Tuesday, March 14, 2006

IIMs and Salaries

The readers might be aware of the recent spate of news items where each IIM (Indian Institute of Management) upped the ante by reporting how their new poster boy got $180K+ salaries. As I see it, this is nothing more than India’s long held fascination with higher scores and higher ranks culminating now in higher salaries. This fascination is what all school going kids imbibe during growing up phase in India.

Parents in India are extremely conscious of how their kids perform at school- not qualitatively but mostly in quantitative terms. ‘How many marks did your kid score in Science?’ ‘What is your kid’s rank in class?’ ‘Which prize did your kid win in the painting competition?’ And then they go home to compare this with their own kid. The parents rate themselves according to their kids’ performance and feel happy or sad based on the outcome. I know of parents who were not ready get out of their homes because of the shame their kids brought onto them by not entering an elite institute. 

There is great deal of obsession with elite institutes as well. As I see it, IIM is not really a serious business management institute at all- it is just another one of those title-endowing schools which looks great in a resume- like being a member of International Engineering Group - nobody knows what it means, but does look good on a resume. Getting into an IIM is just the next step which follows the long list of other schools that you entered only to tell others how big is your IQ compared to the kid next door. Scoring 92% in ICSE/CBSE exams followed by rank number 228 in IIT-JEE entrance test followed by 99.6% in CAT results followed by $180K job is the prescribed path suggested to all the kids nowadays. Even the household astrologer has started suggesting this path to the so called successful-kid-raising-parents.

I am not sure if this reporting frenzy taken up by different news groups and the colleges is a healthy sign. First of all, I always had serious doubts on the contribution of various IIM grads to any business. Right now, I run my own business and I keep asking myself – ‘Do I really need an MBA grad in my team?’ It’s like asking myself – ‘Do I really need a helicopter so that I can commute from my home to office which is 3 km away?’

Do a survey. Ask any IIM grad this question – ‘What is the purpose of a company/business?’ He/she would answer without even thinking (or even blinking) – ‘To make money’ (or ‘To maximize returns to a stockholder’). When I got the same set of answers from far too many IIM grads, I reasoned- ‘I don’t think so. It has a far higher purpose than just making money’. They came back with an immediate reply- ‘But a company/business would cease to exist if it did not make money’. That’s how they run to the conclusion that ‘making money is the purpose of a business’. 

I have an analogy to understand this. Ask anyone who is next to you– ‘What is the purpose of life?’ and he/she would ponder for long to answer and most probably each of those answers would be unique. What if my answer to this question is ‘To breathe’? Would you agree? Of course not! Many would disagree with me on this, I think. But then I would reply – ‘You would cease to exist if you didn’t breathe’. Hence, ‘To breathe is the purpose of one’s life', I conclude. Sounds absurd, eh? But that’s exactly the same argument a high-IQ IIM grad uses. Founders of HP, Gillette, Apple, Google, and many other business icons of modern era have NOT founded their companies to make money. They all wanted to make a difference in this world- which was much more than just making money. Making money is like breathing, one needs it to exist, but that is not the main purpose of one's existence- they believed.

According to me, IIM grads are in fact useless as far as running a business is concerned. They are too young when they enter a business school. Most of them do not have any industry experience – and even if they do, it is a mere year or two, of which they spent half the time preparing for CAT exam. How does one debate in a IIM class on what should be done to a business given a situation? The solution does not come out of pure number crunching exercise- as every experienced business man knows; it’s far more complicated than that and there are many subjectivies involved. So, without having the experience of going through real life situations how are these grads debating in a class room? To compound the problem, most of the teachers have no industry experience either. What we get to see is a bunch of high-IQ guys thinking and debating theoretically about a practical problem coming up with unrealistic and far-fetched solutions bereft of any accountability or responsibility.

This whole charade of announcing who got what salary is completely childish- it’s like a Tutorial institute in Hyderabad announcing what ranks their students got in a local entrance test. I mean, we should be talking about creating leaders who are worthy of making an impact to a business and society and here we are all talking about CAT scores and salary numbers.

Our fascination with numbers- how much a kid scores in each test gets exaggerated and blown up by the time that kid goes off to an IIM. This kid somehow puts on a smooth tongue and blabbers a pseudo-intellect talk, crunches some numbers and produces flashy reports to bag a job with exorbitant salary. What happens next? How about tracing each of those poster boys and see what happened to them in five years? That would tell us a great story of IIMs!

24 comments:

  1. you may like to see some articles on the IIMs at:

    www.india-awake.blogspot.com

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  2. At least IIM as an Oraganization and their grads influencing positively on Indian society, Is that a problem for you?

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  3. Anonymous:
    I don't have a problem with IIMs or their grads. But I do criticize the over emphasis on salaries and other achievements which have no significant contribution (according to me). Positive image is only good beginning. It has to be accompanied by positive results which I don't see (as much as their hype suggests).

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  4. Hi, Found your blog quite informative and I am in owe to see that you have written on such a variety of topics!
    Good work!
    Coming back to IIM topic. Well I agree with you but I have two reservations here
    1) I assume you are taking a generalization approach as every eyar at each IIM there are certainly some who know what life and MBA means and what they are going to do?
    2) Regarding faculty: I do not agree becasue in this era of intense competiotion where education is more of a business each School knows to fly high they need to cater to current demand so somehow it acts as blessing in disguise; as per my info and survey now-a-days most of Bschools let alone IIM have industry backed faculty.

    Now looking at the problem you pose; you never opined your solution for the problem. It is easy to say this is sheep way but what one can do here and how can parents being part of society, run out of it?
    Yes, we are a knowledge soceity but we are a billion also. So to get into BEST we need to be BEST at every school. This population has made us into this mad race and we have no choice but to be part of it. What's your take how do we live in this society without being part of it. I agree when you say that it does not need to be an MBA to start a business but what about who want to be in a company and not an entreprenur? Do you feel without education one can get that kind of work let alone money, in this country when the compnay have choice to recruit people from institute like Harward, Wharton etc?

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  5. Roark-Wanna be:

    1) I assume you are taking a generalization approach as every eyar at each IIM there are certainly some who know what life and MBA means and what they are going to do?

    I don't deny that. Yes, there are always some young people who know what they want to do exactly. But most others, especially those who have no industry experience tend NOT to know what they the industry is all about.

    Talking about leadership issues, or the issues confronting the customer, or making strategic decisions, etc, are something one can appreciate better having had some industry experience.

    Majority of Indian MBA aspirants lack industry experience.

    You ask for a solution- it is simple.

    Have more industry-experienced people enter MBAs (or create more schools catering to that pool)- it will tend to change the scope of the curriculum. Instead of making students mug up formulae to tend to spew forth cliches to all problems, one can make a wise MBAs who know what they are talking about.

    What are our MBA schools creating? Leaders and managers or number crunchers and cliche repeaters?

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  6. Please clarify: Are you jealous of those guys making so much money? If not, it's not their mistake that they are paid so much.. no iim guy claims he's a bigshot entrepreneur.. companies recognize them for what they are: good with numbers, good with fast thinking, good IQs and they pay for these qualities and nothing else..

    Source: Wikipedia
    -------------------------------
    A straw man argument is a logical fallacy based on misrepresentation of an opponent's position. To "set up a straw man" or "set up a straw-man argument" is to create a position that is easy to refute, then attribute that position to the opponent. A straw-man argument can be a successful rhetorical technique (that is, it may succeed in persuading people) but it is in fact a misleading fallacy, because the opponent's actual argument has not been refuted.

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  7. lone sailor:
    You ask-
    Please clarify: Are you jealous of those guys making so much money?

    Looks like you have not read the post above. If you did, you wouldn't have asked this question.

    I am asking a bigger question- which seems to completely miss out on you- What is the role of MBAs in a business and are they worth that much?

    Second, by overemphasizing on the exorbitant salaries that few grads fetch, aren't we continuing our propensity to glamorize scores and numbers instead of actual and tangible contributions?

    You inclusion of 'straw man's argument' is completely useless.

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  8. sujai,

    couldn't agree with you more. great article !

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  9. TOP 20 REASONS MBAs ARE OVERRATED

    Please read:

    http://www.projectmanagementsource.com/2007/03/top_20_reasons_.html


    JACK ROBERTS

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  10. Give India - http://www.giveindia.org/give/common/abtus_whoweare.jsp#venkat

    Look at the above URL and an organization called Give India, started by Venkat Krishnan (IIMA alum) and this organization's purpose is not making money. And, there are many-many-many more Venkats out there.

    I would also encourage you to look at the sustainable social enterprise curriculum taught at the business schools. Do look at NetImpact (http://www.netimpact.org/). This is an organization where all business school students come together to as you said "make a difference in this world".

    Also, a recommendation on similar topics about money - a book by Bernard Lietaer - Future of Money.

    Again, like your other conclusive posts this post has a problem of a very small and skewed sample Sujai - you talked to just the wrong set of IIM grads.

    Hire the right sustainable business person with the right EQ (not IQ as you suggested) for your startup and you will be happy :). You are not meeting the right kind of people nowadays - or it is just "like attracts like" - you will have to look deeper inside for that.

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  11. Hey Sujai, great blog!! Pertinent issues, opinions rationally and lucidly put forward on a take-i-or-leave-it basis. This is the kind of public discourse we need.

    Being an MBA, I can't agree with you entirely. But I have very strong and similar views of the newspaper reportings of dollar salaries of the "righ hand of the normal curve" guy in a B-School. However, I guess the this is more to do with yellow journalism than the MBAs themselves.

    Lastly what you told about MBAs actually apply for virtually all academic degrees. I have seen multitudes of doctors who are less aware of recent health developments than I am, accountants who have no clue of accounts or finance and lastly engineers who never learnt engineering (myself being one of them). So paiting MBAs with a thick brush wouldn't be a bright idea.

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  12. i dont think so that IIT and IIM's test IQ of the candidates. because the way these exams are conducted question of testing IQ is not at all visible. There people select questions which can be done. And to learn all these,everybody starts "PREPARING" since two years. If IQ are tested,then nobody will join coaching institutes.

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  13. Great Post. As usual your posts ROCK. I always thought that management post graduate holders would be quite mature and have a good sense of spending the salary that they earn. Surprisingly they are as worse as their younger IT collegues. They do so much work to get the money but no work is done to plan how to spend the money responsibily. Maybe this should also be taught theoritically in their courses!

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  14. i can understand your feelings man - after all when your fellow iitian got promoted over you, you lost your job to a young guy from iim who eventually even stole your girl from you - you are bound to feel a little down...dont worry cheer up there is more to be faced.

    -
    anand, iit bombay

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  15. I like u mann.. Bt this is a blinkered article.. Sinc u hvnt been to IIMs and interacted with the larger pool, you have a pretty cliched image of MBA and MBA grads which many many people (who dont make it anywhere) share..!!
    read up a bit more.. I would recommend "Stay Hungry, Stay Foolish". And "The Goal"..

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  16. Rachna Biyani:
    Why do you think I do not know about IIM graduates just because I have not attended IIM?

    One can get to know them through interviews, as coworkers, and also because of regular interactions with the students and their faculty.

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  17. ...dude you gotta be into a IIM to see what its all about...you just cant say things when you dont even know what it takes to get into one of these institutes....!so sorry Pal ..but i think you are a loser...!!..

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  18. Roger,
    Not entirely but the fact that the most successful enterpreneurs in the world history had no formal management degree to begin with, gives some credence to Sujai's argument.
    Well IIM's do give a fair degree of insight on how business whould be conducted or to say how people are to interact in business(some kind of autocratic protocol that is being slapped on our face).
    However in today's scenario it is how much you earn is the bottom line and not how. May be that is why the article is a sour eye to many.

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  19. Say you are right. IIM grades, inexperienced and without sound knowledge of business (according to your assertions), get paid large sums of money. The money is paid by businesses who hope to earn more by employing them. If not, why would they hire them?

    -Ryan

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  20. I feel I am reading blog of a mediocre who is just happy with his mediocrity and is accusing the happenings and events.

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  21. Oh my God.

    What a level of thinking !!!

    Simply Suberb.

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  22. IndiaGlobeRankerJuly 14, 2011 11:22 PM

    @Sujai -"According to me, IIM grads are in fact useless as far as running a business is concerned. They are too young when they enter a business school.Most of them do not have any industry experience – and even if they do, it is a mere year or two, of which they spent half the time preparing for CAT exam."

    What I say-
    "industry experience" - define it, my dear buddy. define it with true heart. How many with say with so called 10 year "industry experience" are really good at managing thier projects with overall happiness? How many are just spending time in thier chairs - doing not much? They were not taught about business/management - they only learn it by experience (learning by experience - can be correct way/incorrect way)
    But if you attend a B-School, it mostly teaches the ways which are proven to be good. So you can innovate more upon proven ways rather than incorrect ways.


    "industry experience" is essential. But it should not be mandatory for kids - denying them entry to B-Schools.

    Agreed - only theoretical knowledge. But "good foundation" -> "strong house". He might not be a "good manager" right from the begining which might caused you to conclude "useless as far as running a business".
    I say everybody have "thier own learning curve"


    @Sujai - "One can get to know them through interviews, as coworkers, and also because of regular interactions with the students and their faculty."

    "get to know" -> is a not hearty. Do you have friends or family from IIM which you had spent a hearty time to conclude "useless as far as running a business".? Better - yourself can get into a good B-School and find out more closely for yourself the facts.


    I somehow feel that your behavior is very similar to "pure blood" culture in the movie "Harry Potter". There are two idealogies - (1) "all students can study magic and should be in school" (2) "only pure bloods should be in magic school".


    "A mixture of varied background people is essential for every school, state, nation" - It brings out the best of human being. "A school,state,nation with only one religion,race,culture, one type of people" in longer run will get into problems - they tend to get the disease of xenophobia of other types, which in turn will lead to loosing the edge in the global arena" (read -> one type of people - "people with industry experience only in B-School")

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  23. Sujai, you tend to make generic statements like 'IIM grads are overrated' or 'IITians are better than non IITians' or 'Asians are smarter than others' etc. If someone makes a blanket statement like that it only reflects their stupidity. In IIMs, just like in any other institution there are different kinds of people. While there are few people who have very little real world experience and are not very valuable to a business, there are many extremely talented people who probably deserve 180K. I personally never hire anyone based on where they graduated from. You need to evaluate candidates and make a case by case decision.
    Also,keep in my mind that a job is a two way street. Why would the best and the brightest want to work for you (or even interview with you) when someone else is offering them 180K. I mean, are you (and your company) making any ground breaking things. Are you a hot startup with a brilliant idea that is going to redefine technology? Do you have what it takes to attract the best and the brightest? If not, then you are probably not in the right position to make this judgement because you simply didn't talk to the right people. Sorry if I sounded rude but someone has to say this to you.

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  24. So you are saying that the companies who hire them for 180k are idiots throwing away money.

    Obviously, you have never been close to an elite institute, but do you think people would call them so after nearly 40-50 years if they taught bogus?

    Finally, get your facts right. Every company in this world has been established to earn money by selling a better future. Earning money isn't an evil. I suggest you read 'Atlas Shrugged'. I hope it will open your eyes.

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