Payslips – Reading between the lines
This is the abstract of an article in The Economic Times. It is not against any B-school, but it is a fact which every B-School student should be aware of.
Life may not be that rosy for you as promised by an impressive “CTC” (Cost to the Company) of the new company you would join after passing out of B-school. Well, CTC is actually a way too high than the actual salary that you may take home. ET’s conclusion (after verifying the actual pay-slips of some young executives working in MNCs and domestic corporates): CTCs are misleading more often than not.
For instance one candidate, passed out of MDI Gurgaon, took a lucrative job offer of Rs. 12 Lakh CTC at an FMCG multinational company. Even after working for more than six months, he never took more than Rs. 60,000 to his home in any month.
While making salary offers, companies are increasingly harping on components that may not be of any use to an individual in the short run. In fact, some of these components, such as the supper annuity scheme, are virtually impossible to leverage. For example, I am in Government service which is a pensionable job and if I have to quantify the CTC on account of pension, my CTC will be much higher than my present salary. In a annuity scheme, the company pays some amount of money at regular intervals say for 20 years, after which the employee will get a monthly fixed amount. But, chances are that you change jobs frequently in the private sector for which you may ever get that benefit.
Insurance policies like mediclaim are the other vague terms that’s counted a aprt of the CTC. Interestingly, some companies are even counting EMIs for laptops given to executives as part of the CTC. Even club membership fees are paid from your pocket. Of late, deffered salary plan has also been forming part of CTC. According to this practice, incentives are not cleared along with monthly salaries and rather accumulate and are paid on half-yearly or annual basis.
At times, even the house rent allowance component may be misleading. Some young engineers, who were recruited by a leading infrastructure company and posted in a small town in western UP, were promised an HRA of Rs. 10,000 (reimbursable against actual expenditure) at the time of recruitment. However, during their posting in UP, they were provided company accommodation, where four young engineers were made to stay in one apartment, for which they cannot claim HRA.
Experts say students expecting placement need to read between the lines. Firstly, they should look out for discounts that companies can include in the package. These may not necessarily be used by the students. Secondly, at times companies may include a loan amount to the total salary stating that this loan can be availed at a lower rate of interest compared to the market. So, use your soft skills developed at ISB to negotiate for a transparent pay package wherein you can take home with full packets.
Do not get disheartened, but the truth is that the average domestic salary for the Class of 2006 at ISB is Rs. 11 Lakhs. You can get an hefty package only if you are going for an international placement, and the highest packages will be for those who had previous experience in the field of finance, consultancy or banking. Sometimes, I may be wrong. But I am trying to give an objective version from the interactions with current and past students. You will support me only after you are through your PGPM for six months down the line. However, unanimously everybody, including me, agrees that the experience at ISB is top class and worth spending for it. No doubt about it. Hat off to ISB.
Life may not be that rosy for you as promised by an impressive “CTC” (Cost to the Company) of the new company you would join after passing out of B-school. Well, CTC is actually a way too high than the actual salary that you may take home. ET’s conclusion (after verifying the actual pay-slips of some young executives working in MNCs and domestic corporates): CTCs are misleading more often than not.
For instance one candidate, passed out of MDI Gurgaon, took a lucrative job offer of Rs. 12 Lakh CTC at an FMCG multinational company. Even after working for more than six months, he never took more than Rs. 60,000 to his home in any month.
While making salary offers, companies are increasingly harping on components that may not be of any use to an individual in the short run. In fact, some of these components, such as the supper annuity scheme, are virtually impossible to leverage. For example, I am in Government service which is a pensionable job and if I have to quantify the CTC on account of pension, my CTC will be much higher than my present salary. In a annuity scheme, the company pays some amount of money at regular intervals say for 20 years, after which the employee will get a monthly fixed amount. But, chances are that you change jobs frequently in the private sector for which you may ever get that benefit.
Insurance policies like mediclaim are the other vague terms that’s counted a aprt of the CTC. Interestingly, some companies are even counting EMIs for laptops given to executives as part of the CTC. Even club membership fees are paid from your pocket. Of late, deffered salary plan has also been forming part of CTC. According to this practice, incentives are not cleared along with monthly salaries and rather accumulate and are paid on half-yearly or annual basis.
At times, even the house rent allowance component may be misleading. Some young engineers, who were recruited by a leading infrastructure company and posted in a small town in western UP, were promised an HRA of Rs. 10,000 (reimbursable against actual expenditure) at the time of recruitment. However, during their posting in UP, they were provided company accommodation, where four young engineers were made to stay in one apartment, for which they cannot claim HRA.
Experts say students expecting placement need to read between the lines. Firstly, they should look out for discounts that companies can include in the package. These may not necessarily be used by the students. Secondly, at times companies may include a loan amount to the total salary stating that this loan can be availed at a lower rate of interest compared to the market. So, use your soft skills developed at ISB to negotiate for a transparent pay package wherein you can take home with full packets.
Do not get disheartened, but the truth is that the average domestic salary for the Class of 2006 at ISB is Rs. 11 Lakhs. You can get an hefty package only if you are going for an international placement, and the highest packages will be for those who had previous experience in the field of finance, consultancy or banking. Sometimes, I may be wrong. But I am trying to give an objective version from the interactions with current and past students. You will support me only after you are through your PGPM for six months down the line. However, unanimously everybody, including me, agrees that the experience at ISB is top class and worth spending for it. No doubt about it. Hat off to ISB.
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