Interview

“Contractors can’t be good managers”

How are the business schools facing the challenge that the recent researches, such as the one by Prof. Jeffery Pfefer et al, have posed with their conclusion that the business schools do not actually teach anything that is needed in the real life business?

These types of criticisms have been always there.  Still the business houses have been demanding MBAs. They would not have paid for the MBA graduates if there had been no benefit in employing MBAs. What you may find is that when employing an MBA graduate, the company wants immediate outcome, and it is quite possible that some MBA graduates may not be able to deliver the results immediately. Then there may be some frustrations in the company. But it is not that they are not able to deliver it. Secondly, such cases of MBA not being able to deliver are isolated. Had that been the case throughout the world, then the demand for such MBA graduates would have gone down.

KUSOM has so far sent nearly 240 MBA graduates in the market. How has been the feedback ?

Earlier, organizations were picking up all sorts of people and they were not so particular about MBAs. Our MBA graduates have changed the market. They showed their worthiness wherever they worked. Thus the organizations realized the value of MBAs and they are now demanding MBAs. So, I would say, KUSOM has created the market for MBA graduates in Nepal.

Could you give some examples of how the reaction of the market was after the first group of KUSOM graduates were in the market and how KUSOM had to adapt itself on the basis of those reactions?

When an organization goes on demanding more and more of our students, it shows that our students have performed to the expectation of the employer. There are many such companies which have been recruiting our students continuously for three years now. We constantly keep track of the market. In 1997-98, all of a sudden the demand for students with specialization in marketing increased while the demand for students with specialization in finance was not as high as expected. Whenever a corporate house needed someone in finance department, they used to look for Chartered Accountants, not an MBA with specialization in finance. One thing it indicated was that the organization did not have the idea as to what exactly it needed in the finance manager. What we found, not surprisingly perhaps, was that they thought finance means accounting. Then we changed our strategy and started taking students for our finance course from the corporate houses themselves – particularly from banks and finance companies. We offered courses also on subjects like financial institution management, international finance etc. which are relevant to the bank and financial institutions.  Now you will find that KUSOM graduates are employed in all the banks except a few.

It is said that the majority of MBAs from KUSOM are not working in Nepal. Also the job-hopping rate is said to be very high among them. How do you interpret these phenomena?

Your first statement is not true. KUSOM graduates are not going out of the country, they are working here. Recently some students have gone out, and that’s a recent phenomena and I think that has something to do with the current overall condition of the country. So it is not specific to KUSOM MBAs. And about what you call job-hopping, let me make it clear that our students are quite ambitious. So after joining an organization if they find that it is quite suitable for their career growth and they think they will get from the organization what they want in terms of career advancement, they stick to that particular organization. Otherwise, they move out. In fact, to some extent, the organizations themselves are responsible for the job-hopping among the MBAs. If you can’t create a conducive environment where the ambitious graduates can work, naturally you will not be able to retain such people in your organisation.

Or is it because the business environment itself is not mature enough in Nepal to accommodate the MBAs?

To look at it I categorize the companies into three groups: In the first group are the MNCs. They demand enough MBAs. In the second category are domestic companies which are to some extent, I should say, professionalized and are referred to as the corporate sector. In the third category are those domestic companies which are just coming up, and most of the professional things, such as personnel management, you don’t find there. They are highly family controlled and everything is done through the relatives, kith and kins.  Our students do not want to work in the third category organizations. Even if they get into them, they try to come out as quickly as possible. In MNCs it is very challenging, and our students who have joined MNCs have been working there. They are not job-hopping. There is a competition among the second group of companies. For example, our students prefer to work in banks, just because most of the banks are professionalized. There is not much family control. Then there also are some companies which are trying to professionalize the management, though still only in words. These companies talk a lot about autonomy and blah blah, but the attitude of the promoter is still traditional. So if we send students in such companies, they get frustrated soon. In many of these companies they have not really determined the hierarchy levels. That means there is very little chance for career growth. For example, when a company in this category hires our students, they are hired generally at the second level. Soon, within a year or six months they get promoted to the first level. Then they find that there is no opportunity for them to move further up. So after one or two years, they decide to look to some other companies.

How has been the experience with the Executive MBA course that KUSOM started offering a couple of years back?

It has been quite encouraging. And we are taking about 20-22 students. Now we have just taken the third batch, and it is really a matter of satisfaction to me that this batch is still better. Most of the students are much experienced.

Your expectation was to get in this program the CEOs and business owners who employ MBAs. Are you getting those types of students or you had to change the target group?

Most of those who joined this course are from the middle level management. Though we also have some CEOs from the smaller companies, we have found that the top level people don’t have time to continue this two years course. Moreover, while the middle level managers see that MBA degree may help them to move upward along the career path, that motivation is not there for the CEO or the owner.

Did you have to change the initial curriculum to adjust to these market realities?

No, in fact we foresaw this right before we started getting enrolments. From the profile of the people enquiring us about the course while we were designing the course, we found that most of them were from middle level management. That’s the reason why we have included specialization courses also in the EMBA program. Most of the other business schools don’t have this in their EMBA.

What are you thinking now in terms of enhancing the level of awareness about modern management discipline among the non-MBA CEOs of the country?

When I say that most of the students in EMBA program are from middle management level, I do not mean that there are nobody from the top management.  Still I wish the CEOs were there in larger numbers. But that wish is not going to be fulfilled. So to enhance the awareness among the CEOs about the modern management, we are thinking in line of offering short courses, for example, of two weeks or one month, on specific fields of management, targeting specifically to the CEOs.

You said very few CEOs are there in EMBA program because of problems like lack of time. But some non-MBA CEOs also say that the theories that they teach in the management schools are mere theories without much practical value.

Being an academician when I hear people saying that the theories are not practical, I really don’t understand what they are talking about. Let me make it clear that all the theories are developed out of some practical experience. Theories are not taken out of the blue and put in the text book. They are developed out of empirical evidences collected and analysed scientifically. What may be the case is that as most of the theories taught in the business schools are developed on the basis of data collected in the United States or other developed economies, if you try to use these theories in Nepal in exactly the same way as it is used in the USA, you may face some problems. To address that problem, what we try, as they do in other world-renowned business schools, in to use local case studies. However, though the details of the cases are specific to the country or the organization and the social culture in which the case arises, the framework to address the problems is more or less the same in any business organization whether in an advanced economy or in an emerging economy.

One shortcoming most frequently cited by the MBA students about KUSOM is the insufficient availability of Nepali cases. What are you doing to address this problem?

Some cases, such as those about Economic Order Quantity, need not be localized. The problem and solution do not differ from one locality to the other. But in Strategic Management, Business Policy, Business Environment, Marketing etc. we need local cases. And we have developed many such local cases over the last one decade. We want to develop more cases, but that has been a challenge to us.

How?

The business organizations are not ready to share the information. The cases must be real-life cases, so as to serve the purpose of being used in a business school.  When the companies are not ready to share the information, it is impossible to develop useful cases. Whatever cases we have are developed using the personal relationship with the company people and the reports that our students submit under different assignments. And another equally important source for our cases is your magazine New Business Age (Nubiz).

With your experience so far about the management practices in Nepal, how do you explain the fact that many CEOs in Nepal with MBAs have failed in delivering the goods?

How can you say that many MBAs have failed? Where is the data? It seems what you claim is only a hearsay.

For example, in the public enterprises.

But most of the public enterprises do not have MBAs as the CEOs. Barring one or two exceptions, they have bureaucrats as CEOs. Whenever a public enterprise got an MBA as the CEO, the performance of the enterprise has also improved. What is also true is that sometimes the MBAs become methodical. They do not take decision unless they have all the information in their hands. That is being impractical. Management is about getting the results. Methods are useless if they unnecessarily delay the decision. I have seen many so-called management experts making all sorts of commonplace recommendations which in fact do nothing to help the managers. Depending upon such consultants is one example of methodical management, which I also like to term as “consultant’s approach to management”.

How do you comment on the privatization effort of the government?

It is not being carried out as a long-term strategy. There seems to be confusion about the objective of privatization. One objective of privatization should be encouragement to competition. But competition is not growing even after privatization. Ironically, we have let the business houses to form cartels and monopolies. The country’s jute industry is now concentrated in the hands of a single business house after the privatization of two jute factories. Privatization is not an end in itself; it should be taken as a means to some other ends such as improvement in competition. It should create consumers’ welfare; it should increase productivity. Privatization is not just selling couple of public enterprises to the private sector. Nobody knows what has happened to some of the enterprises after privatization. It seems they are eating up the capital. The proceeds of the privatization are being used up in paying off the employees of the same enterprise.  The government should have invested the money in other productive sectors like health and education. Or it should have kept the enterprises with itself.

But the enterprises do not run properly if in the government hands.

That is not always so. The public enterprises were running in profit in the past, but in the recent years they have failed. The reason is that in these 12 years the leadership of these enterprises was given to the workers of political parties, not to the professional managers. Contractors cannot be good managers. Failure of public enterprises should not be taken to mean the failure of public enterprise management. A recent report in India shows that the top three companies there are public enterprises. They have added value over the last five years. A recent survey by KUSOM in Nepal covering some 900 samples shows that in terms of consumer satisfaction from the investment by the government, telephone and electricity take the first two positions. The people are least satisfied with government investment in security and then in social benefits. This means, the public enterprises can generate higher consumer satisfaction. However privatized the businesses are, you cannot eliminate the public sector. So, you must not let the public sector to decay like this.

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