Page 69 - Appreciating Organization's Biggest Assets

more inclined towards stock option Even though there is an increase in
plans and long term incentives. the percentage of pay to fresher’s,
This is done to align the interest the value of money has fallen
of shareholders and managers by significantly hence we can say that
designing compensation structure. 2 lakhs of last decade are same as 4
These tech firms are innovation lakh today. The percentage increase
driven and they primarily invest can be for tackling the increasing
in research and development for inflation. According to sources,
producing products. It requires a lot the number of people graduating
of time to make the actual product from engineering colleges in India
which increases the scrutinizing is 1.5 million. On the other hand,
challenges. These monitoring IT industry recruiting fresher’s
challenges can be solved by relying is just a little portion of it. Only
more on commissions, incentives, 360000 fresher’s were hired in FY
and stocks. Long term incentives 2022 which further needs to be
therefore ensures that CEO’s trained. Bargaining power is in
perform for achieving them. control of the management due

On the other hand, there is a to higher supply of labour but in
significant difference in salaries case of executives, there is shortage
of Executives with respect to new of talent. Unionization of IT
hires. Salary of executives has grown employees in future can control the
at a faster pace than the fresher’s. widening gap.
Pay disparity can be witnessed in IT Market Capitalization of following
firms over the years and is likely to be IT firms:
continued in the future which also There are many ways to measure
shows that the organization’s top the organization performance. It
executives have a moneygrubbing can be measured through sales and
attitude. There is a shift in the customer service, profits, assets
Indian organizational culture from etc. we have measured by market
taking care of their employees to capitalization meaning total market
taking care of themselves first like value of all the listed shares.
American organizations. Another
reason for lower pay of fresher’s can Market Cap = Share price *
be the hierarchy getting offended number of outstanding shares.
if the juniors are offered similar to The below table is a comparison of
what seniors are paid further down- Annual Salary of CEO in 2022 vs
grading their performance. Market Cap 2022

69