Should IIMs go 'global' - 2

The war for 'talent'
If the IIM's 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 pay scales? 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 pay scales, 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 need 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 heterogeneous 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, if guessed, 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 bottom line 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.
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Let's also maintain a perspective on the earning potential of this exercise. According to TOI "IIM B's Singapore dream is expected to fetch the institute surplus revenues of Rs 2.5 crore over the coming 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.

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