CEO compensation vs entry level salaries

“Everyone is playing for the long haul right now. Yes, there is going to be an impact on the bottom line but if you do not retain this talent and keep investing in them, you are essentially putting your future at risk which no organisation would like to do at this stage,” says Rituparna Chakraborty, Co-founder, TeamLease.






There seems to be this strong disconnect between the salaries paid to CEOs by top IT firms in India and the kind of headwinds that the industry is facing right now. Do you see this level of variance in other industries or is this peculiar to the IT sector?

Honestly, this is a very difficult subject. To answer your question whether this is something that we notice in organisations outside of IT, of course we can see that in data available for the listed organisations. I am a little worried about this whole debate because I do not understand what we are suggesting? Should we pay the CEOs less and pay the entry level folks more? There has to be a justification for any of this.

So one can standalone have a debate on whether the compensation of a particular CEO of a particular organisation is justified or not, but there is a problem linking it to that of an entry level salary. Let me explain why. This alludes to the fact that India has a huge employability issue and a skill issue at the entry level.

Smart Talk

For freshers in India, not just for IT, but across any job roles, the entry level salaries have barely moved. Interestingly, with experience and more exposure, we see how divergence starts happening at every level and there is a leap in salaries. Is this data not good enough for us to focus on the importance of skilling our youth because I have always maintained India does not have a job problem, rather, we have a wages problem. Everyone who needs a job, has a job or is self-employed, do not have the wages they aspire for.

Rising wage costs have been sighted in almost all the quarterly reports and that is one of the reasons why the IT sector growth has been hit in recent times. How much of a hurdle to growth are the kind of salaries that we are paying out at the top end in the IT sector?

Compensation at top level is decided by the board as well as the shareholders, especially if you are a listed company. They are watching every move of the organisation and if they feel that compensation is justified for a particular CEO who can give the organisation the returns and the growth that one is looking at in five to 10 years’ time, they are being offered that.

The impact of the rising wages is happening because thanks to the pandemic, there has been great demand and improved outlook around technology and digitalisations worldwide, cutting across all sectors. There has been an exponential expansion of demand and skillsets for which we currently do not have a supply available and then there is also impact of or suspense around recession and inflation.

Everyone is playing for the long haul right now. Yes, there is going to be an impact on the bottom line but if you do not retain this talent and keep investing in them, you are essentially putting your future at risk which no organisation would like to do at this stage.


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