Monday, March 20, 2006

The Salary Game!

Hi,

Well I have been quite distressed by the way the entire way media has been publicizing and sensationalizing the entry level salaries of MBAs.

It almost seems like a marketing war in order to create more pull for the tier II and III colleges - surely there are never enough seats for getting into the IIM etc.

Let me illustrate - they recently quoted that someone has got a salary of USD 200,000 approx. However, they always fail to mention what all they actually include in this. Firstly, always in such situations, the offer includes variable pay - which in I-Banking may be around 40-60% of the offer at the least(100%+ of the CTC). So lets say out of the 200,000 - 80,000 is variable pay. Out of the rest 120,000, there will be components such as Signing bonus, Relocation Expense, Travel Expense, etc. These probably amount to around 30-40K - meaning that the balance left as CTC is USD 80K. This sometimes also includes other perks that the employee may get. So effectively, the in-hand salary of the person is around USD 60-75K - considering the standard of living in the US/UK - this is barely enough to cover all expenses and have a small savings pool.

The offer doesn't seem lucrative after all!!

Well the marketing gimmik is great - however, the flip side of this is it creates mass dissent amongst all executives who have already completed their MBAs (me being one of them!!). If the media starts quoting these figures every day for a month - human psychology forgets the components and starts focusing on the bigger number (who wouldn't want a fatter paycheck). This not only creates demotivation, it makes me ponder whether we were fools to have done an MBA and have worked for 7 years and not earning 1/5th the salary of these entry level studs!

A thought to ponder - what is media actually doing these days - is it selling concepts to consumers or is it responsible for providing truth and information. If it is in the art of selling and not news, will electronic medium such as blogging take over this advertising medium.

Cheers

Piyush

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