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The $152,000 salary is just a jackpot!
March 23, 2005
here are two kinds of students at IIMs -- those who get good jobs and those who get great ones.
The definition of 'great' is directly proportional to the kind of moolah on offer. The heroes -- to put it crudely -- are the ones with the most zeroes on their pay cheques.
The hero of the moment is the IIM-Ahmedabad student, who has reportedly bagged a job offer of $152,000 (approximately Rs 66,00,000). The news made headlines in just about every newspaper, white or pink. Executives several years senior turned a delicate shade of green.
The effect on the student community has been electrifying. A million more I-want-to-attend-IIM-A dreams have been created in one fell swoop.
My warm congratulations to the student.
But, in public interest, I do think a few points need to be highlighted:
i. The student in question has work experience. So, in effect, it is a 'lateral placement'. The highest offer to a fresher is $110,000 (approximately Rs 48,00,000).
ii. Only 60 students out of a batch of 250 got placed on Day Zero. Some 84 job offers were made. But as one student was being wooed by more than one company, not all could be accepted.
iii. This means about 80% of the batch was still to appear for interviews with the regular rupee-paying companies.
The average Indian salary -- last year -- was around Rs 700,000. Expect it to become Rs 800,000 this year, thanks to a buoyant job scene.
But remember that if the 'average' is 800,000, there are a good number of students who will be offered jobs at salaries below that figure, too!
So while the $152,000 offer may make headlines, let's be clear about the fact that it is a 'jackpot', as the media is describing it.
It is the good fortune -- and brilliance -- of one individual. Not something you will necessarily have a shot at -- even if you do make it to IIM-Ahmedabad!
As a 1998 grad from IIM-A (who happens to be my brother), remarked, "Even I don't get paid that much after five years on the job!" With a multinational in Singapore, I might add.
Most IIM alumni would have a similar story.
Yes, they get paid well and hold positions offering challenge and responsibility. But few are actually 'obscenely rich'.
In fact, all that glitters is not cash in hand. Salaries quoted on campuses are computed on the basis of Cost To Company. It is pre-tax, pre-Provident Fund/ gratuity, and pre-many other things. Like the cost of company provided accomodation/ chummery (which adds up to a lot, especially in Mumbai).
The average IIM-A grad probably gets Rs 30,000 to Rs 40,000 in hand. And though that is a good figure, remember s/he may have a loan to pay off (living expenses + tuition run up to well over Rs 400,000). Besides, there is the opportunity cost for those who have quit jobs and forsaken two years of salary!
So take all these figures about MBA placements -- even from the IIMs -- with a fistful of salt. There are many good reasons to consider doing an MBA, but the hope of that $ 152,000 job should not be one of them.
The richest men in the world -- like Laxmi Niwas Mittal -- have made their millions not on the backs of MBAs, but native intelligence, hard work and good luck.
If that's your dream, follow their example!
There is a concept in IIMs -- borrowed from IITs -- known as Relative Grading. The grade you get depends on how well other students fare.
For example, you could get 85 out of 100 and still get a C because other students scored more.
In short, a few high performers can skew the grading curve and make life miserable for the rest of the class. This, in campus lingo, is known as getting 'RGed'.
And this is exactly what is happening with placements. The $152,000 offer has RGed the happiness of the guy with the $80,000 offer who, in turn, has RGed the happiness of the chap who gets the Rs 800,000 (approximately $ 18,000) offer.
I shudder to think how the person who accepts an offer below 'the average starting salary' will feel. Remember, by the law of averages, these people must necessarily exist!
Meanwhile, the average salaries at the IIMs, XLRI, FMS, will RG the happiness of the chaps from NMIMS, Sydenham, Symbiosis who, in turn, flaunt their placement figures and RG those from lower ranked B-schools.
In all this, the essence of the placement exercise -- which I think should be matching the right student with the right company -- is lost. The System may appear to be 'working'. But is it, really?
The day rankings
A decade ago, when I was on campus, the placement process kicked off with Day One, ie the day the most sought after companies (decided on the basis of votes by students) were invited.
Now, there is a concept known as Day Zero, the 'day before even day one', reserved for the dudes from investment banks offering dollar salaries and postings in London and New York. It is a term designed to stroke the egos of recruiters (many of whom happen to be alumni themselves).
The kick is to have 'first pick' off the tree laden with ripe MBA fruit. And there's a visible scramble to pick the few fruit which have clearly discernible markings of 'goodness'.
In an earlier column, I had elaborated on how, despite the fact that all the folks who made it to an IIM-A beat the same odds, some are more equal than others. The IITians who made it to IIMs and the few non IITians with high Cumulative Grade Point Averages are those who are most in demand.
So we have a situation where a few students get multiple offers, while others appear for a dozen interviews and become increasingly desperate. The attitude at this stage becomes koi bhi company chalega.
Take the example of student X. He is interested in consulting and is, therefore, gunning for Day Zero companies like McKinsey, Booz Allen, BCG. No luck. Then he moves on to interviews with Day One companies and is willing to consider finance/ banking too. He is still unplaced.
Come Day Two and the sheer number of recruiters vs the dwindling number of available candidates tip the scales in favour of the students. Job nahin milne ka to sawaal hi nahin.
But the trouble with day ranking -- for the recruiters invited on later days -- is that although Candidate X or Y may say s/he is keen to join their company, it clearly wasn't one of his/her top choices in the first place.
The students left for placement are 'rejected' maal, never mind the fact that they are among the select few who made it to IIM-A from the national universe!
In fact, invariably, once just a handful of students remain, many companies scheduled to arrive for placement the following morning cancel their visit. As if those still available are the rotten fruit at the bottom of the barrel.
What's the solution?
Like an arranged marriage, where boy-meets-girl and one or the other says 'not interested', the chot is really to the ego. It is not the fact that I really wanted to marry that guy which makes rejection hurtful.
It is the question, mujhme aisi kya kharaabi hai?, that is hurtful. It is the same with the placement process.
In the absence of adequate time and mechanisms to really 'get to know' candidates -- and whether they are the right intellectual, cultural and temperamental fit with the company -- recruiters take the easy way out.
Rely on 'past profiles', grades.
For the students, yes there are Pre-Placement Talks and feedback from seniors. But on the whole, you decide company X is better than company Y based on the brand name and package offered.
Of course, money is not everything. There were students who reportedly declined HSBC's $152,000 offer and joined Lehman Bros at $115,000 (approximately Rs 50,00,000) because they believed the latter offered a better job profile.
But salaries are definitely dictating the choice of which industry to join in the first place. Banks, consultancies and finance companies completely dominated Day Zero and Day One at IIM-A. Just three out of the 40-odd companies invited were FMCGs.
An institute renowned for its marketing brainpower now sees only HLL, P&G and GlaxoSmithKline on Day One. And industries like advertising (a once popular destination for IIM-A grads) have completely disappeared.
Don't tell me it's due to 'lack of interest'. The day an ad agency comes to campus with Rs 800,000, enough folks will suddenly be interested. Not that agencies are going to bother. They are happy recruiting excellent MICA grads for a third of the price!
Bottom line: Neither students nor recruiters are completely happy with the current scheme of things. But, in the absence of an alternative, both chug along.
In fact, the System is working as best it can -- the logistics of scheduling interviews, for example, involve tight constraints. But certainly a more efficient and egalitarian method will eventually need to be found.
The media multiplier
In recent times, B-schools have started competing with each other based on 'placement figures'. These figures are treated with the same importance as company annual results by prospective students.
The 'stock' of B-school X or Y sways with market sentiment -- or the highest Indian and foreign salaries. The 'speed' with which a B-school completes its placement process is also another indicator of its status.
It is a vicious fact of life there is no escaping from.
How things have changed!
The story goes that when the first batch of students joined IIM-Ahmedabad in the mid-60s, there was no concept of job placements. In fact the concept of 'management studies' itself was unknown.
IIM-A professors requested well-known industrialists to come and interact with the students and offer their feedback. The consensus was: "Inme kuch baat hai. These chaps think differently."
Many companies actually created jobs for these students.
Over time, these jobs got institutionalised. And, to cope with the challenge of placements, a day ranking system was created.
Creativity is once again the need of the hour. Both corporates and B-schools need to explore whether they can make the placement process more meaningful.
Can we move beyond the mere filling of square pegs into square roles?
Illustration: Dominic Xavier
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