The government-mandated pay may be a drag, when it comes to attracting top talent from abroad. But this explanation works only for places like IITs and IIMs. Private institutions are certainly free to hire the best -- cost no bar! But, is there any evidence to show that our private management institutions are led by people with superior skills and accomplishments? Heck, is there any evidence that the faculty in these institutions are paid better (and are objectively better) than their (unfortunate) counterparts in public institutions?
Abi is right, nothing prevents private institutions from getting the best talent- except these institutions' short-term focus on the bottom line! However, I am not sure that the IITs and IIMs are entirely constrained by the government pay structure. Here's why:
- Many PSUs have found ways of getting round government scales through a whole slew of allowances. I am sure the IITs and IIMs could do likewise especially the ones that can afford these.
- Faculty at the top schools, including the director, are allowed to do consulting. In scouting for talent, it is the total expected compensation (fixed plus variable) that these schools must focus on, not the fixed component alone. The top schools could emulate investment banks' practice of throwing in a 'guaranteed' variable income for the first year or two.
- There are many distinguished academics among the NRI community, mostly alumni of India's top schools. At least a few may be at a point in their careers where they would like to return home and make a contribution. Pecuniary considerations may be secondary to them.
The challenge is to make the leadership position itself attractive in professional terms, it must be seen as a credible opportunity to make a big difference. The Chairman of the US Fed tops off at around $200,000, which is what a HBS graduate would start off on at an investment bank. That does not make the chairmanship of the Fed any less attractive! There are positions in the realm of government whose principal attraction is not the pay packet.
Will India's top schools can succeed in getting high quality talent from the international market if they put their best foot forward? I don't know. But the effort is worth making. It sends out a signal that they are receptive to the best talent. Even if they fail to zero in on somebody from abroad, the search committee will have a sense of what it would take to bring in high quality talent. It could be that some of the best people abroad don't apply and lesser ones do, but pitting insiders at the top schools against outsiders raises the level of competition.
In other words, the search for talent itself adds value regardless of whether it has a successful outcome. If Pakistan can do it, why can't we?