Friday, February 03, 2006

Should IIMs go 'global' - 2

The war for 'talent'
If the IIMs wish to scale intake of students, they need additional teaching talent. And that is an extremely scarce resource...

Can IIM professors be ‘world class’ on Third World payscales? Mukesh Ambani certainly does not think so. At a recent Board of Governors meeting he asked the institute to 'prepare the ground for compensating faculty adequately in line with other leading global business schools.'

Because, at current payscales, an IIM professor with 20 years experience gets paid far less than what a 24 year old earns as starting salary on passing out of the institute.

As IIM Calcutta’s Prof Anup Sinha bluntly puts it, “In India, you are either very passionate about teaching, or probably you didn't land up the job you wanted so you decide to hang around teaching in a b-school… teaching is not very financially rewarding.”

Of course, academics is not the most lucrative career option anywhere in the world. But the disparity between IIM payscales and corporate ones is so high that it definitely turns off those inclined towards the profession at entry stag. And erodes the self esteem of those who, despite it all, choose to go the academic way. Certainly not the best of HR policies!

Kellogg Dean Dipak Jain believes that the promotion system in Indian
institutes needs changes. " Every professor gets the same compensation as the other. Incentive system must change if these institutes have to be on global scene."

The other issue is that too much emphasis is laid on being a 'career academic'. Most IIM profs would not have significant corporate experience before doing their PhDs. In a practitioner led 'science' this is a disadvantage.

What's more, IIMs are simply not open to the idea of mid-career shifters. People who may have spent say 15-20 years in the industry and now wish to shift out of corporate life and into academics full time. Yes, there are 'visiting professors' with such backgrounds but to join full time a PhD is a minimum qualifying criteria.

And there is definitely a 'we need to protect our turf' mindset because of which this is unlikely to change. Although as J. Philip, Director XIME points out: In the first wave of Directors and senior Professors at IIMs, one would notice a good number of non-Ph.Ds, starting with K.T. Chandy and Hiten Bhaya of IIM-C, Ravi Mathai of IIM-A, N.S. Ramaswamy of IIM-B, Professors Nitish De and Iswar Dayal of IIM-C, and many others...."

Attracting international students
This brings me to the last and crucial ingredient required for a top quality institute: top quality students.

The 'global brand name' the IIMs have today rests to a large extent on the laurels of its graduates. In this, the selection and filtration process has played a crucial role. There are those who argue that inputs at the campus 'hardly matter' given the fact that this is the creme de la creme of the student population.

But I for one am not so cynical. The 'exposure' combined with 'opportunities' is what produces the X factor.

One of the only drawbacks of studying in an IIM is the lack of diversity in the student population.

A huge number of IITians and engineers, sprinkling of C A s and BComs and a tiny number of ‘others’. Any top 20 b school in the US would, in contrast, attract a far more heterogenous and multicultural population.

Well, student exchange programs at IIMs have led to a significant ‘foreign student’ presence on campus in recent years. But would any of these students consider joining for the entire 2 year program? Probably not. Unless IIMs move up significantly in Global Business School rankings. And there - is another BIG anomaly.

Foreign rankings - far from perfect
As detractors gleefully point out from time to time, IIMs feature 'nowhere' in the world B school rankings. For example, IIM Ahmedabad was the only Indian b school to feature in the top 100 of the Economist Intelligence Unit rankings.

Shameful, you say? Well dig a little deeper and here's what you find. If B school rankings conducted by Indian magazines are flawed - this is no better!

The Economist arrives at its rankings by studying 4 broad parameters:
1) open new career opportunities and/ or career advancement (35%)
2) personal development and educational experience (35%)
3) to increase salary (20%)
4) potential to network (10%).

Each parameter has sub-parameters:
eg Open new career opportunities (33% overall weightage) is comprised of:
Diversity of recruiters (25%)
Number in jobs three months after graduation (25%)
Jobs found through the careers service (25%)
Student assessment (25%)

If you compare the ranking of IIM A (ranked 69) with Stanford (ranked 4), IMD Lausanne (ranked 5) and surprise! IESE Business School - University of Navarra, Barcelona (ranked 1) there are some shockers.

IIM A scores the HIGHEST possible rank 1 out of 100 on some criteria ('opens new career opportunities') and the LOWEST possible rank 100 out of 100 on other criteria (student quality and diversity).

As only 1% of IIM students are 'international' a low rank in 'diversity' is understandable. But quality? The applicant to places ratio at 532: 1 is the highest among all colleges!However, one component of student quality is 'average GMAT score' - which is not applicable to IIMs.

This, I'm guessing, means we score a zero in an area which counts for 12.5% of the "Personal Development and Educational Experience" parameter which has an overall weightage of 35 out of 100. Which is like leaving one 4 mark question in a paper of 100 marks for no fault of your own...

Then the Economist (which of all publications should know better!) uses a dollar scale to compute the 'increase in salary' parameter where again IIM A ranks a miserable 100th out of 100. Wouldn't use of purchasing power parity make far more sense?

With more global placements, exchange programs and even foreign languages being taught on campus (that is a criteria!), the IIM A rank should see a significant jump. But it will take time as the EIU methodology takes a weighted average of 2005 (50%), 2004 (30%) and 2003 (20%) data to provide a rounded picture of the school.

In the meanwhile, IIMs need to swallow their egos and do some lobbying with the Economist and other ranking agencies to correct these anomalies.And also look within to see where they can effect changes and thus improve their ranking (the alumni networking parameter for example).

These efforts should not be seen as 'beneath our dignity'. Rankings greatly affect the perception of how 'global' our institutions are. We must accept that and learn to play the game.

If that results in an IIM making it to the 'top 25', we will find both internal and external validation without having to physically go anywhere!

Making India the hub
The bottomline is, just because there is 'demand' from UAE, Sri Lanka, Mauritius or even Singapore to set up IIMs, does not mean we actually need to do so.... The mountain need not go to Mahomet.

In the interest of promoting diversity, IIMs can have a quota for international students other than NRIs (say 10%) and charge them higher rates (like state univs in the US do). But care must be taken to ensure they meet a minimum GMAT score and other stringent qualifying criteria.

The trick is to attract a big enough pool of applicants so you are able to pick up the cream. And for this a large scale communication and branding exercise would be required.

And yes, IIM B does need to worry about whether the Singapore foray will add to its aura or dilute it... If it does not have the resources to invest in a proper campus, it should take care to state upfront that it is planning a 'contact center' for its e-learning courses. Because the word 'campus' conjures quite a different image.

Let's also maintain a perspective on the earning potential of this exercise. According to TOI "IIMB's Singapore dream is expected to fetch the institute surplus revenues of Rs 2.5 crore over the next three years — funds that could be used to open more IIMs in India".

That kind of money is hardly sufficient to think of setting up new campuses but certainly can be employed to spruce up the existing ones to 'global' standards.

The red brick buildings at IIM A for example still look extremely photogenic. But take a closer look at the hostels and many of those 30 year old structures are in fact in bad shape. Especially when you compare the old campus with the shiny new one that's come on the other side of the connecting tunnel.

I'll stop before I get into arbit CP mode...

The point is that 'IIMs going global' is a case study in itself. Hope many ideas and appproaches are used - simultaneously - so that the IIMs move forward and take their rightful place under the global sun!


  1. Rashmi,

    A very good article. On a personal note, I get a feeling that IIMs assume that whatever they think and do is absolutely correct.
    I assume that this confidence is because for numerous years they have been consistently producing excellent outputs.

    I personally feel that the selection system for IIMs needs to be changed a bit. Folks with high aptitude make it thus leaving a few who might have good managerial potential. ISB scores on that aspect. Although avg GMAT there is 690, it looks for well rounded personalities and is striving hard towards diversity.
    The high number of applications at IIM is because even a fresher has a chance of making it to the big school if he cracks CAT. I would personally like to see IIMs making a mark in the global space .

    You make a good point about the EU rankings. The IIMA-PGPX asks for GMAT scores and is perhaps the first step taken by IIM-A to ensure that it does not miss out on that criteria. Although IIMs have tremendous potential , strong alumni, govt support and excellent students, I wouldn’t be surprised if I see ISB featuring into the international rankings before any IIM does.

  2. Why dont we think of increasing the number of such colleges on grounds or such high rankings. This is like the Indian cricket team which stood on Sachin Tendulkar for so many years, if he goes out, we loose the game!

    Is there standardised assessment of universities/colleges in India itself?

    it is dead easy to score an 85 %- commerce -in Mysore Univ, but it is practically impossible in DU. But do these B Schools consider these standards when they do their prelim screening?

    So many of us loose out at this stage itself, though we have the capacity!

  3. cant believe IIM-A was ranked 100 on student quality..always felt it was primarily thanx to the students that they rocked.

    Going Global means we just cant take our profs from here and ask them to start at the singapore campus.So many factors as you pointed out.

    It is also very sad to see the plight of the profs in India from the pay point of view.As you India you are only a prof if you have a passion for teaching or you didnt get the job you wanted.

  4. This comment has been removed by a blog administrator.

  5. I feel that 2 b-schools located in totally different environments cann't be compared. As far as diversity and issue of number of IITians/Engg are considered, I don't think it is the fault of IIMs. Mostly toppers in Classes IX and X all over India take Science as their optional and then go for IITs. So it is the fault of education system and not IIMs that most ppl who go there are Engg.
    The salary of Professors in Indian B-schools is definitely very low and there can be no argument on that.

    But having being taught by both academic PhD Profs and visiting faculty from industry, I do feel that PhD as a criteria should notdone away with. A person should have passion and ability for teaching/research to be able to teach IIM students.

    And we should't too much worry about foreign students coming to IIMs or not. It is Indian B-School teaching Finance, Marketing, HR and Operations for Indian markets. We are taught Financial accnt, Cost accnt etc by Indian standards. Naturally foreign students would be wary of doing a full 2yr course yr. We shouldn't let loose this emphasis of IIMs on Indian Market just to rise in some journal's ranking.

  6. Rashmi, It is a nicely written article and well intentioned. I have a question? Do IIM's really need to go global. Isn't their responsibility to ensure that the students of this country needs better education before thinking about other countries. If they want to study in IIM's desperately, I am sure they will make the time and effort to do the same. Are we not forgetting about the students of our country and without having the statistics, i can say for sure that this is quite a huge number. Is that should be our first priority?

  7. i am not against IIMs going global but the reasons you are giving are very misleading and rather irrlevent

    1. salary is not the only thing a IIM prof. gets most of them are veteran consultants in bussiness world.
    2. as u have said teaching is not the most lucrutive field, while reading i felt you are kind of person who will compare oscars with nobel. now that is not going to help. you should keep in mind that most profs of IIM publish 2 papers per year on an avarage. so you just cant hint that these people are those who dont get jobs.
    3. mear presenting statistics dose not imply a correct logic.
    4. college should not develop it self to grab rank 1 in surveys (which can be bought and are mostly biased) college has some missions and goals to achive over a period of time IIMs and IITs also have there missions and they are functioning accordingly.
    looking there output no one can say they are not performing
    5.IIMs cannot be compared with foreign universities as most students in them are experienced IIMs is still the institute of freshers and its obvious that IITians are most of them as CAT is a kind of IQ test.
    6. I never understood why we need diversity in students at the time of input ... see them at the time of passing out IIMs creat students of diverse interests

  8. Hi Rashmi
    A pretty decent analysis of the Economist rankings and I couldnt help nodding when you talk about improving hostel facilities.

    And I think a good place to start would be the bathrooms and toilets which sadly even in my IIM wasn't upto par (4 yrs. ago and I would be surprised if things have changed). I mean is it wrong to expect western toilets, showers and running hot water?

    Of course it didnt matter much to me then, as I was making the transition from an Engg hostel (which was worse).

    I had an opportunity to visit the ISB campus recently and was blown away. We dont need ACs in rooms but at least keep the mosquito's out!

  9. I Believe that IIMs have a home work to do before they can go global. One-they need to increase the intake of the no. of students from the current 1000+.This is also required by India, considering the demand for Managers that we have today because of the growing servcies, manufacturing, Currently if we consider that these 1000+ are the very best guys...then IIMs can start including the next level i.e. the best guys category too in their schools. Not sure whether they are adding value to the students in IIMs India (which they claim to achieve by going global) or creating competition within the IIMs (IIMs India vs IIMs singapore or any other).

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