How Important is Salary? - On The Job

How Important is Salary?

Tarun Matta - Monday, September 14, 2009 10:26 PM

I was chatting with an old friend, SN over coffee last week. He graduated from a top business school 3 years back, got a good career break right after graduation and is doing reasonable well in his current job.

SN: I heard company XY is hiring aggressively these days.
TM: Yeah.. I heard that too..
SN: I am thinking of applying
TM: hmm.. I thought you were doing well in your current job
SN: Its going well so far. I am getting tremendous exposure and my contribution seems to be valued
TM: So, why do you want to switch jobs?
SN: There hasn't been any salary hike this year.. Company XY might offer me a higher salary
TM: hmm.. Does it really matter?
SN: Sure, It does.
TM: Okay. Lets say we increase your gross salary by 25% .. or even 50%. What'll you do that you can't do now?
SN: hmm.. I can travel the world. I'll go to Europe!
TM: Can't you do that today? You can easily travel the world, with the kind of money you making right now..
SN: yeah.


Of course, salary is important and nobody can work for free. The point here is would 10, 20 or even 25% increase in salary make any difference to your quality of life.

I've had this conversation so many times - with myself and my friends on numerous occasions. Why do we negotiate so much for a few percentage increases in salary while accepting new job offers and at the times of appraisals? My personal experience is that higher salary feels good for the first few months and then it just doesn't matter thereafter. Below are some of the factors that will surely determine if you are happy (or not) in your job -

1. Do I like what I am doing?
2. Am I acquiring new skills and/or polishing existing skills?
3. Is my contribution being valued by my employer?
4. Do I have good relations with my peers, supervisor, and management?

Answers to these questions are far more important than worrying about 15 or 25% increase in salary levels. What do you think?


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Tarun Matta is the founder of iimjobs.com – an exclusive job portal for MBAs from IIMs and other premier business schools in India.

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12 Comment

From Manu Stanley

September 15, 2009 3:21 PM
I agree to your views, Tarun. But imagine such cases when a person is newly married and have a dependent wife, or is just planning go start a family, thinking about the next generation. In that case, its not just a better working circumstance or a meaningful job that matters, it is also the salary.

From rajAT

September 15, 2009 3:39 PM
Salary is very important. Rest all is philosphy.

From rajAT

September 15, 2009 3:39 PM
Salary is very important. Rest all is philosphy.

From Manas

September 15, 2009 5:09 PM
With due respect sir, you do not seem to have a broader understanding. Hike/increase in salary is to be viewed in relative terms. Nobody likes/dislikes the salry hike or absence of it in absolute terms. For example a 30% increase is depressing in case all/most your peers have got 50%. At the same time even a 10% is uplifting if you are the only one who has got it.

From sage

September 15, 2009 6:34 PM
hey tarun, you are bang on my friend, just right. but you can read the comment above me and most of them dont agree, y is so? well i think answer is partly there. most of the time we keep comparing to others (its relative world), we never view a thing in isolation or absolute way. human brain is somehow tht way and hence he always tend be unhappy and be in rat race. things abut marriage and stuff ya i know tht can put pressure for a person to change a job so to earn high to support but otherwise i doubt if many of them ask anything before changing job, only thing on their mind is "whst the hike?" unfortunately our b-schools doesn't teach this concept properly and hence an typical b-school grad keep jumping from one job to another in search of higher package but he never gets to enjoy tht package.

From Ravindra Sangam

September 22, 2009 9:43 AM
I think everybody did not understood the fundamental question 'how important is salary?' and started with comments on 'salary hike'. For most of the people salary is the only income and their day-to-day life is totally run by salary only.

From Jay

September 24, 2009 6:52 PM
Hi Tarun, You raised a very important point here. In fact, I've come across instances where the recruiters have not processed application of a deserving candidate just because he/she was drawing relatively less package in their current organization then the prevailing market rate relative to their experience. Everyone, when asked about their expectation in the first call, invariably states 30% raise over current CTC. No one wants to probe the profile, their KRAs and expected KPIs. To extend this further, once you join the new org. your promotions and hikes also depend upon which b-school you've graduated from. Grads of Tier-1 schools gets a priority over tier-2 and tier-3. I'm not sure if there are any quantitative benchmarks prevailing (except maybe sales) to assess and reward performance

From Rupali dumbre

October 1, 2009 11:06 AM
Hi Tarun, I do agree with you not only the monetary benefits i.e. salary are important the answers to below question is also important. 1. Do I like what I am doing? 2. Am I acquiring new skills and/or polishing existing skills? 3. Is my contribution being valued by my employer? 4. Do I have good relations with my peers, supervisor, and management? Again as mentioned in someones comment we need to think in isolation also. Which ultimately helps to adjust thing accordingly to avoid any negative perspective about our profile. When you think abt hike think about the environment u r going to work. Sometimes these works good than money.

From Ashoo Talwar

November 11, 2009 1:23 AM
I totally agree with Jay here that there occurs a prejudice on the basis of which college you do your graduation from, which city are you from and it goes onto the extent to asking yourself if you are socially viable to the new rules etc....Again "salary is also the value that an organisation attaches to the concerned person" Salary can make you feel small and stupid and at the same time can make you feel confident and motivated. There should be better assessment criteria to decide the salary structure which seems missing.

From jayant srivastava

November 19, 2009 11:10 AM
Dear Tarun, i read your comment on Importance of Salary, i really find it intresting. but i want to put one point that what if in case the companies now days taking wrong advantage of reccesion and intentionally they are not hiking the salary of the employee, despite a huge profit??

From Freshers Jobs India

November 20, 2009 12:29 AM
I do agree with Jayant. Companies are not giving any hikes due to "recession factor" and they are making huge profits indeed. I hope the situation changes soon.

From Mary

November 20, 2009 9:51 AM
As a fairly new entrant into the corporate world, I am of the opinion that at different stages of life and your career different factors motivate you.. At the start of your career as is my case, A good sensible manager, one who can inspire you to go that extra mile, is paramount.. everything else, is secondary.

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