IIMs should evolve like corporate entities: panel

IIMs should evolve like corporate entities: panel

New Delhi: The elite Indian Institutes of Management (IIMs) should function like corporate entities and improve their academic standards to stand up to the competition from foreign business schools that are expected to open branches in India, says a government panel.

The committee, headed by Maruti Suzuki India Ltd chairman R.C. Bhargava, submitted its report last week to the human resource development (HRD) ministry, proposing changes to how IIMs are managed and financed.

The government plans to bring in a law allowing foreign universities to set up branches and issue their own degrees in India. Currently, they have to work with Indian partners and issue Indian degrees. Several varsities, particularly in the US, have expressed interest in establishing Indian campuses.

Last week, the HRD ministry had accepted the proposals of another committee, which had suggested that IIMs be given more financial autonomy and be allowed to seek funds from alumni settled around the globe. It had also allowed IIMs to set up branches in India and abroad.

The Bhargava committee included directors of IIMs at Kolkata, Bangalore and Kozhikode.

“Private investment in management schools is growing rapidly, and the ministry of HRD is keen on attracting foreign direct investment in education, which could include joint ventures. This will pose new challenges to the IIMs," says its report, reviewed by Mint.

The proposals include hiring directors with experience of working abroad, altering their designation and profile, restructuring the boards of governors and offering incentives to corporate houses in lieu of funds.

“The director should be the chief executive officer of the IIM and carry out all the functions entrusted to him by the board (of governors)," says the report.

This would entail giving more administrative and financial powers to the directors. They should be people with the experience of working in different parts of the world, so that the institute can benefit from their global exposure.

“It is recommended that his designation be changed to president-cum-dean. Not only would this be in line with the designations prevailing in leading business schools, but would enable the organizational structure to have vice- presidents and vice-deans," says the report.

These, it adds, would be better accepted than vice-directors or deputy directors.

All the boards of governors should be dissolved and reconstituted with 14 members instead of the usual 26; a third of the new members should be IIM alumni. Absence from three consecutive meetings without taking leave should automatically curtail membership, the report says.

A cadre of managers should be developed to take up administrative work.

Every IIM is registered as a society, whose members are nominated by the government. The panel has suggested that payment of a substantial donation should be the criterion for membership. A corporate house, for instance, can become a member for five years by donating Rs20 crore. “This would be equivalent to a person having an equity stake in the company, except that there would be no dividend payout from IIMs," the report says.

Members can be offered preference in placement dates and discounts in executive education programmes. Buildings, blocks and facilities can also be named after them.

“Autonomy and accountability should go hand in hand," HRD minister Kapil Sibal said last week.

Amitabh Jhingan, partner and national leader of the education practice at the audit and consulting firm Ernst and Young, said some of the recommendations of the Bhargava committee seem progressive. “I think what the committee is trying to do is benefit the students by collecting donation from society members or giving more time to teaching and research," he said. “I think they are trying to find ways where student fees will not increase."

Academician Yash Pal, however, said IIMs should not behave like corporate entities.

“I do agree that (a) lot of consultancy work and executive education takes away the teaching and research time of faculties, which is not good," he said. “But I think IIMs should remain as excellent educational institutes, not corporate or placement agencies. I feel IIMs should get engaged in rural management, agriculture management and even other issues that the country is facing."