Evaluating the Development of further Management Education in India

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Abstract

Over the course of the last hundred years, business has transformed the world. It has been a driving force in shaping society and the catalyst behind extraordinary economic growth and opportunity. MBA or Master of Business Administration is believed to be one of the coveted qualifications across the globe. Graduates from all fields aspire to this qualification because it is the most widely recognized and respected qualification. It is believed that MBA enhances the earning potential of professionals and serves as a launching path to a successful and bright career due to which MBA is worth an investment rather than expenditure. Therefore, the research methodology used to write this paper focuses on management education as a service, management institute as a service provider and students, faculty, academicians, promoters, corporate and government as stakeholders. It is important to list down the underlying objectives that led the philanthropists to promote imparting management education to the young professionals. A bird's eye view compares the management education scenario in India with that around the world. This not only shows the benefits but also exposes the shortcomings of the system. A holistic view is followed to develop a framework upon which the system of imparting management education of high standard can be built. An autonomous model is followed to give each and every institute a platform for self improvement and self development. The government has the responsibility to setup an independent body to regulate the establishment and functioning of management education institutes. The industry acts as a facilitator by providing funds for the nourishment of these institutes and later reaps the benefits from the human resource pool. The governance practices to impart transparency to the functioning of management education institutes are also to be defined to build the trust among the stakeholders. In the end, a roadmap is prepared to implement the recommendations such that every step is practically possible and logistically feasible. The synergy between government, industry and academia is the key to success.

Introduction

Effective management of business has spurred the creation of jobs, the generation of wealth, and access to opportunity for an increasingly diverse population. Management education has produced leaders capable of creating effective organizations that are the core of these profound, global achievements. Successful students of management education acquire the knowledge and skills that enhance and enrich their lives and enable them to make meaningful contributions to their organizations. In turn, organizations that are successful in meeting their goals and fulfilling their purposes become enormous assets to societies, fostering greater productivity and a more desirable quality of life. The value of management education to individuals, organizations, and society is almost incalculable.

Overview of Management Education in India

There are over 1700 Business schools in India distributed across its different states. Approximately 100,000 students graduate from these management institutions annually. There is a positive correlation between the no of B-schools and the industrial development in the state. There are on an average 9 seats in the country per lakh of population. A large population of the capacity is filled through all India entrance exams conducted at a number of locations across the country. There has been a significant growth in the number of B-schools opened in the country over the last two decades. It can be said, that the acceleration is propelled due to acceleration in the growth of Indian economy. It wouldn't be wrong to say that it is also because of the entrepreneurial initiatives by the promoters who wanted to seize commercial opportunities in education sector.

The imbalance between demand and supply has created an exploitable but overly commercial environment in the field of management education. The reason is that it is certainly not clear whether a Business school is seriously committed to the cause of imparting quality management education or just an investment based on the speculative perception of the promoter. There are no stats that actually prove whether an institution meets the norms and standards established by All India Council of Technical Education.

Based on the assessments of HR managers, there will be a three-fold increase in the need of management professionals over the next 10-15 years. Thus, there will be a need to raise the output from the current level of 1, 00,000 managers to about 3, 00,000 a year over the next 10-15 years. For these, specialized management training/development programmes would be needed.

Underlying Objectives of management education

In a churning global marketplace, understanding the fundamental connections between business, the environment, and society has become essential. The roles and responsibilities of business as a global force are becoming more urgent and complex, and concepts related to societal responsibility and sustainability are gaining recognition as essential elements in business management. Increasing complexity and interdependence require new approaches. Companies need integrative management tools that help embed environmental, social, and governance concerns into their strategic thinking and daily operations. They need support as they internalize and integrate these issues into the core of businesses, engage in dialogue with stakeholders, and report their conduct.

Academic institutions help shape the attitudes and behaviour of business leaders through business education, research, management development programs, training, and other pervasive, but less tangible, activities, such as the spread and advocacy of new values and ideas. Through these means, academic institutions have the potential to generate a wave of positive change, thereby helping to ensure a world where both enterprises and societies can flourish.

The principles behind imparting management education to the students are stated as follows:

To develop the capabilities of students to be future generators of sustainable value for business and society at large and to work for an inclusive and sustainable global economy.

To create educational frameworks, materials, processes and environments that enable effective learning experiences for responsible leadership.

To engage in conceptual and empirical research that advances our understanding about the role, dynamics, and impact of corporations in the creation of sustainable social, environmental and economic value.

To interact with managers of business corporations for understanding their challenges in meeting social and environmental responsibilities and to explore jointly effective approaches to meeting these challenges.

To facilitate and support dialogue and debate among educators, business, government, consumers, media, civil society organizations and other interested groups and stakeholders on critical issues related to global social responsibility and sustainability.

The role of the management institutions is to serve as a platform to advocate responsible management education and coordinate efforts to further develop these principles by the agents that can generate change.

Value and importance of Management Education

The value created by management education can be seen from the perspectives of an individual, organization and society, at large.

The individuals opting for management education believe that participation in management can create lifelong rewards for them. They can develop a portfolio of personal skills that will strengthen their abilities to communicate, solve problems, make decisions, and lead organizations. Another important motive is the creation of personal wealth, self-sufficiency, and a sense of well-being. To achieve this, management institutes should educate the students in three distinct areas. Firstly, they must be equipped with specific knowledge, technical skills, and abilities that are honed through a comprehensive set of management education experiences. Secondly, students must acquire knowledge of ethics, social responsibility, law, and public policy. Lastly, students must develop and polish skills in communication, leadership, and critical thinking.

In 1881, Joseph Wharton, proprietor of American Nickel Works, asked University of Pennsylvania trustees to develop the first school of business. Since then, business owners and managers have continued to engage management educators on many levels to achieve results that benefit business practice and the greater economy. Management education promotes research that advances organizational effectiveness and efficiency and generates new ideas, theories and knowledge. This helps in commercialization of effective application of new technologies for production of goods and services that enhance the quality of life. It further serves as a catalyst for innovation and continuous improvement. The knowledge produced by management education has taken on new dimensions, adding diverse areas of research such as derivative pricing, supply chain management, portfolio theory, decision making, and quantitative methods.

There exists a symbiotic relationship between business and society. Management education contributes to society through creation of organizations that enable richer lives for participants, creation of wealth and economic development opportunities, creation of employment along with the supply of essential goods and services to the society. Management education has revitalized and bolstered economic development in communities by involving students, faculty, and other resources in resolving real-world problems. It is this form of societal development that best exemplifies the connection between management education, management research, and society.

Identifying Shortcomings in the existing system

Types of Management education institutions

There are presently six types of management education organisations. These are:

Indian Institutes of Management (IIMs) set up by the Government of India.

University departments of management studies

Colleges (government or private) affiliated to universities

Private or government institutes approved by the All India Council for Technical Education (AICTE)

Private colleges or institutes not affiliated to any universities nor approved by AICTE.

Private colleges or institutes offering MBA courses in India in collaboration with foreign universities, where degree/diploma/certificate is awarded by the foreign university.

All the management education institutions are not fully autonomous.

People going for higher education

The literacy rate of India has increased to 64.8% but, the proportion of students joining tertiary education programmes after secondary level is still disappointingly low especially management education is still not attracting people from the lower strata of the society. One of the reasons cited for this lack of access is language. Command over English language is essential for the admission into management institute. In India, education in most of the areas is still carried out in Hindi medium schools because of which students do not develop a command over English language early. Some students shift to English medium schools but do not match the level of English medium school students. This weakness becomes a shortcoming for these students when they appear for entrance exams for management institutes later. Another reason for less access to management education is lack of financial support. Education loans are not easily available.

Faculty

There is a severe faculty shortage for management education in India. On an average, top central universities have 34% faculty seats vacant. Very few B-schools conduct faculty development programmes for upgrading the skills of existing faculty. It has been observed that a lot of fresh B-school graduates join lower rated institutes as faculty members straight after completing their PGDM. Students in B or C grade institutes, who do not get placed, take such a decision. Hence, the quality of faculty is also declining sharply. Lectures are becoming boring and teaching styles promote spoon-feeding. The quality of graduates produced has automatically declined. Instead of resolving this problem, the regulatory body has temporarily lowered the standards it set with respect to the faculty to students' ratio and also senior to junior faculty ratio in an institute.

Regulatory Body

All India council for technical education is the government body that forms the regulatory regime of technical institutions in India. The regulatory mechanism for management education is unsatisfactory. The criteria for norms, standards and accreditation of institutes are in place but the implementation is not proper. The worst part is that management is treated as a sub-department of engineering and there is no regulatory body giving exclusive attention to management institutes. The regulation process at AICTE is rule based rather than quality based. The reason for this is that professional staffing for AICTE is not full time and most of the staff is on deputation for short periods of time.

Institute rating and accreditation

There is no agency appointed by the government that can provide reliable rating to the institutes imparting management education. Some media firms come out with ratings but there is no credibility attached to their report. Some institutes voluntarily go for some accreditation. Accreditation is a process of evaluating, mentoring and helping institutes who voluntarily wish to go beyond rating. Only 20% of Indian engineering programmes are accredited so far. Moreover, some institutes mislead the consumers by making false accreditation claims.

Management education for serving the society

In this era of globalization, management education needs to pursue greater scope and aim at a more wholesome impact on society. Such thinking is particularly relevant to India, with its diverse socio-cultural contexts and disparities in different occupations. A majority of management education organizations in India are primarily oriented to teaching while the awareness about the society they are going to serve takes a backseat. Leading management institutions in the country have been concerned about this wider application of management. E.g. IIM-A started a Centre of Management in Agriculture (CMA) to cover research in Agriculture credit, animal husbandry, rural electrification, fisheries, poultry, forestry, rural health and nutrition, government /cooperative sector. IIM-B launched its two-year PGP to provide entry-level managerial manpower to sectors such as education, energy, transportation, environment, and agriculture.

Proposed Reforms to the problems discussed above

Regulatory System

There should be a fully autonomous body for regulation of management institutions. Like AICTE, this council should comprise eminent professionals, educationists, industrialists and administrators.

This governing council should play a promotional role, a mentoring role and a surveillance role. It can play a promotional role by identifying the promoters, foreign universities, existing institutes of excellence and help them in setting up new management institutes in different regions. The Council will also have a cell, which will entirely focus on a mentoring role to help new institutes to establish standards of excellence. The Council will establish transparent criteria for rating and accreditation.

It should perform function of registration of institutes and communicate the same to the general public. For this, it should use e-governance as a tool.

It should set transparent criteria for rating and accreditation. These functions can be performed by the council itself or can be outsourced to reliable agencies.

The council has to set criteria that any institute willing to provide management education has to satisfy for registration, rating, accreditation etc.

Some of the attributes of the criteria can be student teacher ratio, the physical parameters of space, computers, libraries etc.

Apart from these minimum standards, the methodologies used to impart management education are equally important. For this the council has to carry out an in-depth analysis and judgement would be required before the quality of the institute is assessed. Such a strict and dedicated approach would be necessary to improve the standard of management education in India.

All these principles of governance should apply to management institutes set up not only by the government but also by private corporate houses, foreign universities/investors, NRIs, local entrepreneurs etc. Any fraudulent practice in presentation of the data or any physical criteria should attract immediate penal provisions and de-registration.

Any unregistered establishment if found imparting management education out of the purview of the guidelines set by the management education council should be termed as "illegal" and attract penalty as notified by the government.

The council should charge an annual fee from the registered institutes.

The disputes that arise can be resolved by an independent cell headed by a judge of the Supreme Court, if necessary.

Model for Management Institutes: Autonomous Body model

All management institutes should function autonomously after getting themselves registered in council for management education.

Each institute must carry in all its communications, information regarding whether it is registered or not, enabling all stakeholders to have the correct information on its status.

If a provider of management education is "not registered", it cannot offer a diploma or degree. All stakeholders (students, parents and industry) must be sensitised to the consequences of non-registration.

Every institute like any organization should have a governance board. Like any organization the number of directors should range from 8-12 comprising of independent members, promoters and faculty members.

The key focus of the Governing Board should be to continuously improve quality of education and research. For this purpose, they would have to maximise the resource/fund inflows and allocate/spend them purposively and efficiently. This way the Board can ensure the independence of management institutes and enhance its standards.

The institute should be regularly audited and the report should be submitted to the regulatory council as part of the annual re-registration exercise.

Processes involved

Surveillance function

Council can setup a low cost e-monitoring system to carry out its surveillance activities. The information should be checked and verified in a totally transparent manner and the stakeholders in the management institutes should be encouraged to follow the 'whistle blowing' process in case they found any discrepancy. All complaints should be handled seriously and appropriate action should be taken.

Governance

All management institutes must have a governing body as pointed earlier. To ensure fair and just governance the composition of the governing body can be:

Total no. of members in the board should not be more than 12.

50% should comprise of independent members comprising of professionals with high reputation like managers, CAs, lawyers, academicians)

25% should be the no. of promoters.

25% should comprise of faculty members including the director.

Attendance to the board meeting should be important and reasonable sitting fee should be paid to the directors.

The institute should have an explicitly stated mission. The rating and accreditation process will evaluate adherence to the stated mission in practice. The Board must approve an annual business plan (revenue and capital) based on the proposals from the director and top team. The board should follow a peer review methodology for evaluation. A Compliance Officer, reporting to the Board, should be nominated for ensuring compliance on all the governance and registration requirements. The Board has to communicate compliance every year to the Governing Council for Management Education. The board can have 2 sub-committees as well:

An internal audit committee, which will meet regularly and engage with external/internal auditors. It will also ensure that all statutory compliances are met regularly. The Chairman of the audit committee should be an independent director.

A governance and personnel committee which will be charged with following responsibilities:

To periodically recommend new members to join the board

To ensure that remuneration levels are aligned with the vision and are competitive enough to attract appropriate faculty

For recruitment, promotion and review of faculty

Rating

The rating agencies will have a framework similar to that of CRISIL and ICRA. These rating agencies will use common standards when rating these institutes, for disseminating correct information, surveillance and for de-registering institutes who fail to qualify. The rating will be done in 2 steps:

The first step of rating will cover all aspects of physical infrastructure, required for registration purposes.

The second step of rating will cover processes that determine quality (admissions, teaching & learning process, research & publications).

Before a new management institute can admit students, it has to go through the first step of rating. A reliable rating system will help the market to function better, enabling students and employers to compare different management institutes. The Rating Agency will give the management institutes a complete report with its explanations for the ratings given. The institutes will have an opportunity to express its point of view. The Governing Council will decide on a fair and transparent mechanism to deal with any conflicting points of view.

Accreditation

Accreditation will be a separate function of the Governing Council for Management Education, in addition to the Rating. Rating is compulsory but accreditation is voluntary. An accredited institute is distinct from an institute rated in whatever category and should be treated as superior, since accreditation is a continuing commitment to processes of quality enhancement. Accreditation clearly establishes the management institute as having the highest quality standard. It is similar to an ISO 9000/9001 for manufacturing/service industries. The Council may develop a special logo for its accreditation, to visually convey and set the accredited institutes apart from the rest. False claims of accreditation should be dealt with suitably. Full time expert staff in the Council, in consultation with external experts from academia and industry, will determine the criteria and process of accreditation, in line with the best global practices. The Council will charge an accreditation fee from the institute, as is the practice nationally and internationally.

Availability of Teaching staff and their training

There is a serious shortage of teaching faculty. Management institutes should be encouraged to offer a Ph.D. programme. Since, industry benefits from good faculty in institutes, they should be encouraged to give fellowships to doctoral students working in management institutes, at sustainable levels. Doctoral students, after completing their first year of education, could start to assist faculty members in their teaching and research work. Banks should also be encouraged to offer loans to doctoral students. However, faculty shortage is so acute that, in addition to pursuing the above mentioned traditional routes, new support facilities have to be created.

Management Faculty Development Programmes

A foundation for management faculty development should be created which is financially sound and academically credible so that it can attract the best faculty domestically and from abroad. Such a new faculty development body may be promoted jointly by the IIMs, by industry and also by the government. To make this Foundation financially strong, funds may be raised, both domestically and abroad, from corporate and individuals. Foundation should support the faculty in newly created and existing institutes through training and re-training programmes. This Foundation should have good linkages with faculty abroad as well as involve industry at the governance and at the operational level. The proposed Foundation should be charged with leading and setting the standards for curriculum. It should seek a broad mandate - with guidelines for what is needed for different sectors.

Faculty must be required to devote at least 10-15 days after every 3-5 years for self development. There should be an incentive for being involved in some of the programmes of the Foundation - for instance, successful completion of and involvement in such programmes can become points in favour of promotion of faculty.

Setting up of new Management Education Institutes

The establishment of a "new wave" of institutions within the stipulated governance and regulatory architecture that the Group has outlined above would raise the quality of management education in India. The following steps should be taken to open up new institutes:

Invite Entrepreneurs: Transparent and smooth system for donations, tax breaks and other such incentives to donors must be considered.

Permit Foreign Universities: Foreign universities with a good reputation in their home countries are expected to spur the Indian system to achieve higher levels of quality and to add a new attraction to the profession of management teaching.

Invite Corporate to open up management institutes through which they can reap the benefits in the future and also fulfil their acts of corporate social responsibility.

Measures to make management programmes more effective

Making curricula sensitive to wider needs of society

Indian economy is globalizing and a lot more research work done in the foreign countries is relevant. Solutions to a number of issues/problems in our country have to be very different as result of the cultural and social structure. As the Group is recommending departments of universities to become independent autonomous organisations, they should be encouraged to engage in exposing their students to the relevant social/cultural context in their local environment. It could be done through bringing into the classroom discussions/reflections of real life value-conflict situations as case studies.

Executive Programmes

The management institutes should be encourages to design and offer short duration programmes for government officers in their role as managers of economic areas.

Making bachelor programmes more relevant

The current Bachelors programmes are neither a good grounding for being managers nor a good preparation for entry into post-graduate programmes. This is mainly because of the inexperience and immaturity of the students and the text-bookish nature of the curriculum. The curriculum needs to be recast to prepare the students for junior management level jobs by introducing substantial duration of apprenticeship in organizations, if necessary with appropriate discipline/ sector specializations.

Top institutes should adopt budding management institutes in their regions

The possibility of leveraging the better-rated institutions to develop the promising management institutes needs to be explored. These institutes should assist the new institutes in ways like curriculum development, case study and teaching, student exchange programmes, sharing experiences in pedagogy, faculty development and placements.

Distance Learning Programmes

There have been a number of initiatives in providing online education/training in management. Online and Distance Learning programmes have the large potential to bridge the gap between demand and supply for managers in our dynamic economy.

Conclusion

The roadmap for implementation of the agenda for improving the standard of management education in India is given above. An agenda needs the support of administrators and enforcement by law to achieve the desired results. India has a long way to go as far as the quality of institutes and the level of management education is concerned. The growth rate of management education institutes does not match with that of the Indian economy because of which the demand supply gap of management professionals has widened and continues to do so. Implementing these steps will not only help narrow that gap but also achieve a certain level of quality. India already has a basic structure to impart quality management education; these steps will help in capitalizing upon that and overcome the shortcomings that are stopping the country to match the world standards in management education. The results will be prominent within the next 10 years and many more Indian institutes will appear in the top ranked management institutes across the world.

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