The growing demand

Aug 16 - 22, 2004

In today's world the sovereignty of only those countries can be assured that have strong economies. Economic development and prosperity cannot be achieved without prudent management of available limited resources. Therefore, every country needs entrepreneurs as well as professional business managers for the best utilization of these resources. With the efforts to separate ownership from management of public limited companies in Pakistan, demand for professional managers is growing at unprecedented rate.

The growing demand is evident from the fact that over the last ten years the number of institutions imparting education in business management has increased tremendously but supply still fall short of demand. Some of the critics say that there is an over supply but speaking realistically there is still an acute shortage of 'quality' professional managers. Employers prefer to hire graduates from a few business schools. It may be another thing that they may hire graduates from other schools but the difference in remuneration substantiates the difference in quality.

According to a critic the difference in remuneration is based on perception rather than reality. However, he was of the view, "The best of the students prefer to get admission in institutions, which enjoy good reputation. Therefore, the ultimate result has to be the difference in the quality. However, it is also a fact that the perceived second and third tier institutions are producing graduates, which are, in no way, inferior to graduates from the perceived best institutions. Saying this I will not hesitate for a second that all the institutions have to work harder to produce world-class graduates".

Another critic is of the view that the business schools in Pakistan are busy in producing professional managers but the country needs entrepreneurs. He says, "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 growth and diversification of business."

A large number of graduates from business schools have a common complaint, "Most of us are inducted at lower management level and are assigned jobs, which can be done by any ordinary graduate. We have to do what we are told to do. If some one dares to make a few suggestions, he/she is not liked for being too smart. It seems that those executives, who do not have professional qualification, consider the business school graduates a potential threat."

However, a manager by profession says, "It was very unfortunate that we have been living in 'Saith' culture for decades. Another irony was that owners have been also managing the business. Therefore, there was no concept of following the written down policies and most of the time decisions were dependent on the whims of Saith. However, an encouraging sign is that the younger breed of Saiths, who have also graduated from business schools are not only hiring the professional managers but also delegating them decision-making powers. Another contributing factor has been the decision of government to separate ownership from management. The younger generation must realize that the 'bad habits' do not change overnight."

According to an old Saith, "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, 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 trade."

According to academia the major reason causing frustration or friction among the employers and employees particularly professional managers is the curriculum being followed by most of the business schools. The textbooks and case studies used at local business schools are from an alien culture and students are hardly exposed to ground realities. It is very unfortunate that the first business school, Institute of Business Administration (IBA), was established as back as in mid fifties in Pakistan. Since it was established from funding by the USAID, its curriculum was entirely based on American books and case studies. It may be true that a lot of effort has been made by the IBA to redefine the curriculum but a lot more remains to be done.

It has also been noted that most of the business schools that have been established lately are committing the same mistake. Some of them are either following the old IBA curriculum or the American curriculum. However, these business schools have a different point of view. They say, "The basic principals of business administration are the same and there is no harm in following the American textbooks. Along with imparting textbook knowledge we are also exposing the students to Pakistani environment through research and internship. The real issue has been that the government has been not only issuing charters but also not monitoring the performance of business schools."

A lot has been written and talked about the mushroom growth of business schools in Pakistan. If one picks up the Sunday edition of any newspaper it is filled with advertisements of all types of business schools. Some of them making tall claims of being Pakistan Chapter of foreign universities. Whereas the fact is that the premises of these institutes often comprise of couple of rooms or classrooms and are located in a couple of shop in some commercial area. The blame for the proliferation of such institutes can only go to the government. The blame should also go to students and particularly to their parents as they hardly make any efforts to find out the credentials of the business school before seeking admission. It only dawns once the student graduates and has to hear that the degree is from an institute that is not duly recognized by the government.

Another emerging trend is that these business schools are established in posh localities with airconditioned classrooms and other facilities but are often devoid of credible faculty. Taking the advantage of their location these institutes are able to charge fabulous fees. Some of them also make tall claims of having numerous visiting professors. They say that these visiting professors have a blend of knowledge and practical experience and are better than permanent faculty members. But it is also a fact that some of these instructors are teaching at a number of institutes. Therefore, they could not give enough time to either of the institute where they are teaching.

Saying this, it is also important to give due credit to those business schools, which emerge distinguished. These have purpose-built infrastructure, strong and dedicated full time faculty as well a long list of visiting professors. Some of them have been working constantly to redefine the curriculum and support it with local case studies. They also organize seminars and workshops for the students by inviting creditworthy speakers. They also have linkages with foreign universities and strong placement offices. The placement office has two major responsibilities: arranging internship for students at blue chip companies and job interviews. The close interaction with business community not only helps in prompt placement of graduates but also adding new courses to meet the demand.

It is often felt that the trade and industry in Pakistan does not fully support the business schools, there are certain exceptions. These schools, particularly being managed by the private sector, often complain that in the absence of financial support they are forced to charge higher fees from the students. However, the general perception is that sponsors of some of the business schools are minting money and/or providing education to elites only. As against this, the fees of public sector universities is low but the quality of infrastructure as well as faculty is also low. Therefore, students from middle and lower income groups usually take admission there.

Trade and industry is the biggest beneficiary of business schools. Therefore, it must also discharge its duty as responsible corporate citizen. The objective of bringing the cost down for students can be achieved in two ways: donating a small percentage of annual profit towards endowment fund for the institutions and awarding scholarships. Along with this private sector banks should also extend soft term loans to needy students. Let every one accept the fact that the Government of Pakistan cannot allocate huge funds for higher education and private sector has to share the burden. In the past, government was collecting Iqra Surcharge on imports but no one knows how much money was collected and how much was really invested in education.

Another suggestion is that both private and public sector universities should organize annual fund raising campaigns. Having read some of the earlier paragraphs one may reject the proposal but the situation can never be improved without actively involving the general public. Since the proposal is for mobilizing funds, publishing annual accounts should also be made mandatory for these institutions to ensure transparency in the operations of these institutions. Complaining that educational institutions are fleecing the students and parents cannot resolve the problems. Only concrete steps to stop siphoning of money can ensure that sponsors are using the funds prudently.

Another observation is that some of the private universities were granted charter with the understanding that they would not operate with one or two faculties only and new faculties would be added in due course. Whereas the fact is that a number of these universities are working at the best with most two Faculty of Management Sciences and Faculty of Computer Sciences. It seems that since the number of students seeking admission in these two faculties is the highest, the universities are least interested in adding new faculties.

According to the management of a private university, "The situation prevails only because most of the students are desirous in getting admission either in Management Sciences or Computer Sciences. Prior to 9/11 the largest percentage of students was seeking admission in Computer Sciences as they considered it a key for job openings in the developed countries. However, after the 9/11 and subsequent events the number of students seeking admission in Management Sciences is again on the rise.

At one stage most of the youngsters believed that Information Technology (IT) was the key to success. Even at that time some of the experts were saying that IT was a tool only and potential was limited, but no one was ready to listen. The perception was also that if any one gets formal education in IT he/she could immediately become an exporter of software. Alas! The dreams were shattered with the destruction of Trade Tower. After recovering from the shock people have started in the direction utilization of IT in core industries. With this realization the concept of 'Call Centres' has also come to Pakistan. In a nutshell, the IT related jobs are growing but this time the emphasis has shifted from software export to networking, data storage and transmission, web-based marketing and communication. The job market is growing mostly in those areas where the companies enjoy considerable strength.

Two other disciplines, which have recently become preferred selection, are Certified Financial Analyst (CFA) and Chartered Accountant (CA). Some of the students are also studying Cost and Management Accounting. There is a perception that CAs are better managers as compared to MBAs. The supporters of MBA say, "The management is not confined to accounting or finance. A business house has to deal with a number of other activities and MBA seem to have greater exposure." Whereas the supporters of CA say that the survival and progress of any business is entirely dependent on prudent financial management.

A recent trend is hiring of people with degrees in two disciplines, Engineering and Business Administration, MBA and CFA. The employers of first combination are large industries and the employers of second combination are financial institutions and brokerage houses. The job market of Chartered Accounts and Cost of Management Accountants is also growing due to introduction of International Accounting Standards in Pakistan and cost optimisation philosophy followed by the companies. Thanks to the ongoing process of globalisation, companies are redefining production processes for achieving higher production and productivity. To remain competitive in the global markets costs are being monitored and optimised by following the concept of cost centres.

The single largest purpose of education is to prepare people to face the challenges, do the thing in a matter manner and, above all, prepare better human beings rather than money minting devices. It is interesting to note that Business Ethics and Corporate Governance have also become part of syllabus at business schools. Once upon a time, the sole objective of a company used to be profit maximization. Thanks to the social pressures and realization of the fact that a corporate also has to behave likes a responsible citizen.


The present government has promised to spend larger amount of education, healthcare and development of infrastructure. In education it is following the two-pronged strategy: spending larger amount on education and focusing higher education. Unless academic qualification of teachers is enhanced and contemporary curriculum are introduced improving the educational standard will remain a far cry.

Realizing its limitations the government has also awarded charters to a number of universities. Experts believe that establishment of more and universities cannot help in resolving the problem. The government should curb the money making motive and create self-regulatory environment.

It is also necessary to reiterate that independent and autonomous accreditation agencies should also be established in the country to monitor and oversee the operations of private universities. These entities are already operating in the developed countries. The minimum standard laid down by these agencies are stated at their websites. At the best some one has to download these standards and rewrite these for Pakistan.

After 9/11, studying at American and European universities has become very difficult. Some of Pakistani business schools have the potential to become preferred choice for studies for Pakistani as well as the students from other countries of the region. It is understood that efforts are made to highlight the strengths but efforts should also be made to overcome the weakness to make Pakistani Business schools the world-class entities.

Last but not the least, the faculty of any business school plays very important role. Ideally the faculty should be a combination of permanent members and visiting scholars. The root cause of non-availability of qualified and experienced faculty has been the poor emolument being paid. The issue has been resolved to some extent but a lot more remains to be done.