IIM-L first to link research to compensation

Written by Kirtika Suneja | New Delhi | Updated: Nov 23 2011, 06:56am hrs
The Indian Institute of Management, Lucknow (IIM-L), is set to switch to a compensation system intended to boost research, becoming the first IIM to do so. The institute took the in-principle decision to alter its pay structure once the government clearances are in, even as two IIMs which have got the green light are yet to make the switch.

In the new system, faculty compensation will have fixed and variable components. Beyond fixed salary and emoluments, faculty members will be rewarded for excellence in research. By breaking the salary into fixed and variable components where the latter will be performance based the institute aims to incentivise research, an area where IIMs score poorly in global rankings. IIMs can alter pay structures only after the HRD ministry amends the memoranda of association.

IIMs at Ahmedabad and Indore have decided to stick to the current structure though the ministry has amended their MoAs. IIM-Calutta is yet to submit a proposal while the ministry is yet to make the change for IIM-Lucknow and IIM-Bangalore.

We plan to evolve a performance management system where academic contribution will be rewarded. This will be achieved by a healthy mix of fixed and variable salary components. We will make a composite index of performance and benchmark it as there is a constant issue that the compensation is not enough, said Devi Singh, director, IIM Lucknow.

The variable component will equalise salaries of faculty who do external consultancy and those who don't. The performance-based variable part will be over and above the fixed salary.

The variable component may be brought in by the end of this financial year. This will motivate the faculty as it will be based on their quality of work and be completely task-based, Singh added.

We are amending the MoA and once that happens, the board will be competent to take such decisions. They will have the autonomy of adding variable components to their salaries, said an HRD ministry official.

A review committee set up by the government under RC Bhargava, chairman, Maruti Suzuki had suggested that remuneration of all IIM staff be determined by the board, taking into account market conditions so as to attract and retain high quality talent, ability to pay, and the need to provide motivation for performance.

At the same time, all IIMs should have some degree of uniformity in remuneration packages and adjustments made for local conditions. Research work should be given due weight in determining performance-based compensation and making promotions and this is accessed through an outside peer review system so that quality of research and academic work can be objectively evaluated, the report noted.