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IS YOUR SALARY RIGHT?
By Vivek Risal
A few days back, one of my colleagues left to join a commercial bank. Amidst the congratulations and best wishes for the new appointment, the conversation led us to the revelation that the commercial bank was offering her a comparatively higher salary and benefits. Upon hearing the figure, most of us were left wondering whether the current salary was right for us given the industry that we worked in. While different industries have different salary structure, a common conversation among employees is whether the given salary is right or not. While we dwell on the subject, an interesting observation is also how the Human Resource Department sets the salary for a company and likewise defines the industry average.
The Department of Human Resource has a tricky matter on hand while setting the right salaries. If the pay is too little, it will be tough to attract the right talent. If the pay is too much, you are not maximising the workforce rupee. Finding the middle road can be an arduous challenge. Hence, here are four key areas to examine to get to the right number.
Different set of skills is required for each position. Different skills have different preparation i.e. degree, certifications, experience. All these come with different price tags. However, investing in people to imbibe specific skills or another attribute can enhance the organisation’s abilities and offer a return on investment. For example, investing in a new employee with a professional certification or an experienced salesperson will allow you to offer additional services which may be the required impetus for growth of your organisation. The technical aspect of the position also drives the salary scale. What are your skill sets?
It is imperative to oversee where the most critical roles lie as you structure your staff. Who are the people whose departure would be problematic? It is the realisation of this scenario which will offer the highest pay to that corresponding person. While all employees are deemed valuable, there are specific individuals whose absence is dreaded the most. In short, it is the realisation for the concerned authorities to pay these individuals well since paying inadequately will lead to these individuals seeking jobs elsewhere. Are you one of them?
The economic model of demand and supply also applies in the labour market and thereby the valuation of each position. If the economy of the nation is undergoing a prosperous phase, the organisation may have to pay more to attract talent. However, when the supply is tight, then you may have a greater talent pool from which to pick without paying a premium. Simple indications from different sources can have telling suggestions. For example, as your organisation releases a vacancy advertisement, the number of resumes received can be telling. In hindsight, the listings are more ample when there are more jobs. Hence, are you working in an organisation where limited or abundant work force is available?
In an economy, there are numerous industries which form an integral part of it. Some industries are mostly known as higher paying than others and typically affect the overall pay scales. If your industry is prosperous, then employers are required to compensate your loyalty with additional pay just to attract you further. In our nation, the banking industry seems to be the most sought after industry. Graduates fresh out of MBA and BBA seek jobs with a reputed commercial bank to start their career. Higher salary and other benefits such as health education and humongous bonuses are attracting the best talent in the market with an assurance of a bright career path. While other industries too offer such perks and benefits, the glamour of working in the banking industry is just too hard to resist. What is the industry you are working in and what are its prospects?
While organisations may argue that the salary structure is not the only parameter to select an industry and thereby the organisation, ironically, for you and me, it is. It is the pay structure that attracts the best of talent from the economical workforce and ensures competition to land the perfect job. So the next time the conversation regarding ‘are you receiving the right salary’ comes up, first dwell on the above points and then respond.