(Original photo credit: Egan Snow)
The Indian Institute of Management (IIM), Ahmedabad plans to release its placement report for the batch of 2009-11 adhering to its proposed Placement Reporting Standards by June-end. The report will be externally audited, for which the institute is in talks with credit rating agency Crisil.
The standards — which aim at adapting the American MBA CSC Standards to an Indian context and force companies recruiting from campus to separate out the fixed, variable, non-cash and guaranteed bonus components — were agreed to by companies that recruited 210 students of the total 312 placements at IIM Ahmedabad this year (however, all nine companies recruiting students of the PGP in Agri-Business Management adhered to them). The school was candid in admitting that not all companies had bought in to the idea but also asserted that the change would be a gradual process which would depend on more b-schools adopting the standards thereby cornering more companies into being transparent. The school therefore plans to report this years placement statistics for both groups separately, said IIM Ahmedabads Placement Chairperson Saral Mukherjee.
The institute threw the standards open to debate at a conference yesterday (Saturday, June 1, which was attended by 33 Indian business schools, four recruiters and seven media houses and rating agencies.
Moderated by Dr TV Rao, the eight-hour conference reached a consensus on making several major and minor revisions to the first draft of the standards. Chief among the alterations was redefining the CTC (Cost to Company) salary communicated in placement reports to Maximum Earning Potential (MEP), which the conference felt was a term more representative of compensation that included performance-linked variable pay. It was also agreed that schools will report summer internships numbers split by those arranged by the b-school and those arranged by students on their own, further drilled down to those that paid stipend and those which didnt. After placements are over, b-schools can release an interim unaudited report to the public and the media. But the standardized placement report (the real deal) will be released three months later, after the school updates salary data with actuals by contacting the graduates after they have joined their companies and gets the report externally audited. This will be the de-facto as-accurate-as-possible placement report of the school. In all public and media communication, the privacy of students and companies will be protected.
The IIMs at Bangalore and Shillong were represented by their career services officers and placement coordinators, as were SP Jain – Mumbai, JBIMS Mumbai, NITIE Mumbai, IIFT Delhi, Goa Institute of Management, IMT Ghaziabad, ITM Navi Mumbai, XISS Ranchi, Great Lakes – Chennai, SCMHRD Pune and SIBM Pune. The rest of the IIMs, ISB Hyderabad and XLRI Jamshedpur were conspicuous by their absence, even though they had been invited.
The recruiters present at the conference included McKinsey & Co, Booz & Co and Hindustan Unilever. They seemed to have already bought in on the standards and left the conference just after the halfway mark.
The media was represented among others by The Economic Times, Business Today, Business Standard, Mint, Businessworld and this online magazine.
Given the diversity of b-schools present at the conference, it became clear from the start that the placement processes, goals and concerns of the top rung schools were very different from those faced by second and third rung schools. The lower-rung b-schools will therefore have to depend largely on the ability of top-rung b-schools to convince recruiters about the benefits of salary transparency.
Pushing a recruiter to have a compensation policy is tough for second and third tier b-schools and I have no qualms in admitting that the recruiters which come to us are those which have not been able to fill up their requirements at the IIMs, articulated the placement officer of a south India based b-school.
The top-rung b-schools were more optimistic about the standards. One apart from IIM Ahmedabad is said to have already committed to following them (it didn’t wish its name to be revealed yet). None of the others committed to adhering to them fully right away, but about half a dozen indicated that they might start adhering to parts of it in the coming year. The rest said they wanted to wait and watch a real example first.
Its a noble cause and somebody had to start this someday. Its great that all of us are meeting and talking about it. This effort will not go waste, NITIEs Associate Dean Prof Ashok Pundir told PaGaLGuY.
The representative from Goa Institute of Management observed that conforming to the standards will require b-schools to add an immense number of new processes to the placement exercise in order to record the detailed salary and placement figures repeatedly.
Maximum Earning Potential
B-schools adhering to the standard will have to report the minimum, maximum, mean and median of fixed base salary and other guaranteed cash components (fixed bonuses, joining bonuses, relocation expenses, loan repayments, etc) separately for each sector and function. The equivalent statistics for the total salary will be represented as the Maximum Earning Potential (MEP), indicating to parents and aspirants that there is no guarantee of graduates getting the total variable component (unlike what is assumed at present).
Before reaching this conclusion, the conference spent nearly an hour deliberating on this particular parameter, discussing among others the possibility of b-schools to collect data from their alumni about actual variable payouts for each company in the last three years and using that data to report a realistic CTC figure. But most b-schools copped out of any commitments involving past students, admitting to having little or no (mostly no) structured interface with alumni.
No more lateral salary
One of the duds of the conference was the inability to find a solution to the problem of reporting the placement information of students with prior work experience acceptable to all. B-schools with two-year programs argued that the concept of lateral placements existed only in a few b-schools and there too, it was often misused as a loophole to allow the most-preferred recruiters early access to students (including freshers). Others argued that lateral placements were largely a specious concept among Indian two-year programs as despite prior work experience of one or two years, students who were shifting careers from IT to marketing or finance were getting paid the same salaries as freshers. The schools decided to re-discuss the issue during a review of the standards an year later. The standards as such, therefore, will be silent on the subject of how graduates with prior experience fared in the placements.
Yet, the need of experienced MBA applicants to learn about their employability post-MBA is a real one and I am personally curious to see how this section will react to the standardized placement reports. My guess is that b-schools that agree to follow the standard will on their own accord include laterals information under the ‘additional information’ head, not wanting to alienate applicants with work experience.
Adoption of the standards
As part of the consensus-making process, IIM Ahmedabad had originally invited 170 b-schools (33 turned up at the conference), 85 recruiters (four turned up) and 13 media houses/b-school ranking agencies (seven turned up: the best show among all stakeholders). (At last, one thing you couldnt blame the media for.)
The poor show from recruiters does not reflect a totally dismal state of things, as IIM Ahmedabad did manage to influence 67% of its placements with the standards, which could not have been on the back of only the four recruiters who turned up at the conference.
It was really the absence of the top-rung b-schools (mainly other IIMs apart from Bangalore and Shillong, ISB Hyderabad and XLRI Jamshedpur) that put a question mark on the adoption of the standards by b-schools at large.
For the success of the standards depends on the top schools complying to them, for the simple reason that among themselves, only they have the bully power to convince most MBA recruiters in India to agree to salary transparency. The same companies will then be more pliant if lower-rung schools demand cooperation. The unspoken truth of Indian b-school placements is that the bulk of the post-MBA jobs are provided by IT companies (the top investment banks and consulting companies visit only a total of seven, maybe ten schools and are in no way representative of all recruiters). Who will convince Infosys, TCS, Wipro and Accenture about following the standards? Not IIM Ahmedabad, but most probably a school ranked between 5 and 30 in any reasonable b-school rankings or a top school such as ISB Hyderabad.
IIM Ahmedabads Placement Chairperson Dr Saral Mukherjee intends the standards to be a downwards-up movement, where b-schools will join the bandwagon out of their own accord and external audits will ensure monitored compliance. Dr Samir Barua, IIM Ahmedabad Director hoped that by the next placement season, about 150-160 b-schools will adhere to the standards.
That seems a tad difficult to pull off, unless there is a central agency that works on consistently and relentlessly convincing more schools to buy-in to the standards at sector conferences and seminars. Even the MBA CSC standards, which this idea is inspired from, is a fulltime agency that conducts regular training workshops for stakeholders.
A bigger danger is of the standards running unmonitored — a democratized standard will be used by lower-rung b-schools in questionable and distorted versions. It will not be hard for them to hoodwink the public by claiming to follow them when there is no central agency that can conclusively verify the claim (knowing the past record of b-schools, expect them to do this).
This is not a false concern. The US is already dealing with one such misuse of the MBA CSC standard at this moment. Private Indian b-schools have specialized in the art of fabricating true lies in large newspaper advertisements. A central agency that finally certifies a b-school’s use of the standards therefore, might be an idea worth considering in the long term. The agency could also devise a logo that denotes compliance to the standard and allow its usage subject to examination of the external audit report furnished by the b-school. The logo would help making the standards user-friendly among students and parents, who most probably will never go into the esoteric backend details of the standard.
IIM Ahmedabad deserves full credit for being transparent about both its own (not-fully-successful) experience with adopting the standards and building consensus with stakeholders. Overall, the standards are a well-intentioned and brave move by IIM Ahmedabad and if successful, will help in cleaning up the muck inside the single information parameter that (for better or worse) lies at the nucleus of Indias b-school boom — the average salary.
What do you think? Constructive comments, please!