Most of the big structured companies have the concept of variable pay which depends on the performance of the individual. While these are variable, it is a fact that many can earn a handsome amount under this variable pay scheme and since this s a cost incurred by the employer for the employees, it is not wrong to include is as part of CTC.
Srabanti
From India, Calcutta
Srabanti
From India, Calcutta
Dear Lochanan,
While the company makes an offer of employment it indicates the CTC component which includes the fixed pay and variable pay.
For instance the CTC component of many companies include the following
Superannuation @ 15% of the Basic + DA,
Mediclaim premium paid by employer
Gratuity (Basic + DA x 15/26)
In all the above cases the employee does not get immediate benefit either in the year of joining or in the subsequent years.
This does not mean that he is unlikely to get it for ever.
I worked for an MNC and was eligible for superannuation benefits. After serving for a decade I resigned. The MNC approved Superannuation benefits to me as per its rules though I did not attain the age of 58 years. I get an annual Superannuation benefit. The capital available in my superannuation account will be paid to my nominee (wife) in the event of my death due to old age or otherwise.
Similarly companies indicate the variable pay to inform employees the maximum probable earnings. It is the responsibility of the HR department to clearly explain the CTC break up at the time of joining otherwise confusion prevails in the minds of employees and after their joining they feel they were cheated on CTC.
It is equally important that the candidate is cautious to look into the CTC offer made by his prospective employer.
To summarise there is nothing wrong on part of companies to indicate the actual pay and probable pay as CTC.
Trust matter is clarified. In case you need any further clarifications please feel free to raise them.
M.V.KANNAN
From India, Madras
257While the company makes an offer of employment it indicates the CTC component which includes the fixed pay and variable pay.
For instance the CTC component of many companies include the following
Superannuation @ 15% of the Basic + DA,
Mediclaim premium paid by employer
Gratuity (Basic + DA x 15/26)
In all the above cases the employee does not get immediate benefit either in the year of joining or in the subsequent years.
This does not mean that he is unlikely to get it for ever.
I worked for an MNC and was eligible for superannuation benefits. After serving for a decade I resigned. The MNC approved Superannuation benefits to me as per its rules though I did not attain the age of 58 years. I get an annual Superannuation benefit. The capital available in my superannuation account will be paid to my nominee (wife) in the event of my death due to old age or otherwise.
Similarly companies indicate the variable pay to inform employees the maximum probable earnings. It is the responsibility of the HR department to clearly explain the CTC break up at the time of joining otherwise confusion prevails in the minds of employees and after their joining they feel they were cheated on CTC.
It is equally important that the candidate is cautious to look into the CTC offer made by his prospective employer.
To summarise there is nothing wrong on part of companies to indicate the actual pay and probable pay as CTC.
Trust matter is clarified. In case you need any further clarifications please feel free to raise them.
M.V.KANNAN
From India, Madras
Dear,
I want give a reply to first part of your query, as to why the prospective employers look at the previous CTC while negotiating the future CTC.
Pl. note that the logic behind this practice is that, generally people change jobs for improvement in Financial Status and Unless a person is offered better ctc than the previous one, he may not join.Hence this generally done to motivate motivate a person to leave present job and join new organisation.That way referring present ctc is a thumb rule.
But more important from employers, side is that the position we are trying to fill up and the pay that can be offered for that position,than the previous ctc of the person.Many times as employers we come across good candidates ,but since we can not offer an improvement over existing ctc, and disturb the internal wage structures, we can not recruit them.
Looking from individuals side, yes it is a fact that exiting ctc comes into consideration when we negotiate future ctc, as people may not offer much more that the present ctc . Rarely, we come across cases, where 100% increase over present ctc is offered.
From India, Hyderabad
I want give a reply to first part of your query, as to why the prospective employers look at the previous CTC while negotiating the future CTC.
Pl. note that the logic behind this practice is that, generally people change jobs for improvement in Financial Status and Unless a person is offered better ctc than the previous one, he may not join.Hence this generally done to motivate motivate a person to leave present job and join new organisation.That way referring present ctc is a thumb rule.
But more important from employers, side is that the position we are trying to fill up and the pay that can be offered for that position,than the previous ctc of the person.Many times as employers we come across good candidates ,but since we can not offer an improvement over existing ctc, and disturb the internal wage structures, we can not recruit them.
Looking from individuals side, yes it is a fact that exiting ctc comes into consideration when we negotiate future ctc, as people may not offer much more that the present ctc . Rarely, we come across cases, where 100% increase over present ctc is offered.
From India, Hyderabad
Dear All,
I fully agree with Mr.J.R.Kumar's view. But at the time of negotiation if we have a doubt on the claims made by the prospective candidate we seek his previous year's CTC politely and this reveals his actual earnings leave alone LTA and Medical reimbursement subject to ceiling if it is exempt from tax subject to IT rules in vogue.
Regards
M.V.KANNAN
From India, Madras
I fully agree with Mr.J.R.Kumar's view. But at the time of negotiation if we have a doubt on the claims made by the prospective candidate we seek his previous year's CTC politely and this reveals his actual earnings leave alone LTA and Medical reimbursement subject to ceiling if it is exempt from tax subject to IT rules in vogue.
Regards
M.V.KANNAN
From India, Madras
Dear All
The points on CTC has been well explained by Mr M.V.Kannan from the beginning. Mr JR Kumar's concern is right that we come across good candidates but the companies will not be be able to hire such people due to internal salary structures.
It is true. But the present market condition, cost of living and the ambitions are high and as such the demands are also high. If the companies are unable to offer or negotiate or convince the candidates, they have to go in for such suitable candidates who would fall in line with their salary packages.
At the same time, we need not come to a conclusion that we cannot get good candidtes for lower salaries. As these days because of the specialisations available to the candidates in MBA and other courses, and cost of living in cities, they think that they can demand more. Particualrly in MNC's and foreign collaborated companies such a situation exists. Even there also, only the new incumbants willl be offered high salaries and the senior persons who are existing in the company will be stagnant with lesser salaries.
The companies and recruiters should not stop here. My strong suggestion would be to look for candidates who fall within the salary structure available in the company, Encourage candidates from outskirts of city (i.e. those who have worked in other towns far away from the cities) and groom them. If the companies cannot offer increased salaries over previous CTC, it is better to drop such candidates and be within limits or call candidates who fall within the company's salary packages. At the same time, there are good candidates who really need job and are ready to work for medium salaries.
Regards
K.Ramachandra
Bangalore
The points on CTC has been well explained by Mr M.V.Kannan from the beginning. Mr JR Kumar's concern is right that we come across good candidates but the companies will not be be able to hire such people due to internal salary structures.
It is true. But the present market condition, cost of living and the ambitions are high and as such the demands are also high. If the companies are unable to offer or negotiate or convince the candidates, they have to go in for such suitable candidates who would fall in line with their salary packages.
At the same time, we need not come to a conclusion that we cannot get good candidtes for lower salaries. As these days because of the specialisations available to the candidates in MBA and other courses, and cost of living in cities, they think that they can demand more. Particualrly in MNC's and foreign collaborated companies such a situation exists. Even there also, only the new incumbants willl be offered high salaries and the senior persons who are existing in the company will be stagnant with lesser salaries.
The companies and recruiters should not stop here. My strong suggestion would be to look for candidates who fall within the salary structure available in the company, Encourage candidates from outskirts of city (i.e. those who have worked in other towns far away from the cities) and groom them. If the companies cannot offer increased salaries over previous CTC, it is better to drop such candidates and be within limits or call candidates who fall within the company's salary packages. At the same time, there are good candidates who really need job and are ready to work for medium salaries.
Regards
K.Ramachandra
Bangalore
Dear Mr.Ramachandra,
You have clearly explained the manner in which we need to strike a balance between new employees and existing employees.
I fully agree with you that we should not chase candidates aspiring for higher CTC all through his career. This suggestion is because even after you try and match his salary expectations, the probability of his duration in the company is shortlived. Because, he constantly looks out for employment with higher CTC.
We have also come across candidates who get stuck with a particular company early in their career because the CTC drawn by them in relation to their young age is not affordable by many companies.
Hence, as rightly pointed out by you it would be wise to groom candidates with a relatively lesser CTC.
Thank you SIM for initiating an interesting topic.
M.V.KANNAN
From India, Madras
You have clearly explained the manner in which we need to strike a balance between new employees and existing employees.
I fully agree with you that we should not chase candidates aspiring for higher CTC all through his career. This suggestion is because even after you try and match his salary expectations, the probability of his duration in the company is shortlived. Because, he constantly looks out for employment with higher CTC.
We have also come across candidates who get stuck with a particular company early in their career because the CTC drawn by them in relation to their young age is not affordable by many companies.
Hence, as rightly pointed out by you it would be wise to groom candidates with a relatively lesser CTC.
Thank you SIM for initiating an interesting topic.
M.V.KANNAN
From India, Madras
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