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No reason for IIMs to be alarmed



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No reason for IIMs to be alarmed


T.T. RAM MOHAN

Attempts by successive governments to inject a modicum of accountability into the Institutes have been construed as threats to autonomy, but this is not the case


“There has never been any threat to the autonomy of the IIMs.” File photo shows Prime Minister Narasimha Rao at the Indian Institute of Management in Ahmedabad in 1993.— Photo: The Hindu Archives

The Indian Institutes of Management Bill, placed for comments in the public domain until recently, intends to bring the IIMs under an Act of Parliament. An IIM Act would enable the IIMs to confer degrees, instead of diplomas and fellowships. The leading IIMs are up in arms against the Bill. One wonders what the fuss is all about.

The framework that the Bill intends for the IIMs is more liberal than the IITs Act. For instance, the Bill intends only a Coordination Forum for the IIMs, unlike the IIT Council which has powers of policy-making and oversight. The IITs have a higher standing globally than the IIMs. Admissions, curricula and faculty recruitment at the IITs have all remained free from government interference. If the IIT Act has not cramped the IITs, why should we believe that the proposed IIM Act would erode the autonomy of IIMs?

The issue here is what the leading IIMs mean by autonomy. These IIMs have long taken the position that what they need is not just academic autonomy (which they have always had) but financial and operational autonomy. Since the early 2000s, they have enjoyed financial autonomy as well, meaning they are self-supporting. They now demand operational autonomy.

The expression ‘operational autonomy’, as used by the IIMs, is rather misleading. It’s not just the freedom to implement policies, as the expression would seem to connote. It includes the framing of policies, including those related to matters of governance. The leading IIMs have long contended that all appointments and decisions related to the institutes should be left to their boards of governors.

They would like the chairperson, board members (other than the government nominees) and the director to be all selected by the board. Faculty compensation too should be set by the board. The government should have no say on the fee structure. Defining the powers and responsibilities of the director should be left to the board. And so on. The government’s role, these IIMs believe, should be confined to setting broad objectives and ensuring that these objectives are met.

The IITs do not have these privileges. Nor were these privileges intended for the IIMs in the memorandum of association under which they are governed. In 2004, V.K. Shunglu, a former Comptroller and Auditor General, submitted a report on the finances of the IIMs. In his report, he remarks caustically, “IIM (Ahmedabad) continues to implicitly assume authority it arguably does not possess and explicitly seeks autonomy and ownership which does not emerge from the Articles of Association.” Leaving aside the legal position, how appropriate are the IIMs’ demands? The question is best answered by addressing three issues. What are the conditions, in general, for boards to be effective? How are public universities in the U.S. and elsewhere governed? What has been the track record of the leading IIMs on matters of governance?

Boards do not become effective because they are composed of wise men and women who will offer sage counsel. They are effective when they are held to account. In the corporate world, three conditions must be met for boards to be effective. There must be competition in the market, and large or dominant investors who monitor performance closely. The financial markets must be efficient. Even where these conditions are met in large measure, boards are seen to be not effective enough.



American universities

Universities in the U.S. may not be subject to the discipline of financial markets but they certainly face fierce competition. There’s very little difference amongst the top 20 universities or, for that matter, amongst the top B-schools. Rankings and research output are closely monitored by the various stakeholders. Alumni are big donors and often sit on the boards of universities. As a result, boards are under pressure to deliver. Non-performing presidents and deans are shown the door.

The IIMs lack serious competition. The pecking order amongst the IIMs themselves has hardly changed over a very long period. Board members, including the chairperson, come and go and have little stake in the institutions. IIM boards have not set performance norms for directors. Under these conditions, it’s unrealistic to expect that the boards can enforce accountability. It’s important for the dominant stakeholder and promoter, namely, the Government of India, to keep a watch. This will require monitoring of decisions, not just outcomes. It will be especially required if the IIMs come to be covered by an Act of Parliament as the government itself is accountable to Parliament.

Although American higher education is dominated by private, non-profit universities, there are also State universities of the highest quality. How are they governed? Well, California has one of the best State systems in higher education. The board of governors at California — called the Board of Regents — has 26 members, of whom seven (including the governor of the State) are ex-officio members. The governor appoints 18 members. The board appoints one student as Regent. At Texas, the nine-member board is likewise appointed by the governor. These highly regarded universities don’t bleat about any threat to their autonomy.

The functioning of the IIM boards itself has left much to be desired. In September 2008, a committee headed by R.C. Bhargava made scathing observations on IIM boards. It said, “Board agendas are filled with routine administrative approval requests…only rarely do boards discuss strategy and prepare any long-term plans.” Even today, murmurings are heard in the IIM system about the perfunctory nature of board meetings.

Shortcomings

The government has had to step in to fix serious shortcomings in governance in the IIM system. For decades, some of the IIMs had outsized boards with some 25 members. The government had to persuade the IIMs to prune their boards to a more compact number of around 15 (and even this was construed as a threat to autonomy!). IIMA has not thought it necessary to change its statutory auditors for 50 years; the IIM Bill now has a sensible provision for rotating the statutory auditor every four years.

The IIMs have not had fixed tenures for board members, something that one would regard as a basic axiom of good governance; the IIM Bill limits the terms of board members to a maximum of six years. In 2012, the five-person committee constituted by the IIMA board to select a director did not have a single academic on it; it was composed entirely of people from the corporate world. The IIM Bill wisely mandates a desirable composition of the selection committee.

There has never been any threat to the autonomy of the IIMs. It’s the attempts of successive governments to inject a modicum of accountability that have been construed as threats to autonomy. There are provisions in the IIM Bill that, perhaps, require discussion — for instance, the provision that states that all regulations made by the IIM boards require the prior approval of the government. However, the IIMs can hardly contest the basic thrust of the Bill, namely, to put in place transparent processes and clear norms for accountability in the system.

(T.T. Ram Mohan is a professor at IIM Ahmedabad.)

The IIMs have not had fixed tenures for board members, something that one would regard as a basic axiom of good governance



EMINENT PERSONALITIES

STATESMAN, JUL 06, 2015



Relevance of Mahatma

Jaydev Jana
If humanity is to progress, Gandhi is inescapable. He lived, thought, acted and was inspired by the vision of humanity evolving towards a world of peace and harmony. We may ignore him at our own risk. - Martin Luther King, Jr.
Over 67 years have passed since Mahatma Gandhi’s assassination. His body has been cremated, but not his message. His philosophy remains a possible answer to the global crises of human values, the conflict between development and environment, affluence and poverty, technology and man, violence and non-violence, freedom and repression. Gandhi sought truth and wisdom and, like Plato, cared for ‘the greatest improvement of the soul.’ Indeed, he was the voice of sanity and the brightest beacon of hope for peace-loving and tolerant individuals. From Dalai Lama to Desmond Tutu, from Martin Luther King to Nelson Mandela, many world leaders were inspired by the Mahatma.
Jean-Paul Sartre once drew a fine distinction between a gesture and an act. Commitment is the fundamental difference between a Sartrean gesture and an act. The Mahatma was aware of the deepest implications of commitment; it is only in the willingness to sacrifice that commitment is tested. That is the basic difference between the demo and the true rebel. Soon after his martyrdom, Sardar Vallabhbhai Patel said in his tribute, “I am sure Gandhiji’s supreme sacrifice will wake up the conscience of our countrymen and evoke a higher response in the heart of every Indian.’
Gandhi believed that trust in leaders is terribly important if the followers have to make sacrifices. Leadership by example, he believed, is the most powerful instrument for gaining trust. To walk the talk was extremely important. The Mahatma believed in accepting personal responsibility. We need political, religious and corporate leaders to take responsibility. Thereby, they will make other culprits accountable. Gandhi was essentially a dynamic person who went through an evolutionary process of change in his life. His policy was never static. In the half century and more of his tremendous service to India and to humanity, he handled problems in a novel manner. He would focus on the issue per se. As regards his leadership, Nehru once remarked: “He was a very difficult person to understand; sometimes his language was almost incomprehensible to an average modern Indian. But we felt that we knew him quite well enough to realise that he was a great and unique man and a glorious leader.”
Non-violence was both a creed and a way of life for Gandhi and he once pledged that he would lay down his life in defence of it. It was also the essence of his praxis. The most outstanding contribution of the Mahatma lies in his supreme achievement of transforming the principles of non-violent resistance into a successful instrument for achieving liberty, justice and peace. In the realm of violence, one man’s victory is another man’s defeat. Gandhi once said: “An eye for an eye will make the whole world blind.” But triumph achieved through non-violence is a win-win state of affairs. It is not the victory of one and defeat of the other; it is the concept of general welfare. In the words of Martin Luther King, Jr.: ‘Non-violence is a powerful and just weapon, which cuts without wounding and ennobles the man who wields it. It is a sword that heals.’
The Mahatma had a wonderful answer to the idea of religion - “All religions adhere to the fact that “his God is the Truth.” In his reckoning, “Truth is God.” His religion was Sarva-Dharma Samabhava (Equal Approach to All Religions). It is quite similar to Swami Vivekananda’s ‘Universal Religion’ or Tagore’s ‘Religion of Man’.
Politics is viewed as power politics - to achieve, regain and retain power - where morality or values have no place. It is rooted in deceit and dishonesty. But the Mahatma believed that politics has a constructive role and needs to be controlled by an ethical, spiritual and religious base. “Politics bereft of religion is a death trap.”
The rule of majority is the kernel of parliamentary democracy. However, in coalition politics, the tyranny of the majority is perverted into the tyranny of the virtual minority. A minority or even a simple caucus can impose itself on the rest. Gandhi was highly critical of parliamentary democracy and in his book, Hind Swaraj, he described the British parliament as a ‘sterile woman and a prostitute’. He advocated decisions by consensus as the main thrust of democratic functioning. This concept of consensus does not mean that there is no scope for two opinions on an issue or that people must think in an identical fashion. It only means a process for the resolution of all differences. In fact, it is the purest form of democracy. Presently it is gradually gaining acceptance in certain situations; the alternative to consensus is grave and serious. Even the Security Council has to take decisions on the basis of consensus as a single veto can undo a decision.
The utilitarian philosophers of the West enunciated the concept of ‘greatest good of the greatest number’ as the objective of state policy. However, it has failed to take a holistic view of the human race; that is to say each and every man. Gandhi propounded the theory of Sarvodaya which means ‘Universal Uplift’ or ‘Progress of All’. The concept must influence public policy in the 21st century.
The Mahatma’s model of economic development is based on the concept of decentralisation of means and resources and also on developing villages as an independent production and administrative unit. His idea of Swadeshi talks of ‘production for neighbours’ or ‘the last man’ which speaks of providing every individual with the basic necessities. He was saddened by the economic systems that kept a large number of people chained to poverty while a few enjoyed enormous financial clout. He realised that the solution to the problem was not merely economic; it was primarily moral or spiritual.

The Mahatma’s attitude towards technology is generally misunderstood. He was not against machinery as such but against mass production that throws people out of employment. His perception of machinery is still relevant. The machine can be a boon to mankind. Romain Rolland regarded his spirit as ‘the perfect manifestation of the principle of life which will lead a new humanity on to a new path.’



EMPLOYMENT

BUSINESS STANDARD, JUL 07, 2015





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