Are salary packages different from actual salary?
Salary packages is a very confusing term. As a matter of fact, it does not show take home salary. Instead, it is a combination of take home salary, cost to company and performance linked bonus (which is seldom paid). So, one should not be fooled on the figure of salary package. One should immediately consider about take home salary. In case of salary in Dollars, this should not be converted into Indian Rupees because this salary is not being paid in India, it is paid abroad where cost of living is too high.
Prof Saral Mukherjee, Chairperson, IIMA Placement Committee has expressed his views on the hype surrounding the inflated and incorrectly quoted salary figures in media. Professor Mukherjee says, “ The truth is that the readers are being fed garbage."
He further said, the average salary offered by international banks at the IIM campuses are in the range of Rs. 12-20 lakh per annum, while that offered by private sector banks is at just over Rs. 9 lakh for IIM graduates. The top 30 percent were offered packages of Rs. 12-15 lakh, the next 40 percent get salaries in the range of Rs. 8-12 lakh and the remaining 30 percent get offers between Rs. 5-8 lakh.
Last year, average salary figure for IIT, Roorkee was Rs. 6.5 lakh. God knows whether it was a salary package or take home salary!
Supporting the range of salary being offered, K Ramkumar, Executive Director at ICICI Bank said, "For a person with less than three years of experience, whoever is paying more than Rs 15 lakh is doing a disservice to their organization."
Tricks in Salary Packages
Trick 1: The highest salary offered in a many esteemed higher education institutes is typically a dollar denominated salary. The first trick in sensationalism is to convert the dollar figure to a rupee amount. The two are not comparable as the dollar salary would not be earned in India but in a country with a substantially higher cost of living.
Trick 2: Refrain from mentioning the amount of bonus. Bonus component of a salary package is contingent on performance. Consider a firm which stipulates that performance linked bonus would range from a minimum 40 per cent to 300 per cent. Which number should be used for reporting – 40 or 300 or an average value? Forget the fact that the bonus is likely to be paid in future.
Trick 3: What gets reported is the Cost to Company (CTC), a fuzzy word whose definition varies from one firm to another. The take home salary is sometimes a tiny fraction of the CTC. So a package may include take home salary plus cost of temporary accommodation given by company, cost of parking and even includes cost of tea, snacks and food in company cafeteria and other petty things and off course performance linked bonus!
With the rise in costs of an higher education, many students are forced to take educational loans for covering their expenses. My suggestion is to never base a decision to take an educational loan on the highest package but on the average salary figure, that too after making sizeable reductions from the CTC value to arrive at the take home salary.
Many esteemed institutes stopped reporting highest salary figures years ago. They report the average salary separately for domestic and international offers, thereby negating the need for currency exchange rates.
References:
1. http://insideiima.wordpress.com/2010/03/12/the-truth-about-b-school-salaries/
2. http://toostep.com/insight/real-truth-now-a-days---iims-salary
Prof Saral Mukherjee, Chairperson, IIMA Placement Committee has expressed his views on the hype surrounding the inflated and incorrectly quoted salary figures in media. Professor Mukherjee says, “ The truth is that the readers are being fed garbage."
He further said, the average salary offered by international banks at the IIM campuses are in the range of Rs. 12-20 lakh per annum, while that offered by private sector banks is at just over Rs. 9 lakh for IIM graduates. The top 30 percent were offered packages of Rs. 12-15 lakh, the next 40 percent get salaries in the range of Rs. 8-12 lakh and the remaining 30 percent get offers between Rs. 5-8 lakh.
Last year, average salary figure for IIT, Roorkee was Rs. 6.5 lakh. God knows whether it was a salary package or take home salary!
Supporting the range of salary being offered, K Ramkumar, Executive Director at ICICI Bank said, "For a person with less than three years of experience, whoever is paying more than Rs 15 lakh is doing a disservice to their organization."
Tricks in Salary Packages
Trick 1: The highest salary offered in a many esteemed higher education institutes is typically a dollar denominated salary. The first trick in sensationalism is to convert the dollar figure to a rupee amount. The two are not comparable as the dollar salary would not be earned in India but in a country with a substantially higher cost of living.
Trick 2: Refrain from mentioning the amount of bonus. Bonus component of a salary package is contingent on performance. Consider a firm which stipulates that performance linked bonus would range from a minimum 40 per cent to 300 per cent. Which number should be used for reporting – 40 or 300 or an average value? Forget the fact that the bonus is likely to be paid in future.
Trick 3: What gets reported is the Cost to Company (CTC), a fuzzy word whose definition varies from one firm to another. The take home salary is sometimes a tiny fraction of the CTC. So a package may include take home salary plus cost of temporary accommodation given by company, cost of parking and even includes cost of tea, snacks and food in company cafeteria and other petty things and off course performance linked bonus!
With the rise in costs of an higher education, many students are forced to take educational loans for covering their expenses. My suggestion is to never base a decision to take an educational loan on the highest package but on the average salary figure, that too after making sizeable reductions from the CTC value to arrive at the take home salary.
Many esteemed institutes stopped reporting highest salary figures years ago. They report the average salary separately for domestic and international offers, thereby negating the need for currency exchange rates.
References:
1. http://insideiima.wordpress.com/2010/03/12/the-truth-about-b-school-salaries/
2. http://toostep.com/insight/real-truth-now-a-days---iims-salary
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