Friday, May 04, 2007

Quotas and brand IIM

In an article in today's ET, Prof V Ranganathan of IIM Bangalore writes:

The IITs /IIMs are the one product with a ‘Made in India’ stamp that emerged as India’s global brand, and there is an apprehension in some quarters that this is now being sacrificed at the altar of caste politics. Will that brand decline in value due to a perceived fall in quality by foreign recruiters, who, after all, bestowed such sterling brand equity on those institutions in the first instance? It was these foreign MNCs, who flew down from New York, London, Tokyo and Hong Kong and recruited these students, paying them eye-popping salaries, besides conferring global recognition on these institutions

This is the standard line taken by anti-reservationists: the great IIM brand is in jeopardy. Look closely at the proposition and the flaws become apparent.

  • The international recruiters hire around 60 students at IIMA out of a batch of 250. The number must be the same or lower at the other IIMs. These are the top 60 of the batch. Assuming that those who get in through the OBC quota are all of lesser calibre, how does this affect the top 60? It doesn't. So the foreign recruiters will continue to get the quality they are accustomed to.
  • There is a problem only when overseas demand swells to a point where there is a market for the entire batch of 250-300. But we are a long way off from that point. By the time we get there, those who get in through the OBC category may not be very different from those in the general category. Why? Because cut-off scores in the reserved categories tend to coverge towards those of the general category over time.
  • We need to look at the cut-offs for those who get in through the OBC category. How much lower are these? And are all OBC students having lower scores than those in the general category? We need some data on this.
  • The idea that the IIMs exist primarily in order to create an international brand through international placement itself deserves critical scrutiny. We need the IIMs to produce managers in large numbers for the Indian economy. We need them to produce good management education. There is something demeaning about the notion that the IIMs are an exalted placement agency- faculty at IIMs would be wise not to foster this notion.

Ranganathan also refers to the proposed IIM Bill and its implications for the IIMs.

It now seems the government is rather perturbed at such a miracle of a brand being created in spite of itself, that it now wants to make amends for it and rob IIMs of their financial autonomy by bringing them on a par with IITs through an Act of Parliament. With financial autonomy gone, and the competition to attract quality faculty from international markets at its peak, the IIMs will find it very difficult to attract and retain quality faculty. All they will perhaps be left with are teachers who are no better than the bureaucrats they are trying hard to reform.

I must confess I have no clue about the Bill myself. I also do not know whether bringing the IIMs on par with IITs will mean any loss of academic autonomy. Assuming, however, this is true, I hope Ranganathan is not suggesting that the present degree of financial autonomy of the IIMs has somehow enabled them to attract quality faculty, especially, international faculty. The plain truth is it has not.

Elsewhere, Ranganthan talks about IIMs being able to attract faculty who would be able to switch jobs and go to the top 10-20 schools in the world. He seems to suggest that the IIMs should have even greater autonomy so that they can de-link from government pay scales. Once this happens, they would become attractive to top faculty. I'm afraid that in the foreseeable future, this is only a pipe-dream.

The top 10-20 business schools are mostly in the US. And in higher education in general- and not just in business management- the US reigns supreme. There is a chasm that separates US schools from even European schools. The top European schools find it difficult to lure away faculty from the US even when they are willing to match American salaries. This is because, salary apart, networking and collaboration in research is much easier if you are in the US. Faculty value this and would not give up a position in a top US school easily.

As Ranganathan acknowledges, Singapore is not able to attract top faculty with all the money it can offer. So, even if IIMs became more autonomous and were free to set their pay scales, that in itself would not enable the IIMs to compete for the best talent in the near future. Maybe 20-30 years from now they can- when India is a very different country and if the IIMs systematically go about pulling up themselves by their bootstraps.

The IIMs need to be realistic about their objectives. They need to set objectives that are meaningful in the context in which they operate. They certainly could use more funds and they need to think of ways to mobilise these. But it is not clear that having to operate within the government framework is a constraint on raising more funds.

It is convenient to suppose that there is some government devil that is keeping the IIMs from soaring to greater heights, that greater funding or greater financial autonomy will propel the IIMs into the big league. The reality, alas, is rather more complex.


Anonymous said...

Dear Sir,

Although your argument on the quota issue does sound very persuasive, it may not be entirely convincing. We are probably ignoring the fact that the brand value of IIMs is not built on the caliber of the top 60 students but in the overall perceived talent and intelligence of the entire batch of students that graduates out of the school. We are also ignoring the possibility of a student getting placed into an MNC a couple of years after graduation. How would we then be able to ensure the consistency and quality of talent that is the hallmark of IIMs if there is a good chance that a significant chunk of the graduating batch may not be of the desired quality?

Jaggernaut said...

Brand perceptions tend to be impacted directly by intangibles rather than tangible, measurable parameters. The way the IIMs operate, the placement statistics, perhaps even the quality of output may not suffer substantially post the increase in reservation. But core operational details or cold, clinical placement statistics really don't have the potential to hit the brand as much as intangible signals do.

On that note, two points threaten to impact the brand:

1. The way the HRDM has arm-twisted the IIMs into delaying the declaration of results, and the mostly spineless reaction from the IIMs
2. 'Actual' quality might not take a hit, but 'perceived' quality sure will, post reservation implementation. Perceived quality, at least in the near term, has a heavier influence on the brand

Sure, the reality is a little too complex. And it is the intangibles that play a role in adding to that complexity :)

Jayesh Jagasia
IIM Kozhikode