Posted in Human Resources Articles, Total Reads: 2499
, Published on 14 February 2012
The time when the top most B-School of country, Indian Institute of Management (IIM), Ahmedabad published its 2009-11 batch’s placement report sticking to its Placement Reporting Standards in June, they didn’t know its consequences. The report was externally audited, as per the standards, for which the institute had consulted the credit rating agency Crisil. They issued a detailed 31 pages report which had every hidden aspect of their placements and compensation offered by the companies. Later this year, some other big names joined the bandwagon, hoping the transparency in their placements reports and to achieve a standard across the all B-Schools.
But before start bowling anything against or for IPRS one should know the pitch and the playground well, i.e. what is the current scenario of Management Education in India. MBA Education in India - was started around 50 years back and has reached its peak in last decade. Today in India, an MBA degree or an equivalent one is a passport to a good career - a career which extremely rewarding and highly challenging. Post liberalization economy of India (1991) has given a major boom in the demand for MBA graduates. Corporate firms from a variety of sectors - ranging from IT, Financial services, Manufacturing, Telecommunication, FMCG, Banks, Retail and Consultancies - started hiring MBA graduates from Indian b-schools by luring them with big salary cheques.
MBA graduates from Top B-schools are known to being offered fantastic job opportunities with high pay packages. Few of the Ivy League (ranked top 10) b-schools of the country have an extra-ordinary track record of getting 100% placement with excellent salaries and very good job profiles. The conditions have been improved tremendously in last 4-5 years as the salaries offered at Top B-Schools of the country have been grown up by leaps and bounds and in quite a few cases have more than doubled. As the matter of fact, there is an increase in the international postings as well especially in financial consulting sector. In fact, lately, it is a matter of great pride to be able get placements in the "Big 4" consulting firms and in some of the top investment banking companies in the world. The salaries of such placements can go anywhere between US$ 60,000 per annum and US$ 1, 50,000 per annum.
These Ivy League b-schools also take pride in finishing their placements within first few days of their placement weeks. It is very common for a student of such b-school to have more than one offer. Every such college then been ranked on the basis of the “average starting salary” along with other parameters. Each and every college is fighting to lure more applicants on the basis of last year’s average salary by posting their placement reports on their websites, journals and other media. When everybody was enjoying this game IIM-A has decided to change the rules by introducing IPRS.
Now in this current scenario, the Indian placement reporting standards (IPRS) — which aim at adapting the American MBA CSC Standards to an Indian background and dictate corporate firms recruiting from B-Schools to clear the hidden sides of compensations they offer. The MBA Career Services Council (U.S.) is the provider of education, information and expertise for the support and development of individuals in the MBA career management and employment professions in U.S. and abroad. They provide education, professional development, networking opportunities and support for their membership and the MBA career services and recruiting industries as a whole.
Abiding to the basic architecture of MBA CSC, IIM-A were able to develop such standards for Indian context which is first of its kind. In first year of IPRS, standards were agreed by firms that hired around 210 students of the total 312 placements at IIM-A (according to placement reports). But nobody denied the fact that there were few companies which appreciated the initiative taken but also emphasized that the change would be a slow but sure process which would depend on other big names adapting the IPRS thereby forcing more firms to be transparent. Authorities at IIM-A also said that they have a plan to report this year’s placement statistics for both groups separately.
The institute opened the discussion at a conference (Saturday, June 18,2011), which was attended by 33 Indian business schools. IIM-Shillong, IIM-B, SP Jain, JBIMS, NITIE, IIFT, IMT-G were among few who attended the conference. The rest of the b-schools like other IIMs, ISB Hyderabad and XLRI Jamshedpur were conspicuous by their absence, even though they had been invited. Four recruiters (McKinsey & Co, Booz & Co and HUL) were also present there but it seemed that they have already incorporated the standards and so left the conference in between. Among others big names of media houses like Business Standard, Mint, The Economic Times, Business Today, and Business world and rating agencies also attended the meeting. The long conference reached a consensus on making several big and small changes to the first draft of the standards. Mainly among the changes was elaborate the CTC (Cost to Company) salary communicated in placement reports to Maximum Earning Potential (MEP), which the conference felt was more appropriate and more representative of compensation that included performance-linked variable pay. It was also decided to detail the information about summer placements and attributes related to that like how many were arranged by B-Schools and how many were self arranged by students. Also the stipend structure whether paid or non-paid. It was also agreed that b-schools can release an unaudited report initially to the public and the media. But they have to issue the standardized placement report (the real thing) after three months.
Lets see what were the objective cited by IIM-A in its first IPRS proposal. IIM-A issued its draft proposal this year and school has mentioned the key aims of the standard in revision 2.0 of the report.
The IPRS is first step towards standardizing the placement processes at B-School and making it transparent for both the parties (Recruiter and MBA aspirants/applicants). It was proposed that there should be no concept of lateral placement it was often wrongly used as an excuse to permit the most-preferred recruiters early access to students (including fresher). But the standards as such, therefore, will be quiet on the subject of how laterals (graduates with prior experience) fared in the placements. Yet, the need of experienced MBA aspirants to learn about their chances of employment post-MBA is a real deal and it would be interesting to see how this section will respond to the standardized placement reports. We can only speculate but the best way would be to include laterals information under the ‘additional information’ section and not alienate applicants with work experience.
After all the hoopla about IPRS, the question which still remains is how will IPRS become the sector standards? We are talking about the diversified sector where we have few Ivy League B-schools with “AAA” rating which represents only top 10% of the sector. The democracy driven country also have B-schools which is being rated “B” and goes down further, and mind you, rest 70-80% MBA graduates come out from these colleges. Most of the executive level recruitments have been done from these colleges only. Here we are talking about pushing a recruiter to have a compensation policy both transparent and lucrative for these 2nd and 3rd tier b-schools. The other aspect is the recruiters who come to second and third tier b-schools are those which have not been able to fill up their requirements at the IIMs. It makes clear that only top-rung b-schools will be more optimistic about the IPRSs. But to make IPRS as sector standard the need is to add a huge number of new resources and processes to the placement procedures in order to document the detailed salary components and placement figures continually. As a result none of the others would be committed to adhering to them fully right away, but we could still expect few of them joining the bandwagon and might start adhering to parts of it in the coming years. And rest may wait and watch a real example first.
After seeing all the pros and cons wee can say that IIM-A have done a tremendous job of taking this initiative for being transparent about both its own experience with adopting the standards and raising its voice and building consensus with stakeholders. On conclusion, the IPRS is a well-intentioned and bold move by IIM Ahmedabad and if triumphant, will help in making the picture more transparent inside the single information parameter that (for worse or better) lies in the nucleus of Indian b-school boom – “the average starting salary”.