What is "Salary"?

What is “The Salary?”

Who should read: Anyone who is worried about it?

 Very recently I read a post on professional social media by an HR Executive stating she had offered a salary of INR 35,000/- to a deserving candidate when his demand was of INR 27,000/. Further executive wrote- “Company should understand that if you pay your employees up to their expectations, they will deliver results beyond employer expectations”

This triggered me sharing my experience on 'Salary'...... because this is a subject with various adjectives associated with it like dearest, critical, personal, unexpected, over rated, under rated, below dignity and what not.....

The peak time for ‘Gossips’ – Annual increment

No wonder if you have already  come across the typical reactions after every annual increment such as "company has given peanuts to me", "I deserve much more", "My appraisal was good, no negative remark then Why single digit increment", "my performance is much better than my colleague but he got 7% and I got 10% .... only 3% difference for such a hard work", "everyone gets almost the same then why to take extra efforts”, "company does not care about old employees and give more salary to new recruit" AND very rarely if you get the expected or more than expected increment then 'I deserve it and hence I got it", "Company has made huge profits on us and hence we deserve it".

If I was right in expressing your feeling as it is then you might wonder how? Answer is simple .... I was employee for the first 15 years of my career and Employer for last 6 years. Even though I was a Star rated employee (this feedback I got during exit interview from HR manager little late though) I realized 'How average employee' I was when I started my own company and what better could have been done if someone had told me "what is Salary?"

Is Salary my “Market Value?”

Most of us do think that 'Salary is my market value'. If so then you are 'a commodity' because there is nothing called ‘marked Value’ There is a ‘Market Price’ and the price of a commodity is based on 'Demand and Supply'. Thus, salary is based on 'Demand and Supply' . That is why people are ready to settle down for low salaries during COVID, particularly if one has lost their job. (This is a real paradox , when an employee resigns it is for his/her better prospects and when company asks employee to leave it is always a bad management, Strange isn’t it?). But in reality no company likes to 'Fire' even its average rated employee. Back to the point, when there is a Demand in the market you get many calls from HR agencies or companies and we think “Is this my value in the market?” Is it "Value" or "Price”?.

Once my Manager and a lifetime mentor said in an office meeting "If you want to check your real value then go in the market and check when the market is down! It means when there are no jobs in the market. If still any company pays you high (assuming that company also does not have enough projects in hand) and ready to invest in you then that is your ‘real Value.’

Most importantly you are never introduced by your Salary, example ‘Meet Mr. Joshi having 15 Lac CTC’, an expected one is ‘Meet Mr. Joshi, his knowledge and skills in Marketing are unbeatable”. So why to worry only about the aspect which we hide?

What is ‘Salary?’

Still the question remains “what is 'Salary'? It is nothing but 'a reason' to 'be with the company'. The salary is not for how many hours you are working but it is for you representing the company directly or indirectly in front of the client or in the market.  I remember I would check my salary slip only once a year after the annual increment just to check whatever agreed salary has been paid or not. But rest of the year I hardly paid attention to my salary slips. And this practice has been followed by many ‘passionate employees’ and I observed most of them did well in their Career. On the other hand many used to fight for hours for an overtime payment of half an hour.

In fact, I remember when our company was in Financial crisis and employees were being laid off, we offered to reduce our salary. This is what I mean that the ‘Salary’ should be a reason to be with the company and then you should get your own vision mission aligned with the company’s one. Don’t you think even the greatest actor needs ‘A stage’ to show his excellence in acting. That ‘Stage’ is ‘the company’. Both need each other.

Then Why Salary has always been an issue? Few Facts are

? ‘an employee’ gets 'A Fixed Assured Salary' irrespective of if company makes profit or not, Whereas the company gets paid only after completing the project or achieving a particular or threshold sale. And the Sale is Uncertain. This gap between ‘Certain’ and ‘Uncertain’ makes the issue critical.

? The way Employee looks for ‘a better paying company’; the company also looks for ‘better employee in less salary’. But once company understands ‘The Value’ of a particular employee and if that Employee assures to be with the company then company can reward the employee. These discussions are essential during Appraisal meetings.

The obvious question is, 'Why should I worry about the company?' It is their risk and if they cannot afford me then why they have recruited me? I have many other options in the market.” So let’s understand ‘What is company?’

What is a ‘Company?’

"A commercial business' and / or 'the fact or condition of being with another or others, especially in a way that provides friendship and enjoyment' (source: internet search).

It all depends 'what you think about the company' and 'what company thinks about you'. And most of the time this communication or rather understanding is missing. A Great company cannot be formed without a Great team. The company is nothing but a group of people (now called as ‘Management’) like you who were thinking ' from employee view point' few years back and now have become the decision makers like 'Employer'. One Fine day you will also become one of them... that is why perhaps most of the senior managers still cannot think like an entrepreneur. An Entrepreneur does not always mean the person who starts his own business but also the one who ‘Explores own potential considering the company as a platform’.

Let’s take an example of Mr. Sundar Pichai, Mr. Satya Nadella and many such! They were all employees once but are now the business leaders leading the company. A simple question, Does Cristiano Ronaldo earn the most because he is the best football player or he plays the best football because he is paid the highest? That is why I disagree with the very first statement made by HR executive.

The company is taking risk at every moment trusting their employees. So, if you do not take care of the company how would one expect the company to take care of you?

How to increase ‘Your Value’ and ‘Not Price’?

Ask few questions to yourself....

1. Am I learning from the company or I am teaching something to it? Meaning “was I a 'readymade product' or 'I was groomed by the company" If the answer is ....'I am learning' then it is not yet time for earning. Have some patience.

2. If I resign today, will company stop me at 'any cost' or 'little negotiation' or 'let me go'. Unless former statement is an answer, you have not 'achieved' the 'Value yet'

3. Do I have any special skills which others do not have or have I added any 'Value' to the company?

Then why other companies are paying me high? The way you and me are at different stages of career, similarly the companies are also at different stages of their own career path. Some are new with great potential to explore, some are settled for many years, some have strategy ‘hire and fire’. There could be many other reasons too. Such as company gets a 'ready to use product and need not spend on training', 'has a new project and needs man power urgently', 'earning revenue in foreign exchange and hence you are paid better due to the currency ratio of your country must be high'. We must think… are they paying me ‘Price’ or ‘Value’. The Price is short term relation and Value is long term, if not forever.

I am not trying to underestimate you and your skills and your desire to earn money. Yes, you could be one of the finest employees as well. I am just trying to put forth the facts in front of you.

Then What Salary should I demand?

You should not ‘demand’ …. You should ‘deserve’.

My personal experience says, you need to have 'Long Term vision' because many times 'You over estimate what you can do in next one year and you under estimate what you can do in ten years.' The salaries are going to reach to their 'threshold level' one fine day and when the company finds the Salary vs Revenue generated is not balancing or 'we can keep 3 employees instead of this one' the company waits for its opportunity to say you 'Good bye'. On the other hand, I have seen many cases where valued employees get rewarded by 'company shares', 'head of the department position even though they may not have formal qualification for it', ' becoming CEO's'. At the end, a company wants 'Responsible' employee rather than a Manager, a 'trust worthy' employee rather than a highly qualified MBA.

Plan your career for the first 20 years.

a.     Give minimum first five years to the company with minimum expectations. Choose a company where you have a 'Good Manager' or 'Great learning opportunities' than a 'Brand name'. 'Know what you do not know' means go through the CVs / profiles of your managers and make a list what you should Aquire.I literally mean Acquire means not just knowing it but know 'Why behind it'. So that you can understand their graph.

b.     Start taking more responsibilities. Do not compare your salary with others. It will always be painful.... the tweens also have different fate. Compare only with yourself.

c.     If you are 'Saturated' means 'nothing new to learn' then think of changing the Company. Never change a company for 15-20% salary growth.

d.     The next five years shall be invested still in learning and little bit in ‘Recognition’ by writing research papers, participating in competitions, representing the company in forum, taking some advance courses etc. This makes your base firm. Try to make yourself ‘A Brand’ and Brand means Trust.

e.     After 10 years take a 'Big Jump in Salary' and after 15years Take a jump for the 'responsibility or position' never think I will learn managerial skills when company will make me manager ... it is exactly the opposite. First you need to work as a manager then you will get the post ...the deserving one.

f.      Give the most attention to the most ignored part of Appraisal i.e. KPI (Key Performance Index) wherein you should make monthly note of new learnings, your achievements, your efficiency etc.

g.     Stay away from ‘Negative’ and or ‘Money Minded’ colleagues.

h.     Salary shall be the ‘Bi-product’ of your creativity or contribution in the company and your colleagues, especially juniors. You should have a team which is ready to work for you and not for your company salary. This adds a ‘Great Value’ in your career.

The numbers I put above 5-10-15-20 can alter a bit. But it would not be advisable not to change companies too frequent. I am sure you will get rewarded as per 'your Value' which would be much higher than 'your price' and this is what 'Salary' is for me.

I acknowledge Mrs. Prachee Mahambare, Director of iprofex, for her help in editing this blog.

Disclaimer : All views are my personal views and one can always differ from it.