Hello,
CTC as the very name indicates, is "Cost to the Company" for employing the concerned person. It is NOT "salary" since Canteen, Treansport facilities and other welfare activities the company conduct for employees do cost the company but it should not be termed as part of the salary. Salary is what an employee receives on fixed basis, whether monthly or annually and to that extent, professionally speaking even the "incentives or performance bonuses" may be costs to the company but are not salary since these are conditional payments based on how the employer views the employee's performance. There is nothing wrong in installing a variable pay component in the CTC. My objection is such payments are being termed Salary, especially when the companies equate CTC with Salary. If the company shows Rs. 50000/- as annual performance pay (where the candidate does not know the rules or norms or targets) and he ends up receiving let say just Rs. 20000/-, he is BOUND to feel cheated. The worst part is it is not as though the employer cannot or does not see such a possibility!
Salary is what you pay an individual employee for doing certain amount work in certain time frame (like 48 hours a week). There is an assurance about this money coming to the employee's account if he works diligently. Variable pay is an incentive for improved performance. What is actually paid as incentive/performance bonus/variable pay, MAY be called salary ONLY after these are paid but to include a certain heafty sum on the CTS-negotiate the same as salary and when the employee does not get the same in hands (even due to his lack of qualifying performance to earn that higher amount) there is bound to be serious disillusinoment and beginning of a feeling of having been short changed by the employer. Such practices and feelings are a substantial cause for attrition even though leaving employees may not admit so explicitly!
The other part of the question concerns when the candidate knows about "salary" while finalizing the job and in the offer or appointment letter only comes to know that the figure he was told to be the salary is in fact the CTC. By the time this dawns upon him/her it is perhaps too late to put foot down! All I can advise is that one should work on crystal clear definition of these terms and should not hesitate seeking clarification before making up mind to accept the job. Else he will have ample time to repent the haste!
Both the terms are poles apart in meaning and content and need to be understood without an iota of doubt. For the employer CTC is the correct way to look at the employee costs and a very wrong way to treat it as salary. I have failed to understand why the employers can not work on two figures at least for the satisfaction of the candidate and for stable relation. Not doing this cuts the very foundation of trust, credibility and transparency!
As candidate the least we can do is to NOT get enamoured with high figures being shown as salary and accept the same blindly. But often the lure of money, position, the employer's brand value prompt commitment of this fatal error. Let us guard against it!
Regards
samvedan
October 20, 2008
---------------------------------
From India, Pune
315CTC as the very name indicates, is "Cost to the Company" for employing the concerned person. It is NOT "salary" since Canteen, Treansport facilities and other welfare activities the company conduct for employees do cost the company but it should not be termed as part of the salary. Salary is what an employee receives on fixed basis, whether monthly or annually and to that extent, professionally speaking even the "incentives or performance bonuses" may be costs to the company but are not salary since these are conditional payments based on how the employer views the employee's performance. There is nothing wrong in installing a variable pay component in the CTC. My objection is such payments are being termed Salary, especially when the companies equate CTC with Salary. If the company shows Rs. 50000/- as annual performance pay (where the candidate does not know the rules or norms or targets) and he ends up receiving let say just Rs. 20000/-, he is BOUND to feel cheated. The worst part is it is not as though the employer cannot or does not see such a possibility!
Salary is what you pay an individual employee for doing certain amount work in certain time frame (like 48 hours a week). There is an assurance about this money coming to the employee's account if he works diligently. Variable pay is an incentive for improved performance. What is actually paid as incentive/performance bonus/variable pay, MAY be called salary ONLY after these are paid but to include a certain heafty sum on the CTS-negotiate the same as salary and when the employee does not get the same in hands (even due to his lack of qualifying performance to earn that higher amount) there is bound to be serious disillusinoment and beginning of a feeling of having been short changed by the employer. Such practices and feelings are a substantial cause for attrition even though leaving employees may not admit so explicitly!
The other part of the question concerns when the candidate knows about "salary" while finalizing the job and in the offer or appointment letter only comes to know that the figure he was told to be the salary is in fact the CTC. By the time this dawns upon him/her it is perhaps too late to put foot down! All I can advise is that one should work on crystal clear definition of these terms and should not hesitate seeking clarification before making up mind to accept the job. Else he will have ample time to repent the haste!
Both the terms are poles apart in meaning and content and need to be understood without an iota of doubt. For the employer CTC is the correct way to look at the employee costs and a very wrong way to treat it as salary. I have failed to understand why the employers can not work on two figures at least for the satisfaction of the candidate and for stable relation. Not doing this cuts the very foundation of trust, credibility and transparency!
As candidate the least we can do is to NOT get enamoured with high figures being shown as salary and accept the same blindly. But often the lure of money, position, the employer's brand value prompt commitment of this fatal error. Let us guard against it!
Regards
samvedan
October 20, 2008
---------------------------------
From India, Pune
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