Governance of IIMs

original article.

Ahmedabad and IIM Calcutta have celebrated their golden jubilee during 2010-11, there is nothing much to cheer, except for the fact that the alumni have made a mark in the global corporations and the United States (US) universities. Alumni play a key role in keeping the institute flags flying. It is of mutual interest that they promote each other.

Governance Structure

Even after 50 years of existence, they continue to impart American education through US case studies and produce managers for foreign multinationals. Unlike the west, the system has failed to produce any “management gurus” with the socalled decentralised faculty governance structure that governs IIMs according to the authors. The contribution of IIMs to raising the quality of management education in the country too is negligible; nor have they contributed to the development of barefoot managers that the country needs badly. While it is easy to dismiss the reform committee reports, there is no running away from the fact that IIMs are in need of reforms.

The system put in place by the original architects of IIMs can be loosely termed as distributed governance by four pillars, namely, the society, board, director and faculty. The board was supposed to set the vision and strategic direction for the institute; the director and faculty were to execute the same. And the societies were expected to play the monitoring role. With the society and faculty having rep-

Director of the Indian Institute of Management,

tor as a permanent member, they could

Ranchi, Jharkhand.

jointly shape the vision and strategic

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Faculty Coterie

For various reasons, the societies have become moribund over the years, the boards were found to be uninterested in the affairs of the institutes and directors too have been experiencing an erosion of their power. This has led to the concentration of powers in the hands of the faculty. The authors too agree on the above point. They say, “The report does not acknowledge the significant contribution of the faculty in building the reputation of the IIMs – much more than the director, the board or the IIM society”. But the fact remains that everyone will have to play her/ his role. The authors may be right in saying that the faculty contribute more than the director, board and society. If only one pillar contributes, with the other three remaining inactive, it will result in derailment of the institution.

The authors have got it all wrong with regard to the governance issue which they teach in the classrooms when they talk about illegitimate powers of the directors. According to their view the Bhargava Committee report intends to reduce the legitimate role of the faculty and increase the illegitimate role of the directors and the board to control faculty. According to me, the legitimate role of the faculty is knowledge creation and dissemination. The director has the legitimacy to measure the contributions made by different faculty members. If this basic principle is not acceptable to the authors, there can only be anarchy in institutes.

Sorry State of Directors

The scant respect that the directors have in the system has also been highlighted in the article. While the authors consider their directors to be incompetent, they go on to say in the same breath that the present system of faculty doing administrative roles helps them to develop future directors. This kind of in-breeding too has also contributed to the erosion of the p owers of the directors.

DISCUSSION

The concept of temporary and permanent stakeholders as put forth by the authors is puzzling. A director is a director whether he is temporarily or permanently with an institute. The post of a vice chancellor for a period of three years does not make him any inferior to the faculty in the university. In our political system, the politicians who are there for five years make the policies while the IAS officers who are permanently there are the ones who execute them.

Misconceptions

It is surprising that those who teach management are averse to either evaluation of the institute or the individual faculty members. The authors questioning the ability of the director to evaluate faculty performance or their board’s ability to evaluate the performance of the institute, is a big surprise to me. We are the ones who teach the world that if we cannot measure, we cannot manage. We are the ones who teach balanced score card and metrics to measure performance of organisations. I wonder as to why the authors are advocating such a double standard. After all, the board can appoint a set of competent people to assess the contribution by the institute.

The authors tend to believe that they have made a significant mark in management education even without the control of the boards or monitoring by the society.

The authors say, “If the IIMs have come so far without the boards having any control of the type proposed in the report, then where is the need to introduce these systems now?”. It is very unfortunate that the management teachers who teach companies to set higher goals and students the need to get out of their comfort zones are themselves caught up in local minima. All that I can say is that we need to get out of our slumber and see what is happening in schools in Europe and south-east Asia which were ranked far below us a decade back. The so-called faculty-led governance has led us to a low level of equilibrium. It is high time that someone shakes it up.

As regards donations, the authors have got it all wrong. The idea is to make the members of the society play an active role in the functioning and monitoring of the institute. Unlike the west, where donations come easily to educational institutions, we need to incentivise the donors in India. We can always bring in mechanisms that ensure that the money is properly utilised and the donors do not hijack the institute. If we, the management experts, do not know how to develop systems, only god can save the institutes.

Conclusions

I am not trying to find fault with the authors or the faculty alone. There was a time when salaries were very low and the directors tried their best to get additional money for their faculty by way of management development programmes and incompany programmes. The Ministry of Human Resource Development too put pressure on institutes to build corpus funds so that they could become autonomous. Hence, the faculty and directors worked in the direction of making more money. The current report takes a complete U-turn and comes down heavily on executive teaching and advocates 160 hours of postgraduate programme teaching. It is a well-known fact that the metrics and measurement drive performance. There is no denying the fact that we need to put in place the right kind of metrics and measurements to manage the system efficiently and effectively.

Basically, we should look at the spirit behind the report and try to take advantage of it. As management teachers, we should understand that any building will collapse if one pillar gets taller than other three. We need a strong society, board and director, apart from faculty who are not mere administrators but net knowledge creators. Instead of waiting for the committees to set directions, let the faculty council come up with their recommendations for improving people, processes and technologies for the institutes. Let us put in place metrics and measurements to ensure growth in the right direction. Fundamentally, what we need is surgery and we all need to get out of our comfort zones.

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may 21, 2011 vol xlvi no 21

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