Education for Rural Management: Challenges and Possibilities (II)

By V Santhakumar

So far, we have discussed organisations that provide private goods and enhance the incomes of people. However, human life needs public goods or those services for which intrinsic motivation is significant, for example, school education or childcare. There is a need for organisations that provide these goods and services, and there is a set of professionals to manage these. Whether Education for Rural Management (ERM) is suitable for this purpose or not, is an important area of exploration.

ERM for public organisations

Public goods are provided mainly by the government through public-sector organisations. Will ERM be suitable for creating managers for these organisations? There have been efforts to create managers of public sector organisations through the institutes of management.¹ However, there are fundamental challenges in this regard.

Managers of for-profit companies may get a higher monetary compensation due to the fact that it is easy to measure their contribution to the profit of the organisation, and the incentives of `owners’ of such organisations to compensate those who contribute to the profit. On the other hand, the contribution of public sector organisations may be intangible, long-term, to society as a whole and there are no explicit owners who have the incentive to reward well-performing managers. The lack of a `residual claimant’ makes the incentives of public sector organisations complex.²

This is known to society, and hence, it may come out with a transparent and standard compensation to public sector officials without connecting it with the actual performance of specific individuals. Hence, a certain difference in the compensation between private managers and public-sector managers is inevitable (for people who have, by and large, similar proficiencies). This may make the operationalisation of training of public sector officials as part of normal institutes of management somewhat problematic. (Skills needed to be public sector officials need not be the same as those to be private sector managers. However, providing additional skills to public sector managers by management institutes may not be very difficult.)

There is one more issue with regard to public-sector managers. The recruitment of managers by a private company is not considered problematic due to the presumption that the owners have the incentive to recruit efficient managers, and the cost of any mistake in this regard would be borne by the former. There could be only a minimal negative externality in this regard. However, this is not so in the case of public sector managers. Those people who recruit such managers may not have the incentive to recruit efficient ones, as the former is not bearing the cost of their incorrect actions. This is also known and is the reason for rule-based recruitments which should be open to all those who have the required basic qualifications.

Moreover, the need for open recruitments and the practice of affirmative action may work against campus recruitment Even those who acquire training to be public sector managers from reputed (management) institutes may have to go through standard recruitment examinations where they compete with students from different institutes/universities. This is another factor that may reduce the interest of students in getting trained to be public sector managers, and for the side-lining of such training programs in reputed management institutes.

These problems may persist even if an institute which is focussing on ERM starts a program for training public sector managers. Those who opt for such (pre-service) training programs may not get government jobs. They may not get well-paying jobs in the private sector. This may reduce the demand for such courses or may attract less competent students. However, such institutes may be in a position to offer in-service training to government officers and this possibility is discussed in the end.

ERM for not-for-profit/non-governmental organisations

Not-for-profit and NGOs provide public goods or services, such as healthcare, school education, and childcare, which require intrinsic motivation. What about training the professionals of these organisations as part of ERM? Some of these professionals also require managerial skills (marketing, product management, financial and human resource management, etc.). The output of NGO professionals, as mentioned, may be intangible, uncertain, long-term and for the wider society which may have an impact on their monetary compensation. Moreover, their salaries are not as assured like those of government officials or public sector managers. Non-governmental organisations in India face a lot of uncertainty in terms of continuous funding, which too can have a negative impact on the material compensation of their employees and consequently, the attractiveness of the job, if it is seen as just another job.

Hence, such jobs are more suitable for self-motivated individuals who would derive satisfaction from a combination of material compensation and non-material rewards (like the joy in helping others, doing the right thing or extrinsic recognition that they may get in society).³ There could be challenges in combining the training for such people with that for other management professionals who may be expecting a higher material compensation. Hence, ERM can be seen as a potential space for the training of NGO professionals if the other students who use it are also similarly inclined.

The demand for such organisations may go up in future. This could be due to the concerns regarding corporate capitalism.⁴  Though conventional trade unionism has declined, there would be newer pressures on corporate enterprises from concerned activists.⁵ Activism in corporate affairs is catching up. The attitude of a major section of employees may have changed (or will change) in countries which have attained a reasonable quality of life for their people. They may not be willing to work just for money, and organisations/workspaces may have to evolve to accommodate their needs. Environmental conservation and social justice could become important concerns in capital investments in future. Firms may not be able to make money by neglecting these concerns. There would be greater social monitoring and control over unethical means of making money. There would be greater social pressure to restrain the amassment of wealth and to share the resources with the needy. All these may increase the demand for and the efforts towards the creation of organisations controlled by small producers, workers, and customers, and also those providing goods and services which require a focus on non-monetary incentives for employees.

The signalling role of education

The conventional idea is that people seek education to enhance their knowledge and skills. Though this could be true to a great extent, the other role of education is also recognised, and it has negative implications for ERM. That is the screening and signalling role of education.⁶ There is information asymmetry in labour markets. Employers find it difficult to assess whether a candidate for a specific job position would be doing hard work or not. This cannot be assessed even if an interview or recruitment test is conducted. Hence, they may look for screening and signalling devices. Education is such a signalling device. Degrees or diplomas received from reputed universities would become more valuable in the labour market because of their signalling role.

The demand for education in reputed institutes creates inherent competition in the education process. Such a competition is based on certain tangible or measurable indicators, which may enhance the importance of measurable indicators, such as the salary of graduates who pass out from these and may lead to the neglect of the intangible aspects of education (like social purpose).⁷ A hierarchy of educational institutes develops through this process, and some may acquire a higher reputation than the others.

A study on the impact of ranking of universities makes the following observations: `Evidence suggests rankings are propelling a growing gap between elite and mass higher education with greater institutional stratification and research concentration. Higher Education Institutes which do not meet the criteria or do not have “brand recognition” will effectively be de-valued.’⁸

There would be a higher demand among students and hence, a higher level of competition to get admission in the few highly reputed universities. This requires grading of students, again, based on certain measurable indicators. Even if the grades in schools and colleges are based on comprehensive measures, these would be overshadowed by the performance in qualifying examinations for admissions. Those who do well according to the narrower indicators would get admission in highly reputed institutes/universities and others may be absorbed in those ranked lower. All these contribute to the homogenisation and standardisation of education. There would be very little space for experimentation and diversity in such an education enterprise.

What are the implications of this phenomenon on ERM? The institutes offering programs in rural management may be seen as somewhat inferior to those which offer normal management degrees aimed at private/corporate companies. This could be due to multiple reasons. The learning in the latter may lead to abstract universal insights, and hence, the research carried out in such institutes may be publishable in international peer-reviewed journals. On the other hand, the learning in/for ERM may have to be based on context-specific materials, and these may not be easily amenable to transformation to universal insights publishable on international platforms. The students who pass out of ERM may receive lower salaries due to the factors mentioned earlier, and that can also affect the ranking of institutes which offer such programs.  This can also encourage competition among students. There could be a competition on a homogenous set of indicators to get into management education. (This is not hypothetical since IRMA has decided to take students on the basis of the Common Admissions Test which is in use for admissions to the Indian Institutes of Management). Those students who may not get admission in top-ranking management programs may opt for ERM.

Students may match their aspirations or interests in different education programs based on their prior achievements in education. However, this process may not be adequate to create a set of graduates who are deeply interested and capable in rural management. On the other hand, those who are managing rural or alternative organisations (like worker-owned companies) may not go through the ERM. There have to be other strategies to improve their professional capacities.

On the selection of appropriate candidates for ERM

The discussions in the previous sections demonstrate two points: First, ERM need not be aimed at the creation of rural managers per se; it can be directed at jobs in different types of organisations like those owned by small producers, workers and consumers, and public sector and NGOs. Secondly, the signalling role of universities would make the targeting of ERM among students difficult. It may end up receiving those students who may not get admission in general management institutes (which produce managers for for-profit companies, and those who look for careers in rural operations of such private/corporate companies).

There may be two theoretical possibilities to get out of this impasse. The first is to provide training to those who are intrinsically motivated to work in not-for-profit organisations. The challenges in this regard for ERM are discussed below.

Looking for intrinsically motivated students

It is generally noted that the role of intrinsic motivation is higher in not-for-profit organisations (Alatrista, J. & Arrowsmith, J., 2004). Though employees in all organisations – for-profit and not-for-profit – look for certain non-monetary ways of gratification, the importance of these could be much higher in the latter type of organisations. As noted by Drucker (1990) employees `need achievement, the satisfaction of service or they may become alienated and even hostile. After all, what’s the point of working in a non-profit institution if one doesn’t make a clear contribution?’. However, there are challenges in this regard. For example, even those who join with high intrinsic motivation may lose it over time. They may look for satisfaction in a higher level of autonomy (having the freedom to select what they want to do from a wider set of tasks), and whether not-for-profit organisations can provide enough opportunities for such people is unclear.

The factors mentioned in previous sections may lead to a situation where the monetary compensation of people working in an NPO may be less than that for occupations which require comparable qualifications in the private sector. This could be the case even when the base compensation is the same or comparable because there may not be any substantial increase in the monetary reward in an NPO based on the assessment of performance, as in the case of a private company where the firm’s performance in terms of profit can be measured.

A lower compensation may facilitate the self-selection of employees by which those with intrinsic motivation and public sector orientation may decide to join a not-for-profit organisation (Leete, 1999, Coomen et.al., 2011, Bacchiega & Borzaga, 2003). However, this lower compensation may also encourage people who are somewhat `lazy’ or not very competent to be part of these organisations.

Hence, the real challenge in ERM is to identify students who are likely to be intrinsically motivated to work in not-for-profit organisations. This may require clearer signals in the public domain. Thus, the culture of the institute which is recognised externally may enable certain self-selection of students. Certain strategies like the discouragement of placement by certain companies can be useful for this signalling purpose (in addition to the intrinsic usefulness of such strategies). However, a perfect targeting of students who are intrinsically motivated to be in NPOs may be difficult to operationalise.

Targeting those who are working in NPOs

The other strategy to enhance the effectiveness of ERM is to target those who are already working in NPOs (including companies owned by small producers, workers, and consumers) as leaders and managers. By doing so, one can reduce the uncertainty regarding the jobs that the products of ERM would take up in future. There are people who work in NPOs either due to their intrinsic motivation, or for social recognition, or because they could get these employment opportunities due to their proficiencies. Whatever is their background, an improvement in their capability is good for these NPOs, and hence, institutes which focus on ERM can target these employees. Some of them can be trained through full-time programs.

However, there is a need for more in-service training for those who manage rural or alternative organisations. These people may have gone through different kinds of education. In certain cases, people with very limited education are also in a leadership/managerial position in such organisations because of their experience, political activism and so on.⁹ Training these people can be an important objective of ERM. However, this may require a higher level of preparedness on the part of academics who are part of ERM. There may be a need for the development of appropriate learning materials in regional/local languages for this purpose.¹⁰

Challenges and possibilities for IRMA

Some of the implications of the trajectory of ERM for institutes such as IRMA are summarised here:

1. A focus on rural areas is not sustainable. This may lead to the production of managers for the rural operations of for-profit private/corporate companies.
2. There is a need to highlight the additional skills and capabilities which are required for managing organisations owned by workers, small producers or consumers. There is a need to make explicit efforts to include the attainment of these proficiencies as part of the curricular goals of ERM.
3. The field practice component of education programs enables students to get exposure to real-world challenges in development and the work of organisations in rural India. However, the extent to which this exposure gets integrated with the classroom curriculum and pedagogy is unclear.
4. The signalling role of universities may make the selection of appropriate candidates to institutes like IRMA difficult. It may be seen as just another management institute (by a notable section of students) and they may get matched with IRMA depending on its position in the hierarchy of conventional management institutes of the country.
5. There may be a need to attract students who are intrinsically motivated to work in rural and alternative organisations. However, there are a number of challenges in this regard. The communication of signals that differentiate IRMA from other management institutes continues to be important (if it wants to retain its difference).
6. The other useful contribution by an institute like IRMA is to scale up in-service training for managers and leaders of rural and alternative organisations. Such a focus may reduce the wastage of resources associated with the diversion of talent trained by it towards private/corporate companies. However, this may require a higher level of preparedness on the part of the faculty and development-appropriate learning materials in local languages.
7. This may also require a close connection between institute faculty and rural/alternative organisations, which would need to go beyond the conventional consulting framework. Institutes, such as IRMA, may have to encourage their faculty to interact closely with these organisations for the purpose of developing appropriate learning materials.

Conclusion

This essay looked at the challenges and possibilities of ERM in the current socio-economic context and future. It is somewhat obvious that the `rural’ part per se could be a transient phenomenon. Moreover, it may not be a really differentiating feature since certain challenges of rural enterprises can be seen even among those organisations which work with other social groups, like the urban poor. On the other hand, if rural is the main feature, then ERM can be used for educating managers for the rural operations of for-profit private/corporate companies. Of course, the traditional focus of institutes, like IRMA, was not merely on rural management but also on organisations owned by small producers, like dairy farmers. Here, alternative ownership is the key differentiating feature. It is possible to think about alternative ownership structures of this kind, such as worker- or consumer-owned companies and to visualise ERM as a space for creating managers for these alternative organisations. It is also possible to think of ERM as education for creating professionals in the public sector or NGOs.

However, there are challenges in this regard. Theoretically, organisations owned by small producers, workers or customers cannot be those which maximise profits, and this may have an implication for the monetary compensation of their managers. In addition, such organisations may require skills to address collective action or coordination problems. These may indicate the managers of such organisations require a higher level of proficiency but may get a lower monetary compensation compared to the managers of for-profit companies. This may warrant attracting those who are motivated intrinsically to work in such organisations. Otherwise, ERM will attract those who cannot get admission to comparable institutes that offer a general management degree.

The paper argues for the use of differentiating signals to attract students who are intrinsically motivated to work in the space of ERM and/or to focus on training those who are already working as managers or leaders in alternative organisations. The latter goal may require a higher level of preparedness by the ERM faculty and the preparation of appropriate learning materials (possibly in local languages).

Part I of this article.

Author
V Santhakumar, Professor, Azim Premji University, Bangalore

References

Alatrista, J. & Arrowsmith, J. (2004). Managing employee commitment in the not‐for‐profit sector. Personnel Review, Vol. 33 Issue: 5, pp.536-548, https://doi.org/10.1108/00483480410550143

Bacchiega, A., & Borzaga, C. (2003). The economics of the third sector: Toward a more comprehensive approach. In H. K. Anheier & A. Ben-Ner (Eds.). The study of the nonprofit enterprise: Theories and approaches (pp. 27-48). Dordrecht, The Netherlands: Kluwer Academic/Plenum

De Coomen, R. et al (2011). A Cross Comparison of Motivation-Related Concepts in For-Profit and Not-For-Profit Service Organisations. Nonprofit and Voluntary Sector Quarterly, 40(2) 296-317 https://doi.org/10.1177/0899764009342897

Drucker, F. P. (1990). Managing the Non-Profit Organisation: Practice and Principles. New York: Harper Collins

Leete, L. (2000). Wage Equity and Employee Motivation in Nonprofit and For-Profit Organisations. Journal of Economic Behavior & Organisation, Vol. 43 (4). Available at SSRN: https://ssrn.com/abstract=251444

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Stiglitz, J. (2000) Economics of Public Sector, New York: W. W. Norton Company

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