Sunday, June 26, 2011

Why girls have it good in top Bschools

1.     I would have usually posted this in my blog on my IIMA experiences, but considering that this blog is for 'unsanitized' unconventional views, I thought this will be a better fit. As always, I welcome any comments but no personal attacks please! This post covers the little reported topic about how women find it difficult(relative to males) to get admission in IIMABC(and few other top BSchools) but once in, are on top of the world.   as in admission itself-once they clear the CAT hurdle. 
1.     Bias in admission itself-once they clear the CAT hurdle. Directors openly want ‘diversity’ etc tweaking the criteria to accommodate girls. For example, the IIM-K director openly boasted about tweaking the criteria to ensure 40% girls. Even other IIMs do try to help girls indirectly-for example give weight-age to Board Exams/consistent track academic records, where girls statistically outperform males.  IIM-K for instance, boasts of 'giving preference' to girls and has 35% girls in its 2011-2013 batch. But only 84/121 girls have a CAT percentile over 90-which speaks volumes for the relaxed standards they are applying to the fairer sex. And adding insult to agony, they claim that girls get better placements. With a system rigged in your favour, why won't they?
2.     Demand-Supply equations-can balance suitors for a long time. Males(especially those freshers out of engineering hostels starved of female company for years!) gravitate to women, as moths do to a flame. Like the typical moth, they may end getting burned(losing focus etc) if not careful.  
3.     Placements-on an average, girls get better placed than someone with similar CV-solely because companies have this gender diversity mandate. An investment bank even went to the extent of releasing a 100% female shortlist at IIM-A(find out yourself who!)
4.     More PPOs on average due to better networking (whom would YOU want to talk to-a chick eyeing you admiringly or a male?). Wormen just flutter their eyelashes and play the role of a damsel in distress to perfection, men will come rushing to help. This does help during internships. While a male intern may be perceived as dense for asking a question, the same thing when done by a woman may seem gallant to answer/ help out. 
5.     Flip side does exist-they are minority, seen as 'object', slightly harder matrimonial prospects in certain communities(which do not value that education, so these girls end up doing a love marriage. Someone even labelled top Bschools as a matchmaking place for their female students, but maybe society is to blame for this, because highly educated women may need to pay more dowry or find it harder to get same community suitably qualified matches.  Can’t blame them-2yrs is a long time to know somebody well, and probably safer than the conventional arranged marriage.  Also, they are sometimes stereotyped though-like not offering certain finance roles. This does help for sales/marketing roles though.
7.     They play their own role-contact lenses, downplay their off campus bf, dress ‘appropriately’ especially on placements day-a friend of mine even speculated that part of the placement prep in girl’s hostel is on the art of ‘dressing appropriately’ to wow the recruiter. I forbear comment on this one.

Maybe, all the above can the be justified on other grounds such as ; males themselves give attention, need to encourage women in managerial positions, Indian socio economic position etc. And by no means am I implying that they are less 'competent' in any sense of the word. It is only that 'ceteris paribus'(in terms of measurable parameters like skills, qualifications, impact), women do get that extra edge.

Thursday, June 16, 2011

Professionals/Bankers limit responsibility instead of enlarging it.

Open any audit report or a banking agreement(loan/ISDA etc). They are generally one sided, protecting the professional firm(accountancy, law, actuary etc) or bank(lending, derivatives etc) from their errors, to the fullest extent allowed by law. Instead of mentioning their due diligence, the firms/banks prefer to take management representations on even the most trivial points. And to add insult to injury, even if the client has wholly relied on the pitch book/opinion, he has to legally agree that he has sought independent advice etc.

Recently in India, independent directors and auditors have been jailed; practicing accountants/company secretaries have been pulled up for casually certifying obviously incorrect company filings. But the professional response to this has been to clamor for increased legal protection by shifting the blame on full time executives. The argument runs that only the full time executives know the in-and-out of the company, so only they should be penalized in legal disputes. But then, what does the company pay audit committee sitting fees, audit fees, certification fees etc for? If one cannot discharge its duty properly, they should resign from the engagement, but if they choose to continue then they should bear the cross.

Statutory/Regulatory amendments has handed over plenty of work to professionals/bankers like
  1. CAs have benefited from the mandatory internal audit requirement imposed on firms, and also the increasing number of statutory pre certifications mandated from CAs/auditors. 
  2. CSs have gained work due to the compliance certificate requirement, yet one does not see any substantial improvement in corporate reporting practices
  3. From 2011-12, the Management accountancy profession will boom in India thanks to the voluntary cost audit. 
  4. Banks gain business due to mandatory appointment of investment banks for certain capital issues exceeding defined size, need to appoint independent M&A advisor etc.
Everyone is willing to pen their name to a self serving petition demanding XYZ regulation(which throws some bones to them via new work, increased fees etc), but when it comes to professional reform from within, there is a deafening silence. And it is this that is worrying.

Wednesday, June 15, 2011

Commerce for the uninformed is MORE profitable than commerce for the informed

In the book 'Poorly made in China', the author describes an episode where his Chinese interpreter could get brochures from the supplier's stalls, only because she pretended that the author was a 'stupid' foreigner willing to pay any amount. Indeed, suppliers dream of such customers. Couched in the financial context, such a person would be someone who banks with that institution only, does not shop around etc. For such customers, relationship managers can overprice and get away. The customer's wealth or poverty does not make a difference here, a savvy rich customer would probably be less profitable than the poor rustic. The former would demand free services, personalized treatment, lower rates etc, while the latter would be content with being served. C.K Prahlad's vision of 'Fortune at the Bottom of the Pyramid' probably did not intend ripping off the customer, but that is what happens in practice. Financially illiterate customers pay a heavy price by being sold(this is just the tip of the iceberg).
  1. Insurance as investment(endowment insurance instead of term insurance+PPF)
  2. ULIPs instead of index fund
  3. Unnecessary addons/floaters with their existing products/policies 
  4. Credit card personal loans instead of cheaper secured loans.
 When the nightsoil hits the fan, the customer(or counterparty as he;s treated) has little recourse. If he refuses to pay, the bank reports the default to CIBIl making it difficult for the person to get further credit facilities. And no one can compell the bank to hold back the negative CIBIL report even for disputed cases. Only if the person is politically well connected/forms group of affected people is justice possible, as happened in the recent cases of Standard Chartered & Citibank where HNIs who were missold certain products, pressured the banks to compensate them.  But only informed people do this. Most just grimace and bear it.

For most private banks, the notion of financial literacy means educating the customer enough to understand the benefits of purchasing their products. Banks like ICICI have now funded credit counseling centres like Disha, but on the general education front, the RBI is fighting a lone battle. And no wonder, why would a bank educate a customer that its most profitable products(endowment insurance, structured products, ULIPs etc) are probably not in his best interest.  The way forward seems to have a 'fit and proper' test for customer acceptance, but this is a Herculean task in any economy, let alone India.