The search for quality in B-schools

Legal education in the US is going through a correction. Their Law School Admission Council reports a 38 per cent fall in applications in 2013 compared with 2010, and a 20 per cent decline compared with 2011.

While reports are blaming the high tuition costs and mounting student debt, one should not forget that the demand for degrees is a derived demand. With the chances of lucrative employment as a lawyer falling, there are fewer takers.

Schools are responding in various ways. Some are digging deeper into the applicant pool, while others are cutting faculty and reducing their intake of students to maintain quality of the cohort. Still others are innovating with new programmes, more clinics and training for those in the field.

Some in the profession are wondering if the degree programme should be cut from three to two years. There are just too many lawyers in relation to the requirement and so the correction, while painful for the profession, is welcome.

Not a measure of quality

It looks like there is a kind of a correction going on in the demand for MBA programmes in India. In the absence of clear numbers, it is difficult to tell. The numbers of students taking some entrance tests are falling, while those appearing for certain other tests is rising. Additionally, some institutions have been closing due to ‘vacant seats’ which means that they are not able to admit the number of students they are allowed to, while other ‘quality’ or ‘top-tier schools’ are doing well. Since the quality of the schools closing down is not known, their closing may not necessarily mean a falling demand for the degree.

The little data there is suggests that the better quality institutions are doing quite well and growing; the panic is at the bottom end, which believed that it just needed to hang a shingle to pull the crowds. Rather than a crisis, it is a good sign that consumers of post-graduate management programmes are doing their homework before they make their decisions.

Doubtful data

Yet, the way our management education community is reacting is very different from the law schools in the US. Recently, two organisations connected with the business of business education conducted annual conclaves. One was by organisation MBA, Universe in Delhi, which announced that MBA education is going through a turbulent period and that there is a crisis, with a need for a National Education Policy. (More government meddling?!) Another conclave in Bangalore, organised by the publication Careers360, went further and felt that ‘‘to say that management education in the country is going through a crisis would be an understatement”.

Some of the alarm is created by bad research and doubtful statistics. For instance, the so-called return on investment in an MBA programme is calculated by dividing the salary received after an MBA by the fees paid, without any normalisation of the previous background of the individual.

The number of institutions closing down is quoted as an indication of the crisis, while all it represents is that the consumers are more discerning.

The fact that both conclaves had S. S. Mantha, head of the All India Council for Technical Education (AICTE) as their keynote speaker, tells you who they think can provide a solution. And there we enter another fuzzy area in the field of management education in India. While the AICTE plays a crucial role in the process of ‘approving’ professional educational institutions, that role is itself under challenge.

Role of regulator

A recent decision of the Supreme Court curtailed AICTE’s domain to only non-university affiliated institutions. AICTE chief S.S. Mantha, in his address at both events, responded to the concern about institutions shutting down by rightly pointing out that AICTE is a regulator and cannot play the role of a market.

Institutions are set up by private bodies, which must do their analysis and decide how they want to run it, and if they cannot attract enough students, so be it. It was interesting to hear him lecture about free market and competition to an audience that teaches the subjects in its classes!

Of course, even institutions performing well have a lot to say about how restrictive and bureaucratic AICTE is, but that is not the point.

Apart from too many institutions trying to regulate education, it is also not clear what each one is responsible for. Most are looking only at input measures (infrastructure facilities, number of faculty, and so on) and are not concerned about outcome (quality of the education).

We need a regulator that will ensure that an institution it certifies matches up to its (the institution’s) claims. Especially when there is no perfect flow of information, the regulator assures minimum standards and helps the market by giving information to the consumers. Even in a free market, you need, say, a drug approval authority. However, the regulator does not tell a pharmaceutical company how many tablets it can produce.

Much of the confusion about the role of an educational regulator like the AICTE comes from the confusion between two different roles that need to be performed — that of ensuring minimum standards and signalling quality. The latter role can only be performed by an independent accrediting agency. When an institution meets the accreditor’s standards, that is an independent indication of quality and the government does not need to be in this process.

(The author is a professor and dean of the Jindal Global Business School.)

COMMENT NOW