Bhargava-II report on the IIMs

Amit Gupta and Ganesh Prabhu, faculty members at IIMB, offer a detailed critique in EPW of the second Bhargava report on governance at the IIMs. This report, along with other reports and decisions taken by the ministry recently in consultation with IIM directors, has evoked a strong response from a section of the IIM faculty.

The authors argue that it is wrong to vest governance exclusively in the board of the IIMs, as faculty are important stakeholders. They point out that the IIMs have had a decentralised model of governance where faculty also have responsibility for governance. True, but is it appropriate to persist with a self-regulatory model? The board should certainly not review the performance of individual faculty, as the Bhargava report recommends. But some authority needs to take a look at the aggregate performance, whether it is in line with agreed objectives.

I agree with the authors that the boards, having been ineffective all these years, cannot be expected to spring to life all of a sudden. But, then, the question remains: who is to be the monitoring authority? Well, I think the question has been answered to some extent with the ministry constituting what is, in effect, a pan-IIM Council where the minister sits down with IIM directors every six months and reviews performance. Better to stay with this, I feel, than to rely on boards. Vesting more power in the boards will only mean vesting even more power in the directors of IIMs- and this is best avoided since there is already a heavy concentration of power in the office of the director.

The authors refer to the Bhargava report's recommendation that directors be paid amounts in addition to their income and calling it 'self-serving' since three IIM directors sat on the committee. The rationale for making extra payments itself needs to be questioned. The report claims that "the director of an IIM earns less than the faculty who are involved in training programmes."

What is the basis for this statement? Did the committee obtain data on directors' earnings from consulting? It is certainly not true of IIMA that the director loses out on consulting income because he does not participate in it. The government needs to look at the ratio of directors' consulting income to average faculty income at the different IIMs.

Meanwhile, R C Bhargava has given an interview to Business Standard where he defends the decision to sell seats in IIM societies to corporate donors on the ground that this will augment the corpus of the IIMs, which, in turn, will enable them to compensate faculty better. This argument is flawed. Corporates are free to make endowments to the IIMs but they must not expect a seat on the Society in return. There are huge corporate endowments in the US but the corporations don't get to running the educational institutions. At best, they have a hall or a centre named after them (and not always).

However, Bhargava may have a point when he says that, in attempting to augment the Institute's and faculty's income, the IIMs may be spending too much time on executive training to the detriment of long-duration programmes and research. At least at some IIMs, an imbalance may have crept in. For this, the IIMs have only themselves to blame: the older IIMs decided they did not want revenue grants from the government, which leaves them with little choice but to augment income through training.