Monday, January 25, 2010

Ranking Magic

ISB is ahead of Said, Kellogg, Yale and several others in the Financial Times' Global Business School Rankings 2010. ISB has moved up from 20th rank in 2008 to 15th in 2009 and 12th in 2010.

No mean achievement for sure and I am proud of this achievement by my alma mater. It is for sure going to swing the masses in ISB's favour in the coming years. Nevertheless, do rankings really matter? What is the sanctity of these rankings? And now the bigger question of does ISB really deserve a 12th rank? Globally? Well, I am sure many of friends are going to hate me for even pondering over this question. But the doubting Thomas that I am, made me go through the fine text in the ranking.. Some of the things which I did not understand or things that had a bulb glowing over my head were..

1. Its strange that ISB does not have an Audit Year mentioned in the ranking. FT's website defines "Audit Year" as the year in which KPMG obtained evidence applying specified audit precedures relating to selected survey data. Does having the "Audit Year" as "Nil" mean that an audit was never conducted in ISB? Incidentally only 3 out of the top 100 schools have this problem of not having an Audit Year.

2. The weighted average salary for the 2006 Alums today is US$ 141,291 which is approximately Rs. 66 lakhs. Well, it does sound huge, but what does it really include? Is it comparable with the figures quoted for other B-Schools? I remember, ISB's average salary figure for my batch (2008) and the 2-3 years prior to that were in the range of Rs. 15-19 lakhs. Assuming that the batch of 2006 had an average salary of Rs. 17 lakhs at the time of passout, their salaries must have grown at a CAGR of 40% over the last four years to reach this magical figure of Rs. 66 lakhs. Hmmmm... Did we have the worst financial crisis in this period??


3. Another interesting number.. The salary percentage increase is quoted as 166%. This is defined as the percentage increase in average alumni salary from before the MBA to today as a percentage of the pre-MBA salary. Let us back calculate. A 166% increase would mean that the average pre-MBA salary of the 2006 alumni would be about Rs. 40 lakhs (assuming that their present salary is Rs. 66 lakhs). At least 95% of ISB applicants are Indians. Doesn't a Rs. 40 lakh pre-MBA salary for an undergrad, ring a bell in your head?

I rest my case your honour.. This post is definitely not to demean ISB or its worth. I had the best of my times at ISB and have a really high regard for the school. But I do not understand this ranking business.

Sincere advice to the few who still do read my blogs.. Don't be swayed by external rankings. Do your own research and be convinced.

7 comments:

Anonymous said...

i think u did nt give attention to the word - weighted -
they must of have chosen a different rupee/dollar based std of living etc..not the market value of 48/-

Anonymous said...

Yup. The dollar figures are adjusted for PPP. They are not to be converted.

itheabsolute said...

Have to agree with you Ranga. Even assuming it is adjusted for PPP, the numbers don't sit together.

Say, at PPP, USD is INR 20. we are talking about average salary of INR 30 lac and pre-MBA salary of around INR 18 lac. How?

Looks like you are having good time in between jobs.

Cheers

Balaji said...

What happens if few, let's say about 30 ISB grads chose to work without pay for a year or so - (not that it will lead them to penury when I look at the 66lakh figure!). Does the ratings automatically slip?

Satish Bhat said...

Superb analysis as always Zeno.Perhaps they have valued the intangible worth of being an alum and addded it to the final figure:)

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Unknown said...

Ranga, interesting stuff.. 1) I think adjusted for WB issued PPP the numbers will fit in 2) 166% salary increase is incoming salary vs outgoing (when u leave ISB, so gotta leave the growth post ISB)... but either ways, i think rankings mean nothing... i wld be very hesitant to rate ISB above any of the top 20-30 global schools..