[PaGaLGuY Article] Seeing through misleading salaries in B-school placement reports

[Apurv]

Newspaper reports in the year gone by have been rife with b-school placement stories of a rather disturbing kind. It appears that quite a few well-known business schools have been lying about their placement salary figures in public! Here's how you can see through the salary hype when you make that important admission decision.

By Apurv Pandit

The names of these MBA institutes have remained a well-guarded secret, because most of the time, the whistleblower in these stories is a fresh MBA graduate who, invoked by his conscience but under the condition of anonymity, decides to ride against the tide and divulges to the media the inaccuracies in the average salary, highest salary and median salary figures quoted by his institute on its website and released to the Press. The names of these b-schools really become inconsequential, given that many business schools in India’s top 20 list have been known to inflate their salary figures somehow or the other. But thanks to negative media coverage, there is now growing awareness that clubbing international and domestic salaries together to calculate the single ‘average salary’ figure is one of the few tricks that b-schools use to inflate their placement data and improve their marketability. It is only when an MBA aspirant cracks the school and joins it does he become aware of some of the best kept dirty secrets of the Indian business school industry.

You’re probably wondering where all this is leading to but no, this article does not mean to rake up controversy on this rather sensitive issue. But, it surely aims to inform what you, as MBA applicants aiming to be in the best MBA programs of the country need to do to ensure that you get the right facts and figures about b-schools, and not what the b-schools want to feed you.

Come September, and most of you flock to the newsstands to buy magazines that pull out b-school rankings, or are scouring the resources in your coaching institute or the Internet to decide which b-schools to apply to this year. Even as I write this, there are nearly 20 forms for admission into b-schools of national repute live. Because each form burns about one-grand-big a hole in your pocket (or in your parents pocket depending upon your situation), it’s a good idea to research the schools and their placement performance well before investing the moneys.

It becomes especially important for you in February, when you ought to choose between three schools that have more or less similar brand perception and their placement salaries would turn out to be one of the tie-breakers (along with location, expenses, etc).

Why do some b-schools tend to report inflated salary figures? It works out well for everyone, if you really think about it. Since the salary package is the most glamorous and easily perceptible parameter to judge the quality of a job offer (as opposed to other parameters like the job profile description, future growth prospects, etc), by showing inflated salary figures to MBA aspirants the b-school can attract better quality students, sell more forms and gain a few notches above a rival b-school.

By showing inflated salary figures to companies through the media, the school is able to attract better and even higher paying companies for next year’s placements. The companies whose pay packages are reported in an exaggerated manner by the institute don’t mind, because they get free press and become a desired company in other b-schools. Everybody wins!

Two standard tricks are applied to manipulate numbers and arrive at the inflated salary figures. Compensation packages offered by companies come in a fixed and a variable component and a Cost-to-Company factor (CTC). So say, the annual fixed component amount is Rs 6 lakh, then you’ll take home Rs 50,000 home every month for sure. However, the variable component, which includes performance-based bonuses or e-sops may or may not come to you depending on your performance. Placement committees in b-schools, however add the highest possible variable component to the salary figure. So let’s say, your variable component, which you get if you perform really, really well, comes out to Rs 2 lakh per annum. Add to it the most controversial component, the CTC. The CTC simply, is the amount of money the company needs to spend on your maintenance. In reasonable CTC calculations, companies might add the cost of putting you through training and induction programs, your mobile bills and official travel expenses and your tax liabilities. But it starts bordering on the absurd when the floor space rent of the employee’s cubicle in your Gurgaon office is added to the CTC. The CTC component then shots up to as much as another Rs 4 lakh, and the total salary paid by the company shoot up to Rs 6 lakh + Rs 2 lakh + Rs 4 lakh = Rs 12 lakh! So even though you’re getting paid only Rs 50,000 each month, b-schools are pros at showing your salary figures as Rs 12 lakh!

The other way to inflate salaries is by playing around with the wonderful tools of averages. Many b-schools include both the Indian and international placement packages in their average salaries by converting the dollar amounts of the international salaries to rupees. It’s unfair, because they do not normalize the purchasing power parity in different countries during the conversion. So earning € 3750 in London converts to Rs 30 lakh, but is hardly a lot because the cost of living in London is extremely high!

On top of that, when all the salaries offered to students are calculated inflated by adding the CTC and variable components, the average salary is bound look very, very attractive.

Other b-schools calculate average salary by including only the highest offers made to each student, regardless of whether those offers were accepted or not (these days, many students prefer to take up jobs that pay half a lakh less because the profiles are more interesting).

One can go on and on about this, but the important question is, how do you as an MBA aspirant see through all this and get the right data about a b-school’s salary figures to make an informed decision for yourself?

The key lies in asking the right questions. The next time you read a b-school placement report, take it with a pinch of salt. While most of the data in there would be accurate, you just need to dig a little deeper to be sure that the placement data figures are correct. When you contact a b-school or want to know more about a b-school by reaching out to its students through your coaching institute or social communities like Orkut, Facebook or Pagalguy, keep the following things in mind:

Ask for the average salary figures without the CTC component. If they do not have the exact data, ask for an estimate. A b-school is obliged to do this much if you’re spending a thousand rupees on their forms.

Ask for separate average salary figures for domestic and international salaries.

If you’re getting into MBA with a specific goal in mind (for example, you want to join the media industry in a business development role), ask specifically for a list of offers made in that domain in the last two years. If the b-school does not arrange those kinds of placements, it makes little sense for you to join it!

Ask for the lowest salary in the placements. In many cases, a b-school’s placements look good only because of a couple of really high packages that shoot the average up.
You owe yourself at least this much, because one wrong choice about a b-school could change your life!

[standbymind]

Nice Article!
ty for putting it up man!

[sarvshwet]

wow...
and i always thought that ATLEAST the figures can be trusted!!!!!!!!!!!
now i come to know that they cheat even there!!!!!!!!

[profootball25]

Originally Posted by Apurv

....

Nice article
Just 1 thing missing ... and that can be explored ....
Follow IIM B and IIM L and stop publishing salary details
I wish atleast the IIM's converge on this policy ....
No tension about avg , international, median, mode, domestic, CTC ..
no jhanjhat ..
I am serious btw

[mirchikris]

Originally Posted by profootball25

Nice article
Just 1 thing missing ... and that can be explored ....
Follow IIM B and IIM L and stop publishing salary details
I wish atleast the IIM's converge on this policy ....
No tension about avg , international, median, mode, domestic, CTC ..
no jhanjhat ..
I am serious btw

IIM B and L have stopped publishing because of the request made by the students(correct me if i am wrong), But colleges out of the top10(or 15) will not find this feasible because then they may not attract best students

Also this reminds me of my manager saying "dont go by numbers".. How true!!!

kris

[utsavmamoria]

I think the article brings to light something that all aspirants need to know.I would also like to contribute my 2 cents to the Discussion

1.The IIMs can comfortably sit and not reveal their salaries. I think that their brand is more due to the Quality of Human Resource - The Students and The Faculty. The perception of aspirants is pretty strong towards these schools.Their actions concerning placement figures should not affect their brands in any major way, Though this may not be completely true for lower IIMs and New ones like IIM S

2.The problem starts escalating when it comes to private B schools.They need to stay ahead and bag the best students.Unfortunately, they may not enjoy a very strong following amongst the aspirants.So they make every possible attempt to improve their image amongst the aspirants which also includes extensive media coverage and rigged B school rankings

3.The Biggest problem still lies with the lower rung B schools,who either are very new to the B school Market or are only popular in their own region (As suggested by the PG rankings). They are the ones who would severly inflate pay packages without caring a bit for the profiles offered. Most innocent aspirants, blinded by these figures wnd up choosing a wrong B school, thus wasting their time, money, energy and most importantly an opportunity to make it big.

A student who makes it to a decent (read top 20 ) may not suffer as much, as he would at least be able to exploit the Junta and Faculty at those schools.Moreover the packages and the profiles are good enough, for a start that is.Its the not-so-great B schools that ditch the students the most, as he loses on all fronts.

P.S . Is RTI/or any other Similar facility available to get information from private B schools?

Yenjaay

[newbiedelhi]

hi
i am in a mba college which is not even in the top 100.
i am getting a package of 3lacs in hand in a kpo with a i banking profile + com is paying my cfa fees + mobile+ trannsport expenses..

i hav just turned 23 as of now... reading all this i feel a lil more comfortable. i am planning to complere my cfa in nmext 5 yrs . by that time i will be 28 yr old. And then go for a top b school ..

any suggestions for me as to some other strategy which will be more suitable.

warm reagrds

ps: plz pm me if possible

[najmuddin]

Can the names of a few of those colleges be known?
It'll help the aspirants to make an informed decision.

[Nafis.khan]

Nice article thankx apurva

[anurag01232006]

Well I think this is real disgusting...There are some points which I always disliked..

1.Why the B schools like MDI have there last date of sale of form prior to CAT? I think this is only a money making process.Every form costs around 1200 on an average and a guy form a middle class family will surely hesitate filling forms prior to CAT..

2.The fees in the form is for the total GD PI cost then why the money is not refunded of those who are not at all called?

I myself have spent around 12000 bucks in the last 4 months to get into a good B school..The government should take some action and save students from this kinda harassment ...This is high time that this stops...B schools should realize that their main aim is to impart education and not to earn money...