Best B-schools witness a major churn

India's B-schools are witnessing a major churn. With the total numbers proliferating to 900 or thereabouts at last count, the best of them have to differentiate themselves to avoid commoditisation.

The 2003 AIMA-Business Standard Survey of B-schools shows that this may have started. The survey, conducted by IMRB (Delhi), reveals three broad trends:

• There is a noticeable improvement in the quality of schools at the top. Between last year and now, the number of B-schools that made it to the A+ category of the All India Management Association's (AIMA's) ratings is up by half to 9 per cent of the total. That's 25 schools in all, against just 15 in 2002.
• There is similar growth at the bottom of the league, with the C category schools also rising by 4 per cent to 26 per cent in 2003 from 22 per cent in 2002. This could be a pointer to the fact that the less-known schools are having trouble maintaining quality in a competitive environment.
• Schools are increasingly beginning to differentiate themselves in myriad ways. Thus, if IIM-Ahmedabad has pride of place in terms of instant brand recognition, and IIM-Kolkata has a reputation for producing "number wizards", the new stars on the horizon are seeking their own unique positioning: the Management Development Institute (MDI), Gurgaon, is seeking a global focus and closer ties with industry; S P Jain is stressing "value-based" learning, and the IIT B-schools emphasise technology-related management education.

This broad thrust towards quality is reflected in the growth of Super League schools in this year's AIMA rating. There are 12 of them now, against 10 last year.

These 12 are in a class of their own, and include: the four IIMs (Ahmedabad, Kolkata, Bangalore, and Lucknow), MDI, the Institute of Rural Management, Anand (Gujarat), two IIT management schools (Delhi and Mumbai), the National Institute of Industrial Engineering (NITIE), the Xavier Labour Relations Institute (Jamshedpur), Delhi University's Faculty of Management Studies (FMS), and despite the expansion of the Super League to 12 from 10 last year, IIM-Kozhikode has made an exit from last year's list -- indicating the heightening of competition at the top. Even an IIM has its work cut out to stay on top.

This year's AIMA-Business Standard survey was the most exhaustive ever, with detailed questionnaires being sent to over 895 institutes.

Based on the responses, some 274 institutes have been rated on various parameters, including intellectual capital, admissions and placements, infrastructure, industry interface, and governance. Each of the parameters has been assigned different weights.

For example, intellectual capital gets 30 per cent, admissions and placements 25 per cent, infrastructure 25 per cent, industry interface 12.5 per cent and governance 7.5 per cent -- the same as in 2002.

The full text of the survey and methodology is published in the December 2003 issue of Indian Management, a Business Standard publication. So what separates the Super Leaguers from the rest of the A+ pack?

There are institute-specific variations across all parameters, but the key differentiator is apparently the quality of corporate governance, which measures things like composition of the board of governors, frequency of meetings, and number of committees looking into various academic and other issues, et al.

Governance may carry the lowest weight in the AIMA methodology, but it is crucial to ratings at the top where the small differences in quality make a huge impact.

On the other hand, the big differences in ratings elsewhere - among the A, B+, B, C+ and C categories - come from variations in the top three parameters - intellectual capital, admissions and placements, and infrastructure - arguably the three most important things B-schools should be offering their students.

A look at the aggregates shows how: In the Super League institutes, the average number of faculty members with PhDs is around 40; this drops to 30 for the A+ group taken together, crashes to just 13 in the A group and steadily peters out to a meagre two in C grade schools.

The same goes for the other major elements that make up intellectual capital: For Super League schools, the average number of titles published is 22.1; by the time we get to the schools rated as B, the figure drops to just three; at C, practically nothing is published by way of books or research papers.

All this shows when students are prepared for the job market: If the average salary during placement season in 2002 was Rs 6.08 lakh per annum for the Super League schools, the figure drops to less than half (Rs 2.51 lakh) for the A grade schools.

It falls to a third for the B+ and B graders (Rs 1.9 lakh), and a pathetic Rs 80,000 for the C-rated schools. At this level, one needs to question the value of a B-school education since these salary levels are probably achievable even with ordinary graduation degrees.

A summary of the overall results indicates, at one end, the underlying potential of top-notch B-schools, and, at the other end, where problems lurk.

• Of the 274 institutes that form a part of the AIMA survey, the A+ schools accounted for 9.12 per cent of the total (about six per cent in the 2002 survey). These are India's global hopefuls, and the challenge before them is to beef up faculty and intellectual capital, and start preparing themselves for a more international student and faculty profile.
• One rung below, there are 44 A-grade institutes who form 16.06 per cent of the total sample. Institutes in the upper half of the A category clearly have the potential to rise to the top by improving performance in the intellectual capital and infrastructure parameters.
• In the B+ group, there are 38 institutes, and they collectively account for 13.87 per cent of the total sample. This group has to really work at pulling up its socks on all performance parameters if it is to make the grade and strive for excellence. These institutes are, of course, above average, but they are in danger of being commoditised.
• The B grade category has 35 institutes, and comprises about 12.77 per cent of the total sample. This group has its work cut. To attract top faculty and students - not to speak of the best corporate employers - they need huge dollops of investment in infrastructure apart from expanding interface with industry. Improvements in the intellectual capital and admissions and placements parameter, of course, are central to the question of their continued existence.
• The C+ grade institutes - 60 in number and comprising 21.90 per cent of the total sample - are barely meeting basic quality requirements.
• The C group, comprising more than a quarter of the sample (72 institutes), needs to start rethinking its claim to existence. While there will always be students coming in, they will have to ponder over what they really offer by way of worthwhile B-school education.

Quite clearly, the challenges before the best B-schools and their lesser brethren are quite different. But one thing common to all of them is faculty: getting good ones, and retaining them.

Says Pritam Singh, director of the Gurgaon-based Management Development Institute, one of the Super Leaguers: "There is a shortage of good faculty mainly because management education has seen an exponential explosion in growth. We have good and not so good faculty like any school in the world."

For the blue-chip institutes, the bigger challenge is to go global. Given the huge demand for an MBA education, most of them actually have to do very little to attract business.

In 2002, for an effective intake of 172 students, IIM, Ahmedabad, received as many as 76,000 applications. IIM, Kolkata, received 97,000 applicants for its 258 slots.

As B N Srivastava, dean, programme initiative, at IIM, Kolkata, points out: "In India we have a large population of students interested in getting admission to IIMs. But with very few seats available, we do not give any preference for foreign students. We have compensated this by increasing our international exposure through an exchange programme partnership with foreign business schools."

To get out of this high-demand trap, Pritam Singh of MDI is thinking of setting up an overseas campus. Rajat Baisya, head at IIT, Delhi, department of management studies, is planning to link up with foreign institutions.

"We have MoUs with foreign institutes like the George Washington University and the Asia School of Technology, Bangkok. These involve exchange of faculty, collaborative research and so on. We are also working on sending students for a term to ENPC, France." Devi Singh, director of IIM, Lucknow, is thinking on similar lines.

"Our institute has collaborations with several leading business schools across the globe from Europe to North America. These alliances have been created to facilitate student and faculty exchange."

Prakash Apte, director of IIM, Bangalore, prefers to think global by benchmarking the institute against international schools.

"We benchmark against the best in the world and recently IIMB was the only B-school from Asia to be listed among the Top 100 B-schools in the world."

Pritam Singh of IIM, Lucknow, benchmarks his school with different institutions for different things.

"We try to benchmark our activities with the best practices in different schools. We look at Harvard and Insead in executive education, but at Kellogg's and Wharton for MBA education." Way to go.