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The problem with management education in India

The problem with management education in India

Schools are evaluated based on how quickly students get placed and how big their pay packets are. Thus, greed is inculcated at an age when idealism should be.

S.L. Rao
S.L. Rao

Management is a much sought-after field for Indians. Today, the best and brightest students want to study management because it is a sure way to well-paid jobs with great prospects for advancement. In 2008-09, there were over 102,000 students studying for a Masters of Business Administration or its equivalent. But are management schools up to the challenge of providing able recruits to companies that need them the most?

The short answer is no. Many of the 2,000 or so management schools recognised by the All India Council for Technical Education (AICTE) have minimal faculty, most of whom have little practical experience in management and who undertake little research of decent quality. Also, a scant 250-300 management schools allow themselves to be rated—something that would make for easy assessment. Management schools should be at the apex of management education, for older students with work experience, but that isn’t so today.

Moreover, instead of focussing just on B-schools, it is vital to improve other education streams like commerce education, and management orientation in professional courses like accounting and secretarial studies. These constitute the base for the thousands of managers in Indian enterprises who need grounding to make an early and positive contribution as managers.

However, the most serious problem with management today concerns the placement of B-school graduates. In 2007, there were 12,500 or so unlisted companies in India— including public sector firms, banks, financial enterprises and service companies. The top 75 of these compare with the best of the listed companies. Most of the others, however, show poor performance in sales growth, profit ratios and consistency in overall performance—but that is where management graduates should be found playing a positive role.

Having been associated with over 35 companies over the decades, I have noticed that most holders of MBA degrees are targeting—and are targeted by—consultancy firms, multinationals and finance outfits. The huge requirement of the rest of industry, including infrastructure services, real estate, small scale units, NBFCs and educational organisations, amongst others, are largely met by graduates and post graduates in commerce, economics and engineering.

The small number of management graduates in relation to the total need produces another problem: it makes many of them feel superior and arrogant. They complete MBAs in their early 20s and often get multiple job offers. Monthly remunerations can get as high as Rs 5 lakh a month. These schools are evaluated by the media, employers and students based on how quickly students get placed and how big their pay packets are. Thus, greed is inculcated at an age when idealism should be.

Sumantra Ghoshal identified this, saying: “We as business school faculty—need to own up (that)… it is our theories and ideas that have done much to strengthen the management practices we are all so loudly condemning.” Recent excesses in the US and elsewhere, especially in the financial sector, involved many MBAs and had roots in ideas developed in business schools.

If managers seek ever-more inventive ways of boosting share prices, paying themselves over the odds for doing so and offloading the costs on to society, they are just doing what B-school courses on strategy, transaction cost economics and agency theory have taught them— which is to maximise the value of a company, product and themselves. Management education must focus on society and social good, not merely on building corporate bottom lines at any cost.

S.L. Rao is author of From Servants to Masters: The Evolution of Professional Management in India