Tuesday, August 12, 2008
Market competitive pay definitely is working right now but as the saying goes “all good things come to an end” so will this strategy die down. I believe there is a lot of demand for people with the right amount of expertise and experience but the point is to what extent will the companies go to attract such talent. At one point this has to stop. I see a lot of youngsters jumping jobs only to get minimal hikes. The increase in salary is the point of attraction for them. On an average I notice that people with 6 to 7 years experience have jumped 8 to 9 companies in a row, which is less than a year’s experience. How much will an employee learn during a period of one year or lesser is a question that can be debated on. And should the companies encourage such activities is for them to decide. Are they actually getting the talent that they hope to get? Many times its just eyewash and by the time the companies realize this, it is too late. But I firmly believe it’s the people who are looking for stability and a good job profile that will finally survive.
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2 comments:
I am not sure to what extent market competitiveness is an eye wash. Given the extreme market competition in mos t of the sectors today, a pay that equivalent to the market is imperative: to attract and to retain . The only exception to my mind is a company that can attract employees on the basis of the culture it or its brand value.
Pay should not be viewed only in the strict sense of monetary compensation. Instead pay should be seen as an aggregation of 3 dimensions: a) Work impact and b) personal satisfaction and c) monetary compensation (obviously). Firms always try to maximize (not only competitive) this aggregate pay. The first two factors often reason out for the lower monetary compenation across various professions. Lets consider an example for each. Work impact - It is easier for companies to attract good talent with lower monetary compensation, if the job has potential to create huge impact. Agree? Example: Several of us would rather go for a job that has the potential to create a significant impact on society e.g., NGOs, consulting jobs etc. I heard a story of a consultant, who had recently completed a project with Bill and Melinda Gates foundation. According to him, the fact that he was able to mobilize one of the world's biggest charities to an appropriate channel for reaching the poorest in the emerging economies, compesated for more than 10 times its marginal lower salary compared to an investment banking job. Second case of personal satisfaction is much easier to relate to. Personal satisfaction has several components. One of the big ones is work-life balance. To make it more real. Oil refinining companies pay almost 3X to plain engineering gradutates as compared to average salaries to IIM pass outs. A major factor fo this being that the personnel have to stay in deep sea stations away from mainland for months.
Hence when we talk about market competive pay, we should look at all these factors together. A company would be able to offer a competitive pay only when it maximizes the sum total of these 3 aspects of compensation.
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