Pursuing an MBA programme is one of the most in-demand choices for students worldwide. One of the key reasons students opt for an MBA degree is to ‘get higher pay packages. No doubt having an MBA degree can equip you with the right management and leadership skills that can be used in upgrading career opportunities. However, this notion of ‘doubling the salary’ is primarily created by the media and also in part by the inflated placement reports of some not-very-ethical business schools.
Recently, in a LinkedIn post Shatakshi Sharma, co-founder and co-CEO of Global Governance Initiative, unveils the reality of a 40 lakh package at top B-schools in India. Shatakshi herself graduated from the Indian School of Business back in 2019 and shared with her audience the reality of flashy MBA packages.
“In this career insight, I will be uncovering the reality of inflated CTCs, their break-up, and the actual in-hand salary to kill the much-needed information asymmetry in society,” She wrote in her viral LinkedIn post. Here’s what she has to share:
1. Culture of Inflated CTC
Let’s start with facts.
The numbers reported are NOT false CTC reported by organizations and MBA schools.
There are 3 parties involved.
A. Companies do incur costs beyond in-hand salary.
Eg- insurance, travel, or other assets provided to you.
It becomes beneficial for the employer to inflate CTC to attract better talent.
B. #MBA schools share the same CTC figures to attract a better pool of students.
C. Individuals maintain the story to the main societal status.
It creates a win-win for all 3 parties involved.
2. Components of CTC
2.1 Joining and Annual Bonus
At BCG, I was given an annual bonus based on my and the firm’s performance.
Similarly, I was eligible for getting a joining bonus as well.
This component could be between 10%-20% of your CTC.
2.2 ESOPs and Allowances
ESOPs are prevalent in start-ups.
They get encashed when you stay with the company for an extended period.
It is a retention strategy by employers so you stay longer.
This number can range from 10%-25% of your annual CTC.
It, however, diminishes the in-hand salary you will get from the firm.
If you are employed at firms such as Amazon, BCG, or McKinsey & Company, you will fall into the 30% bracket in India.
I got lucky on this component as I was employed in Dubai.
However, it’s a significant component that diminishes your in-hand salary.
3. In-hand Salary (drumroll)
Overall, 20-40% of your CTC can be safely eaten up by the 3 components discussed above.
She also advised that salaries should not be the number one priority when picking a career. Salaries are a sensitive topic and employers typically hide details to ensure better retention of underpaid talent.
She concluded her post by saying, “The objective of this career insight was to kill this fear of missing out by many young professionals who aim for careers in private equity, technology, and consulting because of the rosy picture painted. Choose a career that follows your calling and skills.”
Credits: Shatakshi Sharma LinkedIn.