Placements eclipse leadership role | Premchand Palety

Some Indian Institutes of Management (IIMs) took a bold decision recently, not to disclose their placement statistics to public.

Two reasons were given: one, this will save some students and their families from the threat of extortion back home and second, a very valid one, the IIMs are not to be seen as placement agencies. But, covertly and overtly, they did just the contrary, releasing figures of “dream” placements all over the media. And the media took the bait, reporting Rs1 crore plus figures. The problem is that such figures can be very misleading.

The Rs1 crore salary is, in fact, often paid in dollars or pounds, and for foreign postings. So, it’s not as if the alumni are earning abroad and spending in India. One has to take into account purchase power parity to convert them into effective Indian rupees. In other words, a dollar’s purchasing power in the US is not equivalent to Rs44 in India, it is less than Rs10. So $100,000 doesn’t automatically translate to Rs44 lakh but somewhere close to Rs10 lakh. Then, one should not forget that these are cost-to-company or so-called CTC offers, which many times include intangibles such as cost of training, relocation expenses as well as variable pay. The performance incentive, which can be substantial in these pay packages, is a tricky component. One has to achieve targets, which often are really stretch targets, to qualify for the full pay. If we take all these into account, the Rs1 crore salary has effectively become, say Rs15 lakh per annum, inclusive of taxes. No great shakes, isn’t it?

This practice of bloating placement figures is also widespread among other business schools. In an annual survey of business schools that we do, we ask these institutes for a copy of campus placement offers. A careful look at the offer letters gives the true picture. The package is inflated by notional benefits and the variable pay component is usually very high. City relocation charges, which are one-time payments, can themselves go up to Rs1 lakh. Some companies even include subsidized canteen food in the pay package.

We have had cases of some B-schools including the insurance claim in a placement package, that is, if a job candidate is provided insurance of Rs5 lakh by the hiring organization, then that component is also included as pay. That employee will have to die to get the full salary that is quoted.

Even the high salaries offered are mostly lateral placements, for offers made to students who have substantial work experience. Last year, the maximum domestic salary offered was Rs34 lakh a year for an IIM-Ahmedabad graduate. The person who got it was a senior Indian Police Service officer, a commissioner of police from Tamil Nadu, who had opted to take a break from the service to do post-graduate programme in management.

If we leave out laterals, the average monthly take home for a fresher from top B-school is about Rs45,000-Rs50,000. For second rung B- schools, it’s between Rs20,000-Rs30,000. For the bottom of the pyramid schools—and they constitute about 95% of B-schools in India, the average monthly take home works out anywhere in the range of Rs10,000-Rs15,000.

My big question: Why do we hear about IIMs or other ‘top’ B-schools only during placement season and that too mostly about bloated salary figures? Why don’t we get to hear of path-breaking research by any these institutes? Why are they silent about instances of them leading an industry rather than the other way round? Why there is no reporting of creation of new knowledge, skills and practices? Why don’t we hear of innovations in pedagogy to make dissemination of knowledge more user-friendly and effective?

True, there were reports of the boost given to entrepreneurship by IIM-Ahmedabad or IIM-Calcutta faculty being hired as consultants to the Indian Railways. But, such reports are so far and few between that the popular perception is that IIMs and other top B–schools are a stepping stone for big bucks or, to put it bluntly, good placement agencies.

The truth is research output is abysmally low in these institutes. Out of over 1,200 Indian B–schools hardly 20 can be considered as integrated with industry. Again, institute-industry interface is peripheral in most cases. The obsession with placements has eclipsed the leadership role that these institutes were supposed to play in the great, forward movement of India. This definitely was not in the mind of our planners when they created the IIMs.

(Premchand Palety is director of Centre for Forecasting & Research in New Delhi, from where he keeps a close eye on India’s business schools.