How CTC for an entry level management graduate is determined?


This article will help the reader to understand how pay scale for entry level management role is decided. It helps the reader to recognize what are the key determinants affecting the cost to company (CTC).

Well, there are many factors that play in determining CTC for entry level management graduate. Let us have look at most important determinants.

College Ranking:

CTC depends on which category college you did MBA from. There are four classifications of colleges Premier institutes, Tier 1,Tier 2, Tier 3. A graduate from tier 1 in general cases will be paid higher than a person from tier 3 college. Graduating from a renowned college pays well literally.

Job Industry:

Industry in which the candidate joins the job after MBA is also very important. There are industries which has simple structure and robust processes having the affordability to pay like IT industry, Manufacturing, FMCG etc. So it all sums up to which industry a candidate enters in for the job.

Industry Scale of Pay:

The number of competitors and the industry has some minimum pay for entry level roles. The company will benchmark looking at the competitors pay for the similar role based on scope and job nature. A company may use primary and secondary research for identifying the pay for entry level role

Specialization:

Specialization in MBA is a significant determinant of pay generally. A marketing person is generally more paid than a HR person in most companies as the revenue to business is directly linked with marketing than to HR. The revenue generation of HR and its existence as strategic partner determines the profit sharing percentage to HR department. Globally, marketing person is paid more as compared to support functions.

Candidate's under graduation:

The candidate's under graduation degree also play a crucial role. Certain job requires combination of BE & MBA or B.Sc. & MBA or BBA & MBA. These combinations although is not explicitly said as determinants but sill we cannot discard the fact that many companies prefers to give some weightage to it.

Candidate's previous work experience:

A candidate may be at entry level for a management role but could have worked previously in non-management profile. His years of service and the teams he worked for or handled. His people management experience and other job skills are assessed for determining CTC

Work Location:

Location where the person has to work also impacts the CTC given to the person. The living expenses vary from place to place. The cost of living, taxation policy, government norms change from state to state. Therefore the regional pay change is also considered while calculating CTC. A person working in Delhi will be paid differently for the same role in Chennai or Hyderabad.

Individual Potential:

Most importantly, the individual potential is assessed and weightage is given while deciding CTC. His knowledge, skill, aptitude, communication skills, comprehension is all assessed by many MNCs. Companies look for medium term association with the candidate.

Affordability:

The affordability of the company is the fundamental element in pay scale determination of any role. A giant company which was built to greatness may pay far ahead of the competition just because they can afford. For example, google is a paymaster and they pay and take care of the employees like no other company on earth could just because they can afford.

The above mentioned are some of the most vital determinants of CTC. Based on the job nature, industry and skills required for the job, weightages are assigned to each of the factor. Finally the summation of these components are evaluated and matched with the budget cap allotted for the role.


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Comments

Author: Kailash Kumar19 Apr 2016 Member Level: Platinum   Points : 4

There is difference in cost to company (CTC) and take home salary. There may be certain components of CTC which the individual may not be receiving directly from the company. Company's contribution to the provident fund or health insurance of the employee are not paid to the employee though the same are components of the CTC. The same applies in the case of income tax or professional tax deducted at source. However , an employee can increase his/her take home salary to some extent through proper tax planning. Investing in tax saving instruments like PPF, ELSS etc. up to the extent of Rs. 1.5 lakhs per annum result in tax savings under section 80-C. Though the CTC is not increased by adopting tax saving measures, but the take home salary may increase.



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