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Is your salary increase engineered to stagnate your career?

A star circus tiger is still a circus tiger. What sort of tiger are you?

Who doesn’t like a salary hike… The mantra has always been “the more the better” and I am sure we could each add to this.

But there is a more subtle and dangerous side to this...

What if I said, there could come a day when your fantastic salary growth could render you jobless?

What if I added that I have cases before me where the individuals have spent more than a decade in the industry AND received great salary hikes, but are today without a job?

I know this sounds fishy; why would a good salary hike be bad? The answer isn’t as straightforward as one would like it to be. In the days of yore when India was yet to embark on the path of fiscal reforms, a salary hike was determined (largely) in two ways.

The first was when the owner of the company and/or the majority shareholder decided that a wage hike was necessary.

The second was when a Trade Union Leader managed to get the hike.

As India became globally connected the reasons for salary hikes changed. They are now given to retain talent and sometimes to even let go of talent (golden handshake). There is another aspect that crept in without anyone truly noticing.

Believe it or not but a salary hike has been used effectively to stagnate and stifle the growth of individuals. This is not visible but in the guise of ‘helping’, organisations have harmed individuals. There is a story published not long ago of IT managers in their mid 40s now finding themselves unemployable. While the going was good they averaged a salary growth of 20%+ per annum for 15 years! Not once did they think they would see the day when they were “priced out of the market.” This is in an industry that continues to experience double-digit growth with a large gap between supply and demand of Human Resources (demand continues to remain ahead of relevant supply). Publishing isn’t really any different and the same could be said about every industry where the chief resource is a human.

So what is wrong?

I won’t point fingers at either the employer or the employee; I shall let the reader decide where the blame lies.

The Employer Perspective

Every employer focuses on profitability and financial growth. To this end, human resources are supplemented heavily from – referral hiring (recruitment agencies, employee references etc.), and poaching from competition. Very few have a training program for growing managers internally.

Why do employers not invest in training?

Ask anyone and they will stand on the rooftop proclaiming they invest in training. When you peek under the skin you see training that helps an individual do his/her job. Even a cursory examination of the program will reveal that the program doesn’t have anything to help the individual excel at the job let alone lay the foundation to grow in the organisation. There are multiple reasons for this but I would like to highlight two of the most relevant. The first is the company wants the position filled with a person who can perform at an optimum level.

The second being that most companies can’t define career paths AND/OR don’t have a program to build careers. Investing in careers is a drain on profitability.

Both these points need explanations. A salary reward on exceeding objectives and/or performance is great. Two years in a row is even better. Three years in a row works like a charm. But in the fourth year why isn’t there any desire to grow the individual any further? Why do companies keep long serving individuals static at a certain level and go out and hire their supervisors (managers)?

In my career I have often heard “we don’t have the talent in-house.” And I have wondered why there wasn’t a program that foresaw the need to develop the talent?

The software industry provides a clear answer. Capacities are built to meet demand. Over the years the cost of the human resource in the relevant capacity, increases. The smart ones leave the company “for better prospects”; almost always they have jumped from the frying pan into the fire. The not-so-smart are lured by extra money to continue plodding while replacements are supplemented by automation or outsourcing. This is explained simply as follows

Cost per person x Number of individuals = Cost of the team

(Increased cost per person x Lesser Number of individuals) + automation = Lower cost of the team.

When redundancy creeps in, companies simply use the proverbial “pink slip” to get rid of “capacity.” Financial services, Information Technology and Call Centres (BPO) are perhaps the worst offenders. There is no room for the cost of redundancy in the long-term future of many a company. It is this that hurts an individual the most.

The Employee Perspective

Like I said right at the beginning, everyone loves a good salary hike. A few years in a row and the person is visibly beaming. The salary hike creates a false sense of security that the going is good today and will continue forever. The truth is, it won’t. From fresh careers to middle management levels, salary hikes are not necessarily the best career choice. The alternative many seek is a promotion in a different company. And this when things start falling apart. It is great to be a star performer at a job but rarely do ‘stars’ pause to ask themselves “what have I learnt over and above what I need to do my job?” When a poacher (head hunter or former co-worker) comes knocking with a “better job offer”, an individual is ecstatic. And they should be. Even drug addicts get a high with drugs. One needs to pause and do a self-analysis on the skills needed for the new role. There is no free lunch and very few companies have a large learning curve. If an organisation is going to pay you a large sum of money, they expect a lot from you. The one truth I have learnt is you can learn very little “on-the-job”. The foundation for learning as well as exposure to certain types of skills is essential. Rarely will you find someone so talented that in the very first go they will be star performers. There have been cases in history, Michael Angelo was one such individual – before the Sistine Chapel, he hadn’t painted a fresco in his life!


Breaking free (from the trap)

No it’s not easy to break free. I have often heard people change jobs because they are being “promoted” in a new role. That is great! The question to ask oneself then is, “am I ready for this new role?” And 90% of the time the answer coming back is “oh absolutely.” Then why are people suddenly priced out of the job market?

There isn’t an easy answer to this question. Equally though the answers are not impossible to find. The easiest way to seek an answer is to do a clear self-analysis of what you have learnt in the years you were at the job.

Can you write down all the attributes you have learnt that will help you perform in a new role? I must add the learning doesn’t have to come from the current company alone, it could be learning acquired from external sources such as reading or group interactions. But it is clear that you have to have learnt skills that will help you take on the new role in a different company.

So how does a company help you break free? Many companies and leaders follow a simple rule – they invest in their people. Here is a list of visible signs of a good company.

The investment is not just training to do the current job, but training to perform at the next level!

Some send managers to formal training programs or to get an education; there are others that do this more subtly (perhaps the subject of another blog).The better ones create an environment where people are given the opportunity to fail and to learn.They don’t go hunting for human resources outside the company at the middle or top level except when they are in expansion mode and all internal resources are saturated.They continue to build operational ‘buffers’ in the lower rungs of the organisation.The buffers are used to grow the business. No human resource stays in the buffer zone beyond a fixed period of time (usually 3 years).The company has a robust and transparent hiring mechanism. In this case slow and steady actually wins the race.The company routinely gets rid of ‘dead wood’ or people who don’t meet minimum acceptable output standards. No matter what the recruitment process, some ‘non performers’ manage to get into a company (ah! Subject for another blog).The company encourages inter-departmental transfers.

Here are some not so apparent signs of a good company.

The company listens to the voice of dissent and acts to take corrective measures no matter how grave the issue.The senior management is comfortable with each other and works as a team.The CEO leads by example and not by words alone

So before you start enjoying the extra cash, pause and ask yourself if the cash is for learning something (new) or for not learning

Thank God it's Friday!

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