a lesbian feminist dean's campaign to stop women students at Harvard Business School from acting sexy to attract the men students -- all for the putative purpose of helping the female students close the Grade Gap, not out of lesbian resentment, of course -- I mentioned that I don't recall MBA program grades being terribly important. 

A friend writes:
My XXXX went to Wharton for her MBA and she was not allowed to disclose her grades on job interviews, (which she found annoying as she was in the top 5% of the class, exception that proves the rule, I guess). 
This is true at Booth, Stanford, Columbia and most of the other top Business School programs, though I think it doesn't exist at Harvard; though (they had non disclosure until recently).  Regardless, your intuition that grades don't matter much at elite business schools is correct.   
The idea is that these schools want the best employment statistics and by nature of being at a top business school most people could get some good jobs. 
However, some employers would be reluctant to hire the bottom of the barrel, even if it's a high quality barrel.  The people at the very top can usually manage to find a way to distinguish themselves, but no one is the worst. 
You can't get away with this if you aren't a top school, though.

My recollection of B-School was that it was more fun than hard. I worked intensely on the courses I admired, but was content to get Bs in the more bogus ones. (That said, I presume that if you want to be, say, a Wall Street rocket scientist, you should work very hard in the hardest B-School classes, since your competition is STEM grad students.)

Here's a Freakonomics post by Matthew Philips on the subject:
Grade non-disclosure policies are a quirk of MBA programs. You won’t find them in medical or law school. In fact, the only place you do find them is among top business schools. Of the 15 most selective MBA programs, 9 of them have some form of a grade non-disclosure policy. But of the schools ranked from 20 to 50, none do. 
A new paper from a pair of Wharton economists examines why this is. Wharton, it should be noted, has grade non-disclosure, and while the faculty (according to the authors) is fairly vocal in its opposition to the policy, it’s typically approved by the students each year by a wide majority. The paper begins with a discussion of what economists call signalling, where trusted information is transferred through signals we send. The job market is one of the leading areas where we do this, as explored by economist Michael Spence in his 1973 signalling model. The idea is that without knowing whether you’re good at a job like valuing bonds or putting together marketing proposals, employers rely on the signal we send by way of an MBA from a top business school. 
Students typically argue that non-disclosure policies allow them to take greater risks and harder courses without having to worry about an embarrassing transcript. ...
The authors argue that students at these schools “reduce the accuracy of their signal by passing grade non-disclosure policies.” Why would they do that? Students typically argue that non-disclosure policies allow them to take greater risks and harder courses without having to worry about an embarrassing transcript. But in the face of evidence that self reported levels of learning have mostly fallen since the introduction of grade non-disclosure policies, this seems a little dubious. According to a Wharton Journal article, surveys showed a 22% decline in the time students spent on academics during the first four years after the school passes a grade non-disclosure policy. ...
As long as employers keep valuing a degree from Harvard Business School over MBA’s from mid-tier programs, grade non-disclosure policies aren’t likely to go away. Are we surprised then that the smartest business students in the country have figured out a way to game the system in their favor?

Isn't it wonderful how American elites make life easier for themselves at the expense of the less elite?

Another feature of the ease of B-School versus the other professional school rivals is that there are no licensing exams, like there are for lawyers, doctors, and accountants.

So, whenever I read discussions about how we need more affirmative action in law schools and medical schools, I ask: Why work harder to lure marginal black and Hispanic kids into expensive educations where they might repeatedly flunk the licensing exam? (I don't believe there is any affirmative action on bar and medical board exams, while there is plenty in admission.) Let them go instead to business school, where there are no high stakes post-school tests.

24 comments:

Anonymous said...

The one exception to this policy that comes to mind is Harvard's Baker Scholars (top 5%).

Re Wall Street rocket scientists, a new type of degree has emerged to serve that niche: a masters in quantitative finance.

- Dave Pinsen

Anonymous said...

Elite law schools do this too. Look at Yale's "pass and high pass" system.

David said...

I believe Yale Law does not not have grades

Anonymous said...

I went to Columbia Business School in the years leading up to the big blow-up in 2008. We were graded on a curve and we could show grades but it really did not matter that much, so long as it was either the highest or the bulk middle (HH and HP I think). A lot more focus on fit, poise, prior experience, etc. Also, since one could test out of any and all first year classes, you didn't really have comparability in transcripts. Banks cared only about the finance and the accounting class grades.

I should also note that the grades that really matter are in the first of four semesters as the conveyor belt system goes from internship interviews in Jan/Feb, internships in the summer, full-time offers in August, back to school, then back to work. No one that I know of got asked for about grades after the initial internship interview.

What's curious is that the career office strongly advised people who scored above 700 (92? percentile) on the GMAT to put it on their resumes. Again, standardized test scores were the most comparable metric. (Later, when talking to hedge fund recruiters, they wanted both GMAT and SATs.. from 12-15 years ago).

I also sat on the summer associate (MBA intern) hiring committee at a major investment bank. Resumes from "non-core" schools never made it to the table unless (1) some managing director was advocating or (2) HR was insisting that we look at female/minority candidates.

Anonymous said...

The whole post-baccalaureate education scene is out of control.

The newest of the "100 reasons NOT to go to grad school" is yet another reminder of the importance of the prestige of your degree if you have dreams of a life in academia:
http://100rsns.blogspot.com/

Ninety-five percent of grad students aren't at the elite schools. Most don't realize (until it's too late) that they lost the game before they even started playing. They'll be lucky if their Ph.D. gets them a job at a junior college a thousand miles from their nearest relative.

Five Daarstens said...

SUNY Binghamton had some similar grading policies in the 70's and 80's. For a very liberal school, it was a extremely competitive environment of students trying to get in the best Ivy grad programs.

Mountain Maven said...

I loafed thru B school and my gpa kept me out of some good jobs, as it should have. Then I passed the exam, started my own business and never looked back.

Steve Sailer said...

Mitt Romney was a Baker Scholar at HBS. George W. Bush was not.

jay said...

"My XXXX went to Wharton for her MBA and she was not allowed to disclose her grades on job interviews,..."

Did she sign a contract on condition of being admitted to Wharton that forbade this? If she did, non-government employers would dismiss her as fool. Or are we all that screwed up?

Anonymous said...

You are right about the STEM grads. Business school is easy compared to engineering, at least, for the quantitative stuff. If you can get a B (or even a C) in engineering you should be able to get an A in business classes.

Anonymous said...

Right. No gentleman's C's for Mitt.

- Dave Pinsen

Anonymous said...

Mitt Romney was a Baker Scholar at HBS. George W. Bush was not.

Made him great at making bread. George wasn't too bad either.

David M. said...

One of the major factors that keeps the upper-tier B-schools behind the top-tier B-schools is their starting salaries (by mid-tier, I mean schools in the 11-30 range). Since the finance and consulting firms focus almost exclusively on the top ten schools, it makes it difficult for the upper-tier schools to ever break into the top-tier, because their starting salaries always lag behind. Instead they focus on sending students to good, white-bread corporate jobs, whose salaries are also effected by their geographic location.

I think a good idea for these upper-but-not-top-tier schools would be to institute a rigorous internal testing regime, open only to those who pass a certain threshold on the GMAT and GPA in quantitative courses. This would be a strong guarantee of quality to the finance and consulting firms. They could then limit their recruiting to the individuals who pass the tests. This would actually be a safer guarantee of quality than the random draw from HBS (I have a friend with an MBA from HBS who had no idea what IRR was - really). The school could even offer to pay their intern salaries. The result would be more of their students going into high paying quant and consulting jobs (McKinsey, BCG etc).

dearieme said...

Whereas the class (equivalent to "grade") of my first degree was not only posted on a public notice board, it was published in national newspapers. But that wasn't in the Land of Free Speech, Home of Liberty, etc, etc.

Anonymous said...

"Did she sign a contract on condition of being admitted to Wharton that forbade this?"

I too wondered at the possible enforcement of this. A mere convention, surely, like not discussing business at a Manhattan racquets club? Whatta they gonna do?

Gilbert P.

Sword said...

So, if a recent graduate from a school that has a grade nondisclodure policy goes to a job interview, then what? If that graduate has high grades across the board, then he should want to show those grades to the HR person interviewing him. What stops him from doing so? What credible threat does the school have? How can they know if he has shown his high grades? Even if they would find out, what could they do - does that policy really carry legal weight? If there any precedence for forbidding people from revealing information about themselves?

Anonymous said...

So, whenever I read discussions about how we need more affirmative action in law schools and medical schools, I ask: Why work harder to lure marginal black and Hispanic kids into expensive educations where they might repeatedly flunk the licensing exam? (I don't believe there is any affirmative action on bar and medical board exams, while there is plenty in admission.) Let them go instead to business school, where there are no high stakes post-school tests.

What about teaching the homeless to program computers?

"Why Teaching a Homeless Man to Code Isn't That Bad a Place to Start"

http://www.theatlanticcities.com/jobs-and-economy/2013/09/why-teaching-homeless-man-code-not-bad-place-start/6692/

Anonymous said...

OT:
SI's Special Report: OSU Football

SI's five-part series on the misdeeds of OSU's football program's is illuminating (if not terribly surprising). I wonder what Boone Pickens thinks... actually, he probably dgaf, assuming of course that he didn't explicitly endorse it.

The sex and drugs portions have yet to be published, but here's a taste of the academic caliber of some of the student-athletes:

"[A list of former players] say there were players on the team between 2001 and '05 who were functionally illiterate. 'There was a couple that I would be like, Damn, I don't know how you made it through high school,' says Allen. Coxeff recalls a 2003 team meeting in which Miles asked one of the Cowboys to write 'house' on a chalkboard. 'He spelled it H-A-S,' says Coxeff. 'I was like, Oh, my God, how is he even in this room? ... How can someone who can't spell come to a major college?"

Dave Pinsen said...

"
I think a good idea for these upper-but-not-top-tier schools would be to institute a rigorous internal testing regime, open only to those who pass a certain threshold on the GMAT and GPA in quantitative courses. This would be a strong guarantee of quality to the finance and consulting firms. They could then limit their recruiting to the individuals who pass the tests. This would actually be a safer guarantee of quality than the random draw from HBS (I have a friend with an MBA from HBS who had no idea what IRR was - really). The school could even offer to pay their intern salaries. The result would be more of their students going into high paying quant and consulting jobs (McKinsey, BCG etc)."


A few points. Upper-tier, non-elite schools have another salary metric they can use that makes them look better: average bump in salary from their degree. That metric doesn't punish them for being based in regions with lower average salaries.

As for your idea about non-elite schools identifying their own sort of Baker Scholars: it's a lot easier to teach a Harvard MBA what internal rate of return means than it is to find a U Mass MBA with as fertile a network.

Also, many Wall Street quants come from non-MBA programs. For example, Emanuel Derman, author of My Life As A Quant, and director of the Financial Engineering department at Columbia University, doesn't have an MBA, but a Ph.D. in physics.

Finally, there's already a rigorous, non-degree credential for finance-types on Wall Street, the CFA. But real rocket science jobs seem less interested in MBAs or CFAs than pure quantitative horsepower. And anecdotal evidence I've encountered (e.g., smart amateur stock buffs from other fields who got the designation) suggests that a CFA alone won't open many doors on Wall Street.

Anonymous said...

Many jobs ask for GPA regardless. I-Banks and Consulting firms want GMAT score, preferably listed prominently on your résumé.

Howard MBA students are the only ones who can get into top firms and with woeful GMATs and GPAs. For everybody else not so much.

Whitehall said...

My approach during B-school was to take heavy loads - I think one quarter was 26 units. Almost all the regular MBA courses were walk-throughs, and as Steve said, fun collaboration exercises. My best buddies were both entitled pot heads but we got through it together.

As an older STEM returnee, the two difficult required courses (statistics and operations analysis) were hard mostly because of their NON-rigor intellectually - and the marginal teachers.

The single REALLY difficult elective for this nuclear engineer was tax accounting. STEM training follows natural law which is logical and consistent. Tax rules follow Congress and are neither logical nor consistent.

Which brings me to the question that I'm surprised no one has offered.

"What do you call the student who graduates LAST in his class in med school?"

The answer is of course "doctor."

Anonymous said...

I'm a current student at an MBA program with grade non-disclosure. On the whole, I'd say it's a mixed bag. Have I taken risks in terms of class choice that I might not have taken if I knew my GPA mattered? Yes. Has it helped me rationalize slacking off in classes that didn't interest me that much? Also yes. On average, though, I can't imagine I'd work that much harder if my GPA was on my resume.

One other interesting point, somewhat related to your last paragraph, is that unlike law and medical schools, business schools have large international student populations. Almost every "hispanic" in my class is a white elite from South America.

E. Rekshun said...

@Anon: "What's curious is that the career office strongly advised people who scored above 700 (92? percentile) on the GMAT to put it on their resumes. "

I scored a 710 GMAT (98th percentile) back in 1997. As a RWG, it didn't get me into Stanford, but the Universities of Florida, Georgia, and NC offered me close to 100% tuition scholarships (in an effort to boost their average GMAT for the incoming class).

Darwin's Sh*tlist said...

My recollection of B-School was that it was more fun than hard.

I probably have at least my share of intellectual curiosity and I've nurtured a broad range of interests over my life. But few things seem more mind-numbing than the idea of business school - especially the soft disciplines like management and marketing.