Are MBAs Overpaid?

I couldn’t help borrowing this title from a program on Headlines Today bearing the same title, the reasons for which I will explain presently. The program was structured as a panel discussion, with a few intellectual heavyweights on the panel; most notable among them of course is Prof Arindam Chaudhari. And there were others such as Prahlad Kakkar and I frankly don’t remember the rest. Several great insights were offered, but in my humble opinion, an insight of a ground-breaking nature was offered by Prof Chaudhari. His argument was as follows. ‘There are close to 200000 MBA aspirants in the market (in India i.e.). IIMS have a student intake of 1600; so it looks like IIMS have deliberately kept the supply low so that their grads land those nine lac+ salaries. I don’t see any problem in increasing the intake significantly. The infrastructure is adequate and the professors can be trained’. Whoa, what an insight? This statement would have easily made the CP of the year in my B-school, wait, hang on, I must keep my overflowing admiration in check and offer my humble reactions.

Prof Chaudhari, I am sure with the amount of data you have at your fingertips, you also must be aware that fail/dropout rate in top business schools is around 5% and in exceptional circumstances has even touched 8-9%. Obviously, it wouldn’t be that hard to conclude that this rate would go up if the intake would increase. Now how do you suggest we handle that? No, I know you are not suggesting that the standards need to be diluted, may be we should tweak the syllabus a little bit, let’s remove some of those finance courses that work only in the perfect world where there are no taxes, fees, information asymmetries and all those fancy jargon that don’t mean anything in the real world. Instead, let’s introduce some soft courses such as ‘Breathing techniques to increase profits’ ‘How meditation can help increase shareholder wealth’, ‘Duryodhana’s views on corporate governance’ – where you have to try really hard to fail. Wow, pure genius, do it the Indian way, Loka Samastha Sukhinava Bhavantu; let everybody pass. That is all-inclusiveness at its best. You were also mentioning that MBAs actually are worth only around Rs 30000/- per month; now isn’t that suspiciously close to salaries landed by students from your college. What the hell, that must have been only a coincidence.

Yes Mr. Kakkar, you were mentioning that the ‘business of business is risk-taking, and MBAs are ill equipped to do that since MBA increases risk aversion’. Well, I suppose it is futile to explain that to you that managers risk shareholder wealth, not their own and hence risk aversion is a legitimate position to adopt, and if you are a risk lover, may be you should be sitting in a casino not in a boardroom. You were also mentioning that decisions should be taken from gut and not with those fancy models taught in B-schools. Well, I would use excel at least and not just rely on my gut. Depending only on my gut would put me in the same bracket as a soothsayer or a crystal gazer; In which case you are better off firing me and hiring an astrologer. Believe me, it’s a lot cheaper.