IIMs seek liberty to elect directors

The Indian Institutes of Management (IIMs) have a wish: The freedom to select directors on their own, and at an accelerated pace. The Ministry of Human Resource Development (MHRD)’s intervention in its matters, including selection of directors, is taking a toll on the schools’ reputation, they claim. “We are losing our charm internationally,” laments an IIM director. “We need basic freedom to at least appoint our own directors, sans anyone’s permission. We do not see international professors interested in heading IIMs.”

Consider this: Samir Barua, Director at IIM-Ahmedabad, was to remit office in November 2012 but was given an extension of a few months. Ditto with Shekhar Chaudhuri, Director, IIM-Calcutta, and Pankaj Chandra, Director, IIM-Bangalore, who is still on extension. In contrast, look at similar appointments internationally: Cornell University’s management announced Soumitra Dutta as the new dean in January 2012, when he was to take over in July 2012. Nitin Nohria was announced Harvard Business School’s dean in May 2010, when he was to take over in July 2010.

In fact, the board of governors at IIM-Ahmedabad (IIM-A) had sent names of three contenders – Ashish Nanda of Harvard University and IIM-A faculty members G Raghuram and Rakesh Basant – for the post of Director to MHRD on May 9, 2012. But the ministry is yet to respond. The board, in the absence of a clearance from MHRD, this month asked Dean (Faculty) Ajay Pandey to take over as the Acting Director. While IIM-Calcutta appointed a Director this week, IIM-Bangalore is yet to appoint one.

“I do not understand why an IIM needs the MHRD or the permission of the Prime Minister’s Office (PMO) to appoint a director. Why can’t decisions regarding educational institutions be left to them? We are institutions of the 21st century. Why do we have a board of governors if we can’t be allowed to select our own directors?” asks an IIM director.

Sources at the premier management institutes say the process of selecting a director should be accelerated, as it would be a good model to have a director-designate six months to one year in advance. This would allow the outgoing and incoming directors to work together, allowing for better hand-holding before one takes over.

As an IIM director completes his term, a search committee is constituted to shortlist eligible candidates and recommend them to MHRD. The ministry approves the list, sends it to the Department of Personnel, which forwards it to the PMO for the Cabinet Committee’s approval.

Globally, however, much before a director or dean’s term comes to an end, headhunters identify some key names of eligible candidates and send these to the dean of a search committee, which comprises faculty members from the institute. Committees at the university and school levels come together to interview and shortlist candidates. The appointments are usually done months in advance.

A M Naik, chairperson of the board of governors of IIM-A, says though the selection of directors six months in advance would be a good move, the government’s role in the process would remain, as it was an important stakeholder. Ashok Thakur, Joint Secretary at MHRD, could not be contacted for comments despite repeated attempts for two weeks.

Source: Business Standard, April 11, 2013

IIMs may get legislative cover, award degrees

Five years after it first initiated a legislation to bring 13 premier Indian Institutes of Management (IIMs) under the purview of Parliament, the Ministry of Human Resource Development (MHRD) has revived the process and is working on a bill modeled on the lines of the Institutes of Technology Act, 1961, under which IITs function.

In 2007, the provocation for proposing a legislation for IIMs was the institutes’ recalcitrance in implementing the OBC (Other Backward Classes) reservation. However, this time round, the idea has come from within. Many IIM directors and board members have been telling the ministry that without a legislative cover, IIMs are not able to award degrees. “It has become a handicap. Many IIMs have started five-year integrated courses but are not eligible to award degrees. Once the proposed Institutes of Management Bill is passed, IIMs would become more attractive for students,” a source said.

Now, IIMs function as autonomous societies and run as per their Memorandum of Association (MoA) that is different in case of each institute. IIMs award only diploma for a two-year management course. Degrees can be awarded only by institutions set up by an act of Parliament, state assembly, deemed universities and institutes of national importance. Director of one of the new IIMs told TOI, “At a time when serious changes are being contemplated in the Common Aptitude Test (CAT) like making it an international test, IIMs need to have authority to grant degrees. Recently, the ministry discussed the matter with us. Once bill is prepared by the ministry we would be consulted.”

But some feel parliamentary control could also compromise IIMs’ autonomy and “out-of-box decisions”. First, there would be change in the administrative and financial powers of the institutes. “Over the last three years, government had set up many committees to look into the functioning of IIMs as well as chalk out a roadmap. Most of the old IIMs have already amended their Memorandum of Association that gives them more power and flexibility. “We do not know what would happen to flexibility and financial autonomy,” one IIM director said.

Source: The Economic Times (Online Edition), September 4, 2012

L&T’s AM Naik to be new IIM-A Chairman

Larsen & Toubro Chairman AM Naik has been selected as the new chairman of Indian Institute of Management- Ahmedabad (IIM-A), India’s top-ranking B-school he served as a board member for seven years. Naik will take over from Raymond’s chairman emeritus Vijaypat Singhania who completes his five-year term in March end.

Naik and IIM-A Director Samir Barua confirmed the appointment. The Union Ministry of Human Resources Development (MHRD) picked up Naik over others like HDFC chairman Deepak Parekh and RA Mashelkar, former director general of India’s Council of Scientific and Industrial Research, names suggested by an IIM-A committee headed by Arvind Ltd chairman Sanjay Lalbhai.

The ministry finalising one of the names proposed by the institute, is already being read as an important step towards the much-sought autonomy. When contacted Naik said, it was too early for him to comment. “I just got the letter. (I) have not applied my mind on what I need to do,” said the chemical engineer from Gujarat who rose through the ranks at L&T, the engineering conglomerate. IIM-A’s Samir Barua welcomed the appointment and said, Naik is a respected figure and comes from the infrastructure industry which is important for the growth of Indian economy.

Barua pointed out that it was the first time that the ministry has appointed a candidate proposed by the institute and saw it as a major step towards IIM-A autonomy. The MHRD, Gujarat government and the society of the institute have approved amendments of the Memorandum of Association (MoA) and the appointment of Naik is a signal that the ministry has followed the revised MoA process,” said Barua.

Autonomy would give IIMs the power to appoint their chairpersons and directors, apart from deciding faculty salary, student fees, sale and purchase of assets and setting up of foreign campuses.

Source: The Economic Times, February 29, 2012

IIMs aim to raise own resources, hike staff pay

The Indian Institutes of Management (IIMs) have requested the Centre that they be allowed to raise funds from alumni networks and corporates to supplement budgetary support. The additional funds will help finance existing operations and new initiatives at the country’s premier business schools.

The director of an IIM told FE that the government’s financial burden will come down if the institutes are allowed to leverage their own resources for expansion and infrastructure programmes. “We discussed this proposal with the human resources ministry at a recent workshop as the government cannot finance the requirements of all public institutions in future. The ministry is keen on giving us this autonomy,” said an IIM director.

The Planning Commission’s approach paper to the 12th Five Year Plan had recommended that IIMs should be encouraged to raise money through various legitimate means. According to the director of a new IIM, old institutes have the advantage of vast alumni bases while new ones can benefit from corporate philanthropy.

Each IIM is a society formed under Societies Registration Acts, having a memorandum of association (MoA) outlining its objects and rules. The board of governors is responsible for the general superintendence, direction and control of the affairs of the society and its income and property. The IIMs depend on government support for most of their finances. Recently, the HRD ministry amended the MoAs, empowering IIM boards to independently set up search-and-selection committees to shortlist three candidates for the post of director. In the new regime, four of the five old IIMs (except IIM-Calcutta) at Ahmedabad, Bangalore, Indore, Lucknow and Kozhikode are free to set up campuses, raise funds and dispose property except those purchased with public money.

“Till now, these proposals used to come to the HRD ministry but after the amendments, the institutes can take their own decisions,” said a ministry official. “The amendments will help us raise and manage funds, recruit and compensate the faculty and set up campuses in India and abroad,” said Debashis Chatterjee, Director, IIM-Kozhikode. “With the changed MoA, making faculty pay more flexible is on the institute’s agenda and it is discussing the matter with the board. We are looking at excellent faculty and ways of retaining them by topping up their salaries,” said Chatterjee. The institute is also looking at launching new programmes for working executives at its new campus in Kochi.

A review committee set up by the government under RC Bhargava, Chairman, Maruti Suzuki had suggested that remuneration of all IIM employees be determined by the board, considering market conditions to attract and retain high quality talent, ability to pay, and the need to provide motivation for performance.

Source: The Financial Express, February 2, 2012

Centre may offer greater autonomy to 3 more IIMs

The Indian Institutes of Management (IIMs) who have long sought greater freedom from the government are close to attaining that goal. The Ministryof Human Resource Development (MHRD) on Thursday is expected to amend memorandum of associations (MoA) to three IIMs – Ahmedabad, Bangalore and Lucknow. The amended MoAs will result in drastic changes to their governing structure, reflecting greater autonomy.

ET had in its edition dated January 18 reported that IIM-Kozhikode had received the amended MoA. The boards of governors of the IIMs will have to formally ratify the amended MoA. The changes in the governance structure are in keeping with recommendations of RC Bhargava Committee. The committee was of the view that the divided responsibility for governance between the government, board, and directors inhibited the IIMs from developing effective strategies to meet the challenges that B-schools are faced with. “Till now, the IIMs had to approach the ministry for approval or notifying changes in the board members and so on, with these changes, governance of the institutes will become smoother. The IIMs will have greater autonomy now but that comes with greater responsibility,” a senior official said.

A lean Board of Governors comprising 15 members, as against the current size of 24-26 members, will now be responsible for the IIM’s governance. Instead of the government selecting board members, the board will make appointments in the event of vacancies. The government nominees will be ex-officio members, reducing the need for notification in the event the officer is transferred.

Source: The Economic Times, January 19, 2012

MHRD nod to MoA will give IIM-Kozhikode operational autonomy

The Indian Institute of Management, Kozhikode (IIM-K), is set to enjoy greater operational autonomy with the Ministry of Human Resource Development (MHRD) approving its amended memorandum of association (MoA). Under the changed MoA, the institute will be able to appoint its own director and board of governors (BoG) besides revising the remuneration of the faculty. “The amended MoA will help us in managing and raising funds, recruiting and compensating the faculty besides setting up new campuses both in India and abroad,” said Debashis Chatterjee, Director, IIM-K.

IIMs are societies established under various Societies Registration Acts, and each society has an MoA which lays down the objects and rules of governance of the IIM. The general superintendence, direction and control of the affairs of the society and its income and property are vested in the board of governors. As per the revised MoA, the IIM’s Board of Governors — and not the ministry — will set up a search-cum-selection committee on its own and this committee will then shortlist three candidates for the post of the IIM director. At present, the government takes all these decisions.

With the changed MoA, making faculty pay more flexible is on the institute’s agenda and it is discussing the matter with the board. “We are looking at excellent faculty and ways of retaining them by topping up their salary,” Chatterjee added.

Source: The Financial Express, January 18, 2012

IIMs meet to consider ways of raising funds

Directors of the 13 Indian Institutes of Management (IIMs) will meet on Friday to devise a plan to raise funds from philanthropists, industrialists and their alumni in India and abroad to boost their finances, following the example of the Indian Institutes of Technology (IITs) and foreign business schools. Directors and the chairmen of the board of governors of IIMs are holding a workshop in New Delhi that will also be attended by the human resource development (HRD) minister Kapil Sibal, the higher education secretary and other officials of the Ministry of Human Resource Development (MHRD) to devise a strategy to raise funds.

Initially, the IIMs plan to raise Rs. 400-500 crore (Rs. 4-5 billion). This may also be one of the items on the agenda for the IIMs when they go to Europe and America later this year to promote their brand and attract foreign students to bring in more diversity to campuses. The workshop, which some successful IIM alumni may attend, will discuss a MHRD report prepared by a team led by Hari S. Bhartia, co-chairman and managing director of Jubilant Life Sciences Ltd. “Many foreign B-schools are raising funds successfully, IIMs would do well to raise funds too. It will give them a financial edge while planning their expansion inside or outside the country in future,” said a senior MHRD ministry official, who did not want to be named. “They are a growing brand and more funds will serve them well.”

The Bhartia Committee report has suggested that IIMs follow a model that identifies prospective fund givers, solicits money from them and keeps them informed about how it is being used. IIM-Raipur is leading the initiative to hold the workshop, according to the MHRD. The IITs have leveraged their network well and got a good response from corporates and philanthropic funds, said P. Rameshan, Director of IIM-Rohtak. The IIMs jointly represent one brand and even if the new IIMs don’t have an alumni network, progress in raising funds will help all 13, he said.

For a leading business school, managing everything including infrastructure from student fees is very difficult, said Pramath Sinha, the founding dean of Hyderabad-based Indian School of Business​ (ISB). IIMs have some government backing, but funds are always needed for expansion. “You need it to improve infrastructure, give scholarships to students, create chair professors and improve research,” Sinha said. Sinha, who has mentioned about the role of donations and endowment in his new book on ISB, said that this has been a trend among well-known foreign business schools and universities. “In India, IITs are doing it and IIMs trying to do so seems to be a good step.”

For a decade and half, IITs have made significant progress in collecting funds for expansion. In 2000, the Bharti Foundation donated Rs. 20 crore (Rs. 200 million) to IIT-Delhi to start the Bharti School of Telecommunication Technology and Management. IIT-Kharagpur aims to accumulate a $200 million endowment fund by 2020. Industrialist Arjun Malhotra, an alumnus of IIT-Khargapur, donated Rs. 5 crore (Rs. 50 million) last year and has promised to give more. IIT-Bombay has got funds from its alumni network, mainly in the US. The Kanwal Rekhi School of Information Technology, the Shailesh J. Mehta School of Management, the Gaitonde Lecture Hall Complex, the D.S. Foundation Gymkhana and the Victor Menezes Convention Centre have come up with support from alumni, according to its website. The Vinod Gupta​ School of Management at IIT-Kharagpur was initiated by its alumnus Vinod Gupta and named after him.

Source: Mint, January 13, 2012

IIMs get more say in picking directors

Decade-long efforts by the premier Indian Institutes of Management (IIMs) to wrest more autonomy from the Union Ministry of Human Resource Development (MHRD) have finally paid off. HRD Minister Kapil Sibal on Tuesday approved revised Memorandum of Associations (MoAs) proposed by two top IIMs. The revised MoAs of IIM-Ahmedabad and IIM-Bangalore were granted approval by the ministry after the Ministry of Lawcleared the documents. Three other IIMs — at Lucknow, Kozhikode and Indore — are next in queue.

“As per the revised MoAs, the IIMs will exercise considerable autonomy in selection of their Director and Chairman to the Board of Governors, set terms and conditions for selection of faculty, nominate members to their Board of Governors, set up centres in India and abroad, and purchase and sell property using their own funds, among other aspects. Substantial administrative and financial autonomy will now be given to these IIMs,” said a senior official in the MHRD.

As recommended by the R C Bhargava Committee on IIMs, the Board of Governors (BoGs) will be downsized — from the near 25-member boards now to a 12-15 member group. The Bhargava panel, in its 2008 report, had termed the existing 24-25 member BoGs rather unwieldy, and suggested a trimming. This recommendation found favour with the IIMs. While IIM-Ahmedabad proposed to downsize their 28-member board to a 15-member one, IIM-Bangalore conveyed to the MHRD that they were prepared to trim their 26-member board to a 16-member one under new MoAs.

The IIMs, under the revised MoA, will also nominate members to these boards; two government nominees will also be part of the board. This BoG, in turn, will be able to select its own Chairman and Director. The BoG will set up its own search-cum-selection committee for the purpose, and then forward three shortlisted names to the ministry from amongst which the latter will pick one candidate.

In case of IIM-Ahmedabad, as has been the case from the beginning, the panel of shortlisted candidates for the Chairman’s and Director’s posts will be decided upon after consultation with the state government as well. IIM-Ahmedabad, in fact, was keenly waiting for approval of the revised MoA, as their Chairman Vijaypat Singhania will complete his five-year term in March, while the Director Prof. Samir Barua will complete his term by year end. The IIM-A BoG had, in fact, already formed a search-cum-selection committee to find itself a new Chairman.

Significantly, under the revised MoAs, the IIMs will be free to devise their own admission policies as long as the government’s reservation policy is adhered to.

Source: The Indian Express, January 11, 2012

IIM-Ahmedabad set to choose its own director

The Indian Institute of Management-Ahmedabad (IIM-A) will be the first IIM in the country to choose its own director. Set to formally accept the revised Memorandum of Association (MoA) proposed by the Indian Institute of Management (IIM), the Union Ministry of Human Resource Development (MHRD) will allow increased autonomy to the management institute.

Prof. Samir Barua, who is currently IIM-A’s Director, will complete his term later this year and his successor is likely to be selected through the new procedure which will encourage active participation by the IIM. As per the revised MoA, the IIM’s Board of Governors — and not the ministry — will set up a search-cum-selection committee on its own and this committee will then shortlist three candidates for the post of the IIM director.

The IIM-A BoG will forward these names to the MHRD which will then be able to choose a director only from amongst these shortlisted candidates. The IIM’s BoG will also be able to select its own chairman in a similar fashion. This new process marks quite a departure from the selection process in effect until now.

IIMs have for years been engaged in a tug-of-war of sorts with the government for more autonomy. “IIM-A will be able to select its own director under the new MoA. The IIM-A director will soon complete his term and the new director will come in through the new selection process. This will go a long way in bringing more autonomy to IIMs,” MHRD sources said.

As of now, it is the ministry which forms a search-cum-selection committee in collaboration with the IIM BoG and also chooses one of the candidates short-listed by the committee, allowing the government to wield its influence right from the beginning of the selection process. While this process allows no room for the IIM or its BoG any say in the appointment of its director, the new process promises to be initiated and driven by the IIMs themselves.

Incidentally, the IIT Review Committee headed by R C Bhargava had also recommended the same. “We recommend that the director of each IIM be selected and appointed by the Board of each IIM, with the conditions of service being approved by the pan IIM Board. The process of selection should be determined by each Board. We also recommend that the selection field should be broad-based to attract the best available talent,” the Bhargava Committee said in its report.

Source: The Indian Express, January 3, 2012

IIMs’ quest to break free

Will the Indian Institute of Managements (IIMs) — all thirteen of them — be able to finally break-free from the yoke of the government and under a new era of emancipation, scale higher ground? This is certainly the hope of many of the institutes and as recently as November 2nd, the directors and chairmen of IIMs across the country approached the Ministry of Human Resource Development (MHRD), to discuss this very issue, almost a decade after the demand for autonomy was first voiced.The MHRD has gone so far as to voice ‘support’ for the complete independence of older IIMs — Kolkata, Ahmedabad, Kozhikode, Indore, Lucknow and Bangalore — given that they are financially independent, while the seven new IIMs will continue to get support from the ministry.

So far, IIM Bangalore (IIM-B) has been the trailblazer for change. It has amended its memoranda of agreement (MoA) earlier this year and with the amendment, has received the right to manage its own funds and decide its own budget, take on key faculty appointment and promotion, appoint directors as well as expand its campus footprint. “Others including Kolkata, Ahmedabad, Kozhikode, Indore, and Lucknow are in the process of amending their MoAs as well,” said a senior ministry official.

These developments may seem hardly profound on the surface of it, but for a beleaguered group of colleges colonised by the central government, this is a very big deal. After all, not so long ago in 2002, a saffron-clad Murli Manohar Joshi, the then HRD minister, instituted sweeping changes in the curricula of the IIMs, intensifying fears of saffronisation of management education. In 2004, stakeholders were relieved to see NDA’s Arjun Singh as the new minister but he too disappointed, delivering a caste-based quota across IIMs. Now, however, the IIMs face the most realistic chance to be masters of their own fate.

This doesn’t mean that the rest of the road is going to be smooth. There are two issues that continue to spark both outrage and debate.To understand the first controversy, it is instrumental to understand the following: Each IIM is governed by a board of governors (BoG), which is responsible for making the majority of transactional decisions. The BoG is then overseen by a ‘Society’ — an overarching IIM Council — which has representation from the MHRD minister, representatives of the state government, and a vice chancellor of the state university. Guidelines about changes in governance, faculty management and funding structures were based on the recommendations of three different prior committees headed by former Maruti Suzuki Chairman R.C. Bhargava, Rediff founder, Ajit Balakrishnan and Hari Bhatia Co-Chairman and Managing Director of Jubilant Organosys respectively.

Under the current rules, the IIM board has 24 members. A new proposal suggests that this number be brought between 14-16 members, who mandatorily have to attend 75 per cent of all meetings. “The idea behind reducing board size is to ensure that people who are active remain on the board. Where the proposal of seats in the society in lieu of corporate funding is concerned, that has not found acceptance,” says Devi Singh, Director IIM-Lucknow. The Bhargava Committee had recommended that the societies be trimmed to 20 members so that the rest could be given to those who gave monetary donations.

This strategy hasn’t gone down well with some. “Just for IIM-Ahmedabad, 5000-odd alumnae are now in well placed positions. Raising Rs. 500 crore (Rs. 5 billion) from just them is an easy task. How can one even think about selling stake in IIMs to corporates for money? It is unthinkable,” said Bakul Dholakia, past director, IIM-A. Then, there’s the Balakrishnan Committee suggestion that teachers be required to complete a minimum of 160 hours of teaching time. “Are we clerks? How can the ministry ask us for annual teaching plans, when the discipline itself is evolving?” Says an equally perturbed IIM-A faculty member: “We cannot be told how to plan our lessons. An average of 90 hours of classroom teaching that we do requires 60 hours of backroom work.”

Some feel that other areas of the IIM education spectrum will also suffer. “Mandating a larger compulsory time window for classroom teaching will make a direct casualty out of research,” said Asish Bhattacharya, Director, IIM-Kolkata, who served on the IIM faculty for 11 years. “It is like a vicious circle. The move will affect research merit and, in-turn accountability. In the long run then the purpose of autonomy, and the search for merit itself is defeated,” Bhattacharya argues.

The raucous protests by the faculty across the older IIMs, especially Kolkata and Ahmedabad, have meant that the process of MoA amendment has been delayed, and is slated to remain in limbo for the next year or so. “To be honest, those problems have not yet been solved. We expect some consensus to develop over the year,” said Samir Barua, Director, IIM-Ahmedabad.

Different schools have different needs. Consequently, according to Debasish Chatterjee, Director of IIM-Kozhikode , the restrictions and accountability parameters for every IIM have to be different. For a school like Kozhikode, the need for autonomy is directly linked to the need to expand. “Given our hilltop location, there is no scope for growth. We are in the process of getting some land in Kochi, a natural progress for us. Autonomy is essential in as much as it gives us the chance to set up satellite campuses, both domestic and international,” explains Chatterjee.

That IIMs have been trying to expand domestically and abroad is well known. As far back as 2005, IIM-A almost closed the deal to set up another institute in Maharashtra. Now, there has been talk of discussing campuses in Singapore and Dubai. Also in the works is a collaboration between the three oldest IIMs.“A joint international campus, where synergies, and resources might be shared between A B C is a possibility. Things should concretise next year,” said Samir Barua, Director, IIM-A. Detractors however have argued that instead of strengthening the IIM brand, the move might lead to its dilution. “Look at the international campus of an institute like SP Jain, where the international campus is seen as the money making scheme where only students who do not have merit to make it to the India campus find entry,” argues Dholakia.

M.J. Xavier, Director, IIM-Ranchi points to Article 3 of the MoA, which is essentially the raison d’etre of the IIMs: “To serve the needs of business, industry, Government and society at large through programmes and activities developed to serve the mission; Build leaders and entrepreneurs through holistic, transformative and innovative education.” Can the evolution of more independent decision making powers for IIMs fulfil these fundamental objectives? Have they been doing so? Those are the important questions on everyone’s lips in figuring out a way forward.

Source: Business Standard, November 8, 2011