Unless there is a complete segregation of ownership and management, one should not expect the professional managers play their due role


June 20 - 26, 2005



The overall development of any country, among other factors, is directly dependent on the quality of its human resource. Economic development is critically related to the level of informed decision making, which cannot be achieved without producing professionals in all the related disciplines. Pakistan had never been able to invest in the basic or higher education due to financial constraints. It is heartening to note that the present government is trying to compensate for the past inadequacies. However, the objective could not be achieved without taking a detailed account of the prevailing realties, counting strengths and weaknesses and coming up with a proactive approach.

It is necessary to reiterate the fact that information is the most crucial aspect of today's world and the objective of improving the quality of the life of masses is highly dependent on utilization this information. Masses cannot have access to the information unless knowing exactly what is required. Then comes managing the available information and utilizing it to achieve the desired objective of improving the quality of life.

Before going in further details that till a decade back the government used to fix supporting price of cotton. However, it was often fixed much below than the international prices . After prolonged debate and resistance the government decided to allow the market forces to determine domestic prices of cotton. The fact is that now even a small grower first goes to an Internet cafe and asks the operator to help him in finding international prices of cotton and then visit the ginning factories to sell his stock. This practice has helped in achieving stability in cotton prices as well enabling the farmers to negotiate better price for their produce.

At the onset it is important to point out that despite achieving independence in 1947, the policy makers have not been able to come up with curriculum to suit the country's needs. The worst fact being that they even cannot estimate the number of professionals (doctors, engineers and business managers) the country needs every year. This is evident from oversupply in certain disciplines and acute shortage of qualified personnel in other fields. Since it is not possible to review the all over education system in the country, efforts have been made to review the system responsible for preparing business managers.

According to some analysts two factors impeding the growth of Pakistan's economy are lack of entrepreneurial skills and professional management. The country produces hundreds of Bachelors and Masters who only add to the lot of unemployed. The poor grooming of ordinary graduates and rising demand for managers and executives has forced the business community to employee MBAs. The MBAs may find an immediate opening after graduation but very shortly realize that they are no better than a dignified clerk.

The general complaint is that the business schools operating in Pakistan produce professional managers, who can work efficiently and effectively in multinational companies and local blue chip corporate sector. However, no attention is being paid to groom entrepreneurs. The critics say, "unless the professional business managers are taught entrepreneurial skills their vision remains myopic. Most of the graduates become good executives with the passage of time but often lack entrepreneurial skills, the much needed trait for achieving higher growth and diversification of business."

The demand for professional managers is growing at a very fast pace. There are two reasons for this growth: 1) government's effort to separate ownership from management and 2) the growing realization in the private sector that the owners know very little about the emerging technologies and have to hire professionals. A very positive development is that the owners send their children to business schools to attain new skills, be it information technology or specialized skills for managing highly capital-intensive industrial units.

Realizing the growing gap between demand and supply of professional managers the government allowed establishment of 'Business Schools' in the private sector. The establishment of these schools in such a large number provided an opportunity to a large number of students to get admissions and also get a degree. However, the disparity in quality of graduates started emerging very shortly. This could only be attributed to two key factors: 1) acute shortage of quality teaching staff and 2) following a curriculum that does not meet the requirement of trade and industry. The owners/promoters of these schools may have minted tons of money but the biggest losers were the graduates from these schools. This forced the government to intervene and the situation started improving. It is also evident that while some of these schools have managed to create a niche market for their graduates others are still struggling.

The performance of business schools can be gauged on two parameters: 1) the salary offered to its fresh graduates and 2) the respect they enjoy in the corporate sector. While most of the schools follow similar, if not identical, curriculum, some also offer specialized or tailor-made programs. By doing so, they have succeeded in creating a niche market, which seems to be proliferating with the passage of time. It is also believed that the prospective employers have played a key role in the development of course outline and also by arranging appropriate instructors.



It is believed that the quality of graduates is not a key factor for ensuring timely employment for the outgoing graduates. The good institutions follow multi-tier strategy, which include closer interaction with the prospective employers, internship programs, arrangements of seminars and conferences on contemporary issues and above all a very proactive 'Placement Office'. Some of them also have leading businessmen on their Board of Governors. To further cement the relationship with the prospective employers they also invite guest speakers from the corporate sector. The regular interaction of students with the prospective employers bears fruit. The graduates from such schools are often picked up by the employers even before they get the formal degree. The interaction with business community also helps in further improving the curriculum to suit the needs of corporate sector.

The interaction of students, faculty and management of these schools with employers also helps in making necessary changes in the curriculum and teaching methodology. The first business school, Institute of Business Administration, was established in Pakistan in fifties through grant and support of USAID. Therefore, its curriculum was also picked up from the leading American universities. It is noticed that some of the newer institutes have committed the mistake of adopting decades old curriculum. As against this the enterprising institutions followed the same architecture but introduced disciplines which meet the contemporary demand.

Reportedly there has often been conflicts among the Saiths, the older breed of managers and the young professional managers. According to a senior professional manager, "This is not extraordinary or new. I faced the same attitude when I started my career. Somehow the other owners do not wish to share their powers with their employees, be it a proprietorship or a public limited company. It is another thing that at times the owner has to depend on the skills of an employee. It has been always at the back of their minds that decision making is their sole prerogative. The positive change is that with the involvement of younger generation the level of resistance has come down. However, involvement in day-to-day management still continues. Unless there is complete segregation of ownership and management, one should not expect the professional managers play their due role."

It may be of some interest to reproduce a quote from one of previous cover stories on the business schools. An old Saith had said, "I have built the empire by working hard and also being 'miser', as they call me. My only regret is that the younger generation does not realize that how difficult it is to earn a paisa. Since it is not their (professional managers') money they pay less attention to potential losses resulting from their adventurism. Some of them disagree with the older generation only to prove that they understand business dynamics better. It may be true I am not fully conversant with computers and Internet but I do have better knowledge of my own business."

According to some analysts, "The confrontation comes due to lack of interaction between the business schools and the business community. The common complaint is that business community of Pakistan does fully support the business schools. It may not be a fact but certainly an overwhelming perception. It is felt that business community employs graduates from these schools but are reluctant to help in the development of curriculum as well as offering scholarships to the outstanding students."

The business schools are said to be charging very high fees from the students. The prevailing situation creates problems for poor but enterprising students. Such students cannot afford to join these schools only because they do not have the resources. This creates discrimination between haves and haves not. However, another view is, "Globally higher education is also expensive and Pakistanis have no reason to complain." However, they tend to forget the reality which is, higher education is expensive but scholarships, based on merit, are also available in abundance. This offers an opportunity to haves not to work harder and avail the opportunity.

A very important constituent of business schools is the faculty and no one should try to undermine its importance. It is also important to understand its composition, which is typically classified as full time and part time. However, people often fail to distinguish between 'visiting faculty' and 'part timer faculty'. With the opening of a large number of business schools an acute shortage of qualified and experienced faculty has became a serious issue. As a makeshift arrangement a number of schools lured MBAs working for the corporates to deliver lectures. However, it is not realized that working for a MNC or a blue chip company and imparting education are two different ballgames. The problem with hiring corporate employees as faculty members is that they come for a limited time and their interaction with students is minimal. The other issue is that they demand a teaching/grading assistant, as they are often not willing to grade the scripts. Lately, some of the business schools have realized the importance of permanent faculty and raised its emoluments, which now seems comparable with the remuneration being paid by the corporate sector. This is helping in attracting quality faculty.

While some of the business schools have succeeded in establishing their credentials and niche market, others are still struggling. The government has granted charter for the establishment of a large number of business schools. With the transfer of education to private sector, their monitoring has become all the more important. It is also necessary for the students and parents to find the credentials of a school before making the decision.

For quite some time there has been an effort going on to introduce self regulatory environment, which has not yielded results. Now it has become imperative that the government takes the lead and enforce a regulatory system. This may irritate those who do not wish to follow good governance. However, in the larger interest of nation and to recognize good players, introduction of accreditation system is a must.