Thursday, June 23, 2011

B-schools see red over IIM-A's placement reporting norms

The attempt of Indian Institute of Management-Ahmedabad (IIM-A) to bring in more transparency with a new placement reporting standard, has left tier-3 B-schools in India worried. B-schools that score low on critical parameters – infrastructure, intellectual capital, industry interface and placements – are termed tier-3 B-schools. Such attempts may result in tier-3 management institutes losing out in placements to large- and mid rung B-schools and could widen the ranking gap between them, said B-schools.

"Traditionally, recruiters have preferred better performing and top B-schools against the smaller ones. Recently, a recruiter firm came to our campus only because it couldn't get students from a top institute in our region. Once the placement reporting standards are implemented, such a scenario may aggravate and smaller institutes may lose out more in the long run," said Sanjeev Bajaj, Chief Coordinator, Placements and Corporate Relations of Ranchi-based, Xavier Institute of Social Service.

Echoing similar views, Hema Sisodia, Dean, Corporate Relations and Campus Placements, IBS Mumbai said: "If the salaries for some B-schools are currently high, more transparency will attract more recruiters to those B-schools. If the salaries are low and variable compensation are not reflecting, then the smaller B-schools may lose out. Corporates are willing to respond to only better institutes."

Last February, IIM-A had proposed to introduce placement reporting norms with the objective of bringing in transparency and uniformity in the manner in which B-schools report campus placements. Last week, many B-schools, led by IIM-A, decided to do away with the concept of cost-to-company (CTC). Instead, B-schools would now look to declare a maximum earning potential (MEP) that would include cash, non-cash and other variable components. IIM-A was of the opinion that CTC did not reflect the guaranteed cash component and gave a wrong picture about variable components, and said that reporting the total guaranteed cash components and MEP separately will provide sufficient meaningful information.

Among other B-schools which were apprehensive about losing out to competition are Pune-based Kirloskar Institute of Advanced Management Studies (KIAMS) and Goa Institute of Management. "The moment a B-school states its salary structure, it defines its position in the market. As far as students and recruiters are concerned, everyone would like to move to the better performing ones. This is where the low rung B-schools will lose out. In fact, I also have doubts on how many institutes will go for the standards. The gap will only widen," said R. Nagarajan, Associate Professor, Finance, Goa Institute of Management.

Rating agency Crisil, which has been grading B-schools for a year, however, chooses to disagree with the B-schools. It said B-schools will have an enhanced ability to generate trust with the student community and with recruiters, adding that the standards are still at a nascent stage and their acceptance remains to be seen.

"Leaders of B-schools are likely to be the first to adopt these standards. However, such measures of transparency, must not be viewed in the context of creating or widening gaps within the sector but more as an industry initiative to unite and self regulate. Once B-schools adopt these standards, it will make the sector more transparent, with respect to employment data and facilitate comparability. Tier-3 business schools can also choose to utilise these standards to showcase their commitment to transparency," saids Hetal Dalal, Head-Ratings, Crisil.

IIM-A said such fears are unfounded. According to the institute, if B-schools focus on quality education than figures, which are misreported at present, they need not worry. Moreover, by focusing on quality education and building a strong alumni base, even low-rung B-schools can improve their positions.

"Placement reporting standard is just the beginning in ushering in transparency but this needs to be backed up by quality education. I think the fears are baseless because there is too much emphasis on compensation packages being a performance criterion than quality education," said Saral Mukherjee, Chairperson, Placements at IIM-A.

Sisodia, however, has already worked out her strategy — focusing on maximum earning potential of the student. "The focus should be on maximum earning potential and how the variable portion of the package can be included to stay alive in the competition."

Source: Business Standard, June 23, 2011

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