Now that the first round results of almost all the b-schools are out, we get regular queries about which b-schools to join. There is rarely any confusion about A, B, and C but after that, it seems as if aspirants are having a lot of trouble choosing between the IIMs L, I and K and other top b-schools such as FMS, XLRI, MDI, and others. How does one go about making the right choice between the IIMs and other top schools? One of the terms thrown around a lot these days is ROI.
How you should really calculate ROI
A few years back, an aspirant I was speaking to after an ISB info session said
- Sir, these days even IIM-A does not offer a great ROI, the average salary and fee are close to each other.
A lot of aspirants tend to use ROI to evaluate colleges. They tend to use ROI in conjunction with batch size to decide which college to join where ROI is simply taken to be the Average Salary/Cost of Education.
Well, once you do an MBA you will realize that more than an ROI, the better tool to use will be a Cost-Benefit Analysis since you are not investing in a purely financial instrument or land or gold.
Whenever one does a cost-benefit analysis one has to consider not just the tangible but also the intangible costs as well as benefits.
The intangible benefits or the benefits to which you cannot put a number are the ones that most aspirants on the verge of joining an MBA program, those who are doing their MBA and those who have just graduated are unaware of. This post will deal with all of these intangibles that might help aspirants to make a decision.
The three letters I-I-M carry more weight than you can imagine
Firstly, no aspirant should forget that the second most prestigious & valuable prefix that an institution in this country can carry is IIM. When most aspirants start preparing for the CAT, they do not tell themselves that they want to crack XL or MDI or FMS, it is always the IIMs that are on most people minds.
The same holds true for the rest of the business management fraternity — the word IIM carries a lot more weight than you can imagine. People evaluating you at your workplace are more likely to pull down an IIM grad at the slightest hesitation saying “How can this person be from an IIM” than they are to say “How can this person be from MDI or XL” (I overheard this as recently as last Sunday at a cafe).
The IIM-tag predisposes people to think positively about you
When you introduce yourself as an IIM graduate, people’s perception of your ability becomes vastly exaggerated. People will tend to treat you as being good unless you yourself prove them wrong. Whereas those from other brands are viewed neutrally and they have to prove themselves. It goes without saying the same applies when people look at your resume.
And if you are from say L, I and K and become a great professional, people might tend to think that you are from A, B or C; they might even assume you are from an IIT as well!
An MBA is about a lot more than your first job
The problem with the ROI method is that it places unduly high importance on the short-term result — the first job you get out of campus. Don’t you think that is barely any return! Good investments yield returns over a longer time period and a good MBA is also supposed to do the same.
You might not get your dream job even at IIM-A
On-campus recruitments are very unlike recruitments off-campus and this difference is key to understanding the long-term value of an MBA.
During placements on campus, recruiters are constantly comparing you with a huge list of other candidates they have at their disposal. For recruiters it is like a buffet with many awesome things to choose from but with one constraint — time and competing recruiters!
So what do companies do? They start using various filters to ensure that they look at fewer people and somehow get the people they want before their competitors get them. What are the filters that get applied? They vary from company to company but to name a few
- the brand of the college you graduated from (everybody wants to get into McKinsey but they can’t possibly interview everyone, so they use the college brand as a filter)
- leadership positions held (so guys with big leadership roles on campus get filtered in over may be people with a better CGPA) etc
So intense is the competition among companies that this year one prominent consulting firm at IIM-A was even willing to forego the final interview round if the people who they shortlisted so far were still not picked up by others. Imagine, they were scared that by the time they finish their process, they will no have candidates left!
Compare this with an off-campus process. Firstly, it is not a 3-day affair, so companies are not in any hurry to shortlist and interview people as fast as possible. So you will end up getting a fairer shot and enough time to make a good case for your candidature.
Companies do not need people only at the time of campus placements. In fact, most fresh MBA graduates quit their first jobs within a year! There is a constant need for people all year round and they scour various portals and recruitment agencies to get resumes.
So you do not need to worry about the campus placements being final summit or crowning point to reach. In fact, it is just the beginning of the climb.
What the MBA gives you is a platform to reach the top over the course of your career.
It’s your peer network that will get you jobs in the long run
Campus placements last only a few days but your peer network, network of immediate seniors and alumni network will be the ones that will be getting you jobs over a longer period.
When you graduate from an IIM, you graduate with access to a network of people working in the best companies in the country. You will not come to know of openings through Naukri or other portals but from your peers since firms hire a lot through referrals.
Also, you get access to platforms such as IIM Jobs through which candidates and recruiters find each other. A student who just graduated from IIM-A told me that after graduating this March he was approached by three companies via IIM Jobs.
Can you place a monetary value to the opportunities that this network will open up for you?
If you want to start your own firm, the tag is invaluable to attract investors
Investors are always taking bets on people as much as they are on ideas. Even before you pitch your ideas, investors will be aware of all the hot ideas and opportunities that are present in the market. So, in essence, they are only evaluating the capability of the team and one of the things that goes a long way in boosting your credentials is the IIM-tag.
So keeping all of this mind how should you make your choices?
IIMs – L, I & K versus FMS, XLRI, S.P.Jain, MDI
Technically I would always place the old IIMs above all other schools purely for the reasons mentioned above.
The only exception can be FMS, for the almost non-existent fees! How does one break this deadlock? Choose FMS over the others if
- If you have already done your graduation from an IIT and/or
- If you are sure you want to explore entrepreneurship options immediately after your MBA
What is the rationale behind this?
Firstly, If you have not studied at a premier national-level college, whilst staying on campus in the hostel, an education at FMS or S.P.Jain will be incomplete in terms of the experience.
You will do an MBA only once and the experience of studying in an awesome campus (in contrast to FMS, S.P.Jain, and NMIMS) dedicated primarily to the program you are doing (in contrast to MBAs at IITs) is something that you will cherish for life. You are not going to really enjoy life again (maybe for a few years after you graduate) 🙂
If you have already experienced the same during your graduation then you can go ahead and choose FMS, else the IIMs.
Secondly, if you want to start working on your own venture straight out of college then an education loan will always be an albatross around your neck, making FMS best option.
A slightly more nuanced take can be this particular order(with the caveats mentioned about FMS) — L, FMS, XL, IIM-I, IIM-K, and the rest.
There is a case for choosing SPJIMR-Ops over IIM-I and IIM-K if you are really keen on getting the full range of core operations jobs to choose from, the IIMs might not offer you such a vast selection since they do not admit based on specialization.
Choose other colleges over new IIMs
When it comes to the choice between new IIMs and other schools, choose other top schools over them since you will get the benefit of the degree only over a very long-term, when they are no longer considered new.
Also, everything else right from campus, to college culture and placements will just be beginning to take root and hence leave you quite a bit on the backfoot in the short-term. There is also be no network of peers of seniors through whom you get access to jobs.
You are not investing in a college you are also investing in yourself
Most view the expenditure on an MBA from the what-am-I-getting-for-what-I-am-paying lens, making it the college’s responsibility to deliver. Well, unfortunately, the college owes you nothing.
The college deems you suitable for a career in management and has offered you a seat giving you access to
- the learning that they can offer and
- the best firms in the country
You are investing this money to acquire this education and this network to maximize your potential and your career opportunities.
Most of the time what you study during the course will barely be used in the first few years of your life as an MBA. It will only start making sense when you come into big decision-making roles later in life (even those subjects which you will find most useless on campus).
You are not learning subjects that will help you do your first job better. You are learning and developing the skills to lead a company later.
So it makes a lot of sense to view things not from an immediate placement perspective but from the perspective of maximising your chances of leading the best firms or starting a successful firm of your own.
A few years back this post elicited a lot of aggressive responses.
People accused me of favouritism in placing L over XL since the former is my alma mater. People have pointed out the average salary at XL being higher than the one at L, and so and so forth.
Firstly, I live by Groucho Marx’s dictum — I refuse to join any club that will have me as a member. So, there is no special attachment that I have to IIM-L or any other institution. Wherever I have studied, it has always been a few teachers, the architecture and the library, that I have had an attachment to or fondness for rather than the school or college as a whole. It goes without saying that the moment I meet any person from IIM-L, I do not get particularly excited since that particular individual should be someone with whom I will get along (one has conversations with a person not a tag).
Secondly, yes, the average salary at XL is higher than that at L, but the fees at L is lower. Higher average salary does not mean that every student at XL will get a salary more than every student at L. Also, the average is a function of the denominator. If you take the salaries of the top 180 students at both colleges, I am sure the comparison will look different. Now if you feel that you will end up in the bottom 120, then it is a different matter altogether.
Thirdly, I am not sure if the everyone in the cream (the ones who score 99.5 and above on the CAT) of the test-taking population takes the XAT. IITians would always like to add a few more Is to their resumes instead of other alphabets. I myself eased off when taking the XAT since I was sure that I had aced the CAT. Also, XAT is verbal heavy than LR-DI or QA heavy, so the CAT ends up filtering out a different set of toppers. So as a batch goes, I feel the kind of peer group you are likely to find at the top at L might be different from the kind you will find at XL.
To validate my arguments we need to slice and dice a lot of data that only the b-schools can give us and they couldn’t care less. So readers can take “my take” with a pinch of salt and ignore it, instead of launching into tirades.
I am sure XL can be argued to be a better choice solely on the basis of its sporting rivalry with IIM-C and the events surrounding this rivalry. After a point, it always boils down to the premises that you use to reach your conclusion, with a different set of premises or criteria you can arrive at a different conclusion.
Another major accusation that a commenter hurled was that people like me perpetuate the Sharma Ji ka beta and elite college ke peeche bhaagne wala syndrome. Well, relying on labeling people en masse seems to be a major national malaise that starts at the top. It is any day easier to label and discredit rather than having to tease out the rationale.
Did I ever make a statement saying if you have to do an MBA, do it only from the IIMs? Nope. In fact last year, I convinced a student to take up NMIMS and not waste yet another year running after an IIM without a job in hand. In most of my replies to queries on this blog, I always ask students to take not just the CAT but XAT, IIFT, NMAT and SNAP. So the commenter was attacking an argument that I did not make!
All I am saying is that if you have the luxury of choosing between the old IIMs and other schools, my personal vote would be for the old IIMs, and you are welcome to crumple it and throw it in the dustbin.
The reason I am making these things clear is that I do not want to go through the drudgery of defending a personal opinion in the comments section. As Oscar Wilde said, there are two kinds of people, charming and tedious, one of my other dictums in life to avoid the latter variety as much as possible.
I hope this article goes some way in helping aspirants view things from a different perspective and resolve the queries in their mind.