Monday, December 11, 2006

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.

7 Comments:

Blogger Santosh said...

It is quite possible to increase the intake of the top B-Schools. Make CAT irrelevant and make sure all the 2,00,000+ MBA aspirants in the market get admitted into some school or the other.

The bone of contention seems to be infrastructure and faculty. There are many in prestigious self proclaimed best consultanting firms who can cater to reducing the faculty problem (read numbers). And for infrastructure, when the great Pandavas sat beneath a tree to learn, how difficult will it be for the modern day MBAs to sit on the road and do the same? Seemingly, few institutes do so with the lure of swimming pools, and such non-value added attractive displays.

12:45 PM  
Blogger Ravi Ivaturi said...

right you are. Looks like some of the insights in the program came from first-hand experience.

2:12 PM  
Blogger Siva Prashanth said...

The great Arindham Chaudhari and his genius father...These guys are absolut geniuses at hving made MBA their BUSINESS..along the lines of how the yesteryear moneylenders operated...Grab all you can and then grab some more...If nothin else left , create opportunities (BBM and other graduate programs etc..), promise the moon and lock poor students in IIPM forever..

8:54 AM  
Blogger Ravi Ivaturi said...

I would look at it as a case study in building loyality.

11:50 AM  
Blogger Krithika said...

hello..looks like you haven't updated your blog in a while! (yes I do visit)
I find your writing insightful and an attempt at looking at issues from different perspectives.Guess any of us who've been to b-schools get attuned to this way of thinking.
Your command over the language is also really commendable, and I reiterate, I haven't come across way too many men who have that.
However, at times, i do feel that your writing tends to get impersonal - in that you are mroe involved with showing things in blacka nd white than expressing the underlying emotion that it evokes in you.
But then again, that's just my opinion and is clouded by the fact that my writing has more emotion that any black and white :)
Do write in more - and hope u're having a good time!

9:36 PM  
Anonymous Anonymous said...

Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!

7:18 PM  
Anonymous Anonymous said...

Sorry for my bad english. Thank you so much for your good post. Your post helped me in my college assignment, If you can provide me more details please email me.

5:25 PM  

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