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Home > Business > Columnists > Guest Column > T N Ninan

Rs 1 crore p.a.

March 20, 2006

Only 130 professional Indian CEOs of publicly quoted companies draw salaries of Rs 1 crore (Rs 10 million) and more in a year. There will be more among unlisted firms, including the Indian arms of global firms, but the all-in total is probably less than 300.

So it does look odd when fresh graduates of the leading Indian Institutes of Management, who are still in their 20s, get offered close to that sum as an annual salary.

One way to explain it is that the youngsters who are being offered these eye-popping salaries are going overseas, where the pay-packets are bigger. But even by the standards of business school graduates in the UK and the US (the highest-paying markets), the IIM graduates are doing well.

The average salary reported by the top 100 B-schools in the world (and none of the six IIMs qualifies for the list) is $95,000, or Rs 42 lakh.

Only Wharton and Harvard Business School products get sums approaching $200,000 from the big investment banks. Anyone with that salary will be counted among the 1 per cent income earners in the US and Britain. It does seem, therefore, that IIM products are now ranked up there at the top, even if their alma maters are not.

This raises questions. Is the old charge valid, that the value provided by the IIMs is in the screening process, and the hiring companies are simply grateful that someone else has done the weeding out?

An IIM director has a counter to that. If the charge is true, he asks, why don't companies pick up the kids who make it through the selection process, instead of waiting for them to finish the IIM course? We must assume therefore that the IIMs do add considerable value through the education they provide.

What then explains their failure to break into the Top 100 ranking -- as B-schools have done from Singapore and China, Australia and South Africa, and Central and South America? One answer is the fact that the IIMs fail when it comes to research -- which is an important way to assess the faculty's credentials.

There may be other reasons (quality of library, IT infrastructure. . .), but research is the most important. Why should that matter for the student, since he or she is there for what is taught in class, not what research the professor does outside? That is a question asked on US campuses too, and the answer is that research reflects faculty quality.

It is interesting, though, that even as the IIMs celebrate their success, it is their old nemesis Murli Manohar Joshi (the human resource development minister in the last government) who has scored a point or two. For, without anyone noticing, the IIMs have quietly fallen in line with much of what the hard-charging Dr Joshi had wanted them to do!

He wanted them to increase their intake of students -- precisely the issue that was raised recently when IIM-Bangalore said it wanted to set up shop in Singapore. So the greater intake is happening.

Dr Joshi wanted them to use their accumulated corpus for infrastructure development; the IIMs are doing that. He wanted them subjected to audit by the Comptroller and Auditor-General; that too has happened. And, of course, there are now more scholarships and concessions on offer for poor students -- which was the big issue.

Dr Joshi may therefore feel he got the wrong end of the stick when he raised the right issues; the IIMs in turn might argue that they have managed to protect their autonomy vis--vis the HRD ministry, while responding to valid concerns. But if you get past the "who should get credit" question, the outcome is a happy one.

One closing thought: just as graduates from the leading IITs are not the ones handling the shop floor in large Indian manufacturing firms, IIM graduates live in the rarefield world of investment banks, elite consultancies and brand marketing.

The majority of India's companies make do with graduates from more modestly endowed B-schools (of which there are nearly 1,000 recognised ones). Far too little attention has been paid to the quality issues that abound there. The way to reduce the enormous premium on IIM graduates is to radically improve the next 100 B-schools.

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Number of User Comments: 4

Sub: Rs. 1crore pa

It is really essential to develop the quality next hundred B Scools. But who will bell the cat?Left to the managements of those schools the ...

Posted by s.dasgupta

Sub: Top 100 B-school salary

Your statement "The average salary reported by the top 100 B-schools in the world (and none of the six IIMs qualifies for the list) is ...

Posted by Varun

Sub: Premium on IIM

Amazing article. different. i dont know what the heck IIM does that the people who are associated with IIM feel so proud of. When it ...

Posted by Amit

Sub: Rs. 1 crore p.a.

We should stop converting dollar salaries to rupees and gloating over them. One way is to look at purchasing power parity because like the salaries, ...

Posted by Hemant Srinivasan



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