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Cover Story
Coming to terms with money?
Numerous speculative reports on astronomical placement packages at top B-schools has created a false halo around their MBA degrees. B&E deliberates on why this unhealthy trend needs to be discontinued in the interest of prospective managers as well as the society at large
Issue Date - 08/12/2011
Iconic actor Charlie Chaplin once talked about how he feared a life when he got used to luxury. In a fast growing and increasingly capitalistic economy like India, there would be many who share that fear. After all, most of us do subscribe to the view that matter is the only reality & are just about used to being known for our possessions rather than our mettle. So we really do not perhaps know, or even want to know of a world beyond that.

When it’s about unbridled passion for things like clothes, cars, mansions, mobiles, tablets and expensive holidays, materialism still doesn’t seem too harmful (even though it is). But it certainly is a tragedy for a nation at large when the malaise of consumerism and market forces creeps into something as noble as management education, a fact that reflects in the phenomenon of astronomical B-school packages that keep ‘leaking’ into the media and give the leading B-schools of this country an aura that is unjustifiable as well as misleading. It is the reason why a huge number of students in India dream for that MBA in one of these institutes to metamorphose into a Rs. ‘X’ lakh (or crore) package and secure their lives, even if they may have had remarkably different ideas about their careers otherwise.

You would have gone through some of these news flashes in the past. Three IIM (A) students got PPOs for a Rs.10 million package (deemed unsubstantiated by the institute later) this year. A student from IIM (Indore) beat the previous record of the institute with a package of Rs.3.2 million. An IIM (C) student gets an annual package of Rs.16 million (2010). The highest global package for XLRI goes for around Rs.6 million. The effect is predictable. For media, it is the perfect recipe for the ‘shock and awe’ brand of journalism that they follow as a doctrine nowadays (news channels are discussing Kambli’s allegations of the 1996 World Cup semi final between India & Sri Lanka being fixed, as I write this article). Who leaks this information? Who do they talk to at the campus? These are largely unsolved mysteries. But they do fulfill the purpose of retaining the elitist charm of the ‘IIMs’ and their ilk. These institutes do publish clarifications and say that the reports are not based on facts. But then, how many people read clarifications?

The B&E team went on an investigative binge to demystify the myth behind the packages that the B-schools brought out. Our team went undercover to talk to students at IIM (C), and came up with starkly contrasting opinions to the glorifying reports that come in the media. One unanimous view was that all the packages that are stated in the media are fake and the true packages can be 20-50% less than what is offered. This can be due to the well known reasons that the maximum possible (& largely improbable) bonus has been added to calculate the final CTC, inclusions like house rent, relocation, travel, medical & food have been included, dollar salaries are converted and the resulting figure automatically look huge, et al. One of them told us that the offer letters are never supposed to be revealed to the media, but the mystifying part is they always leak out. It can also be argued that the lack of transparency in salary details affects potential recruiters as well, who are compelled to keep quoting higher figures to ensure that they get the best talent in. That makes it a vicious cycle that only gets worse year after year.

B&E also filed separate RTIs with the leading IIMs asking for names of students, contact details, companies where they were placed and also their packages. Although some were forthcoming with the details on the names of the students, and the companies where they were placed, all institutes declined requests to divulge information on pay packages. The reply from IIM (A) gave the following rationale, “The information requested can be used to identify students who have received high and low salary offers. This would result in stigmatisation and affect the quality of life of the students and their family members.” It additionally went on to state that the information could be used by a previous employer of a student or a recruiter whom the student did not join to harm the career prospects of the student joining another employer! Finally, the response also effectively states that the information requested does not have any significant implications for the public at large and would cause “unwarranted invasion of the privacy of the individual” and the institute has a “fiduciary responsibility towards students and recruiters (since the latter compete for the best talent and such information can be misused)”. This exempts the institute from revealing these details as per Section 8.1 (e), 8.1 (g) & 8.1 (j) of the RTI act, as per the reply.

The question that obviously comes to mind most prominently is regarding the ‘public impact’ of such information. Considering how the public mostly gets/consumes the unofficial word on packages in the media, making thousands who are about to graduate desperate enough to lurch after the CAT dream blindly and most often get disappointed (a windfall for CAT coaching centres though!), the argument that information on salaries doesn’t have ‘public’ implications looks rather weak. The same can be said about the ‘stigmatisation due to packages’ logic as well. We hope top institutes do not adopt such discrimination with their alumni!


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