Sustainable strategies for B-schools in India
By Dr R Gopal
India has more than 4000 B-schools as of now. The A-category schools are normally those which are consistently rated among the Top 10 or Top 20 B-schools in the country by various rating agencies. Characteristically, these schools have held their ground for over 15 to 20 years. Next in line are the B-category schools which find themselves positively rated among the Top 100 B-schools. Some of these schools have been in existence for merely five to seven years but have taken great strides to improve their ratings. Mostly run by private bodies, these institutes possess reasonably good potential to upgrade themselves to the A-category.
A recent news article indicated that a large number of B-schools have applied to AICTE, UGC and MHRD for permission to close down. On the other hand, every year at least 200 new B-school applications are submitted to the AICTE for approval. The number of applicants for MBA programs is showing a steady decline at a rate of 15 to 20 per cent per annum for the last three to four years.
The issue really is what needs to be done to ensure that B-schools survive and move from the B-category to the A-category? What kind of sustainable strategies are needed? Is quality education enough to move from the B to A-category? Is merely advertising every day in the newspaper enough or is there something more to it?
In fact, there are several strategies which need to be implemented. Of all those, there are a couple of strategies that are critical. These are:
Sustainable Management
This is a very important area. In quite a few B-schools, the director is replaced every one or two years. The director in some schools does not enjoy any freedom, so much so that he has no say in the selection of the faculty also. In such cases it is difficult to have a sustainable strategy. For sustainability, it is imperative that the director should be allowed to keep term for at least three to four years. In many cases, it takes around a year to understand the key issues in the working of a particular B-school, another two years for planning and implementing the new strategies that he devises.
Faculty
Faculty is the backbone of any B-school. Faculty shortages are the order of the day in spite of 6th pay commission. Faculty paymentaccounts for almost 30 to 40 per cent of the total cost of running a B-school. With the current DA of more than 65 per cent, this cost seems to be spiralling upwards. Today, commitment and loyalty from the faculty towards the students and B-school is sadly missing. Co-creation of faculty, 360 degree faculty feedback, treating the faculty members as a family by way of celebrating birthdays, organising picnics etc, could help in retaining the faculty talent pool and reducing attrition.
Another area of encouragement could be research. In one of the B-schools, faculties are encouraged to take up summer internships in corporate set-ups so that the quality of faculty teaching is enhanced with broader industry exposure.
Innovative Programmes
There is currently a need for startinginnovative interdepartmental programs – which are in demand by the industry. Such programs could be for example in the area of Retail management, Bioinformatics management, Outsourcing management etc. The prime focus of these programs is to provide the industry with “ready to use” students from day one itself.
Revenue Generation & Optimal Utilization of Resources
Currently, the fee structure is regulated by various bodies. The minimum fees for a start up B-School is around Rs 67,000 per year. The break-even capacity for a new school is around 20 to 25 students. This means that B-schools would have to optimally use the resources available. Many a B-school trustee look at a management institute as an industrial venture, which would consequently require a minimum of 25 to 30% return of investment (ROI), which means a surplus of at least around Rs 30 to 40 lakh from the first year itself.
Even with the integrated campus concept adopted by AICTE, B-school trustees say that if not 25 to 30 per cent ROI, they would require a minimum return of around 20 per cent. Since the aim of all top management is to make some surplus, but given that the revenues both individually and collectively are kept in check by the various statutory bodies, it becomes imperative to reduce the cost.
The issue now is how to reduce costs. Can the B-school afford not to pay 6th Pay revised salaries (in which case the faculty situation would worsen), or can the B-school not afford to innovate with new programs (in which case the B school would be one of the also ran)? In spite of this catch 22 situation with spiralling costs and limited revenues, B-schools have to make surpluses to survive.
Conclusion
Based on the above it is quite clear that there are several challenges which a B-school faces and in order to survive, it must have a sustainable strategy otherwise it would fall by the wayside.
The author is director, dean and head of department at Padmashree Dr D.Y.Patil University, Department of Business Management, Navi Mumbai.
Other interesting reads:
- A breeze of innovation in B-schools
- IIM Udaipur & Genpact in Knowledge partnership
