Management entrance tests: A big farce

It is the season for B-school exams. All around the country, thousands of candidates are preparing for entrance exams that will decide whether or not they get to study business management in some of the country's best institutes. But are these tests an effective measure of a prospective management student's true capabilities? Prof Jayaram K Iyer, faculty at Loyola Institute of Business Administration, Chennai, doesn't think so.   

The AICTE in India and the other education regulators the world over mandate one or the other form of an entrance test for admission into an MBA programme. Little do they, the regulators or the institutes realise how inadequate and inept these tests are!

CAT and XAT are designed for testing and differentiating the best 0.5 per cent (or less) of MBA aspirants; (2) even if they do achieve in distinguishing such small proportion of the creme-de-la-creme, the tests are not a measure of management aptitude at all; and (3) the impact of coaching institutes.

Consider, one wants to recruit the best mind on 'applied physics'. One has designed an objective type test that discriminates the best among the five Nobel laureates in physics who have applied for the position. Likely the test would be rigorous and tough. In all probability, the test will clearly eliminate the postgraduate, graduate, high-school physics students etc, if they too had applied for the position.

For instance, XLRI is required to distinguish and select just about 120 students from among a set of 100,000 students that apply for their business management programme; a mere 0.12 per cent of the applicants. The cut-off scores for this programme in XLRI is usually over 98 percentile. No wonder these tests are tough; they are so tough that if one had just scored between 32 to 46 questions correct from a set of 104 questions, one may be the topper! The IIM's CAT is no different.

Now, consider the fate of other B-schools that accept XAT (or CAT) scores ranging from 70 per cent to 90 per cent. The number of questions that one needs to get right may range from a mere 10 to about 20 out of the 100+ questions. The feeling that one may actually make it by mere chance is quite high. So the primary question is, is the XAT or the CAT a relevant test for admissions for a host of such other schools? The answer is apparent: it is not. For most of these candidates, the tests may actually be called a test of what they don't know! Therefore, it is not surprising that there is little correlation between admission test scores and performance scores in MBA.

If the tests are meaningless for a host of schools that adopt CAT or XAT, is it relevant in the IIMs and XLRI at least? Is there a correlation between admission test scores and performance scores in MBA at least in IIMs and XLRI? Sadly the answer here is also in the negative. If it is so this now leads to another important question: are the admission-tests tests of management aptitude at all?

Lastly, coaching institutes provide a cosmetic make-up to the MBA aspirants by training them with tricks (called by most as 'management of entrance tests') for improving scores. Such tricks include computational tricks, tricks to eliminate improbable choices and take 'educated' guesses, etc. Recall, one incorrect answer may push one into a very different percentile group and also make one compete with a few thousand more candidates in some lower-rung B-schools.

And worse still, entrance scores never correlate with the admitted candidates' MBA performance scores (average marks or CGPA) nor the market value of the MBA student (the salary secured).

So it is easy to see how big a farce entrance tests are.