B school salary figures: Reality Check

The campus placement season is coming towards me like a drunk and unbathed Gulshan Grover staggering towards a cowering and trembling girl who took refuge from the rain in one of his luxurious bedrooms.

That's how IIM Calcutta student Abhinav Jain describes the feeling of hurtling towards the 'final destination'. The all-important, all- essential,all-you-really-wanted-from-the-MBA: the Placement.

In the movies , the girl generally pulls out a seven inch knife from the apple basket lying on the side table , positions it right over her tummy and yells "Kutte , ek kadam bhee aage badaya to main khud ko khatm karr dungi". But I do not feel any amount of artillery positioned over any part of my anatomy can halt the oncoming placements .

Like it or not, that ‘these-are-the-best-days-of-my-life’ feeling you get in year 2 of the MBA is now, inevitably tinged with the worry of what is to come. Will I get placed on day Zero, day One or still be hanging in there like a monkey on day Three?

Well, if placement details so far are any indication, this year you can expect far fewer monkeys. And far more peanuts. Make that pistas and badaams, actually.

The Goa Institute of Management (GIM) is one of the first b schools to announce its complete placement picture this year. The average salary offered at GIM increased this year to Rs. 5.66 lakh as against Rs 3.77 lakh last year. 71 companies were scheduled to participate in the placement process but only 38 companies could recruit students.

Which is great news. The economy is booming, the job market is robust. You are lucky to be passing out this year, folks.

But, a word of caution. Let’s not make placements into an Olympic style competition. This is not a race to be won by any one institute. It’s just about getting off the starting block in the Marathon of life.

And yet, b school after b school – including the best of them – pad up the salary figures in their press releases. As do companies themselves, when making their offers.

The biggest culprit: the concept of CTC or ‘cost to company’.

An annual package of “12 lakhs” (CTC) offered by a well known foreign bank last year actualy included:
* Cash component of salary
* The rental value of the chummery (shared) accommodation provided
* Interest on the deposit paid for your flat
* Allocated cost of furnishings
* Company’s contribution towards your provident fund.
* Your contribution towards PF
... and of course, the taxes that you have to pay.

The joke went, even the toilet paper provided in the loos was accounted for in your package. Certainly, the cost of training in the UK was factored in. So, in hand, the MBA could expect to get about Rs 35-40,000. Which, although excellent, was far less than what the hype would suggest.

One accounting method, please
With tax rules changing, many companies are expected to do away with the CTC concept and offer all-cash-component salaries this year. Which may make the job of adding up apples and oranges - when it comes to salary packages - that much easier.

Either way, b schools must adopt a uniform method of ‘accounting’ for their placements. If one institute reports ‘CTC’ while another refers to actual cash component, there is ample scope for confusion.

Secondly there is the issue of ‘incentives’. A sign-on amount is one thing but otherwise a bonus is linked to performance. How can that possibly be predicted and included as part of ‘salary’?

What’s more, many companies, especially in industries such as insurance, financial products and marketing clearly specify a variable package. Say Rs 2.2 lakhs will be ‘fixed’ while Rs 1.8 lakhs is based on your meeting certain target. Which means it’s more like a commission.

Hence referring to such a package as Rs 4 lakhs p.a. is misleading.

Then, of course, there are blatant lies. A click of a mouse and suddenly figures get transformed. The main thing is that if institute X has released its figures, then we have to look equally good. Or better.

Institute X may have indulged in a bit of exaggeration to begin with - that gets compounded as institute Y also decided to add some lipstick, powder and paint before facing the world.

And so the chain reaction continues. While b school community is not fooled by tall tales – the truth is generally known - the real loser is the prospective student. He who takes the very decision to pursue the MBA based on these fantastic figures...

Will b schools come together and solve this very real problem?