I guess in all generations you see people younger than you making more money than what you did at their age, and even what you make now. The bases for salaries are not complicated... coz they are not objective. It may just be a hype cycle each time, leading to crazy valuations. And then there's a price war of some sort - to price same guys higher than what competitors do. In that crazy competition to buy talent, no company really tries to find out whether those prices are realistic, i.e., whether the return on investment on hiring a particular guy or gal at a certain salary would be positive, and by when, if at all... what are the short and long term returns expected from such an investment... how much of professional growth is the company capable of offering any person it hires in his/her area of interest, whatever be the strength of the business model of the company. This should be an important point to consider particularly in the IT industry, especially when choosing among candidates for hiring, coz the industry is composed and driven by individuals of a certain kind - mainly powered by knowledge and analytical skills - thinking individuals, whose skills have short-lived relevance but whose abilities to evolve is tremendous - and hence, so is the hunger for growth. The highly rampant hiring and firing in the rapidly developing tech / tech-enabled start-up landscape is unhealthy for the intellectual and emotional well-being of such talented individuals, and therefore the industry should treat its talent with caution... as smart and talented individuals, rather than commodities with x y z skillset.
Most of the contemporary managers and even CEOs of these start-ups do not have a mature understanding or point of view on these things. They do most of their hiring in an ad-hoc manner and expect everything to settle and resolve in the long run. Can't really blame them for their lack of experience or foresight, coz while that is truly their weaknesses, these are still extremely complex issues with lots of variables at stake for the people running the businesses. Large companies absorb their flab - if they consider some of their workforce as such - until they have to shed some, and economies of scale allow some sustainability to them, in spite of the inefficiencies. For start-ups, even leaders with the right intentions fail to find right and good solutions for managing their human-resource-pool. In the absence of any standard systems and practices, and resources and scale to afford those, things often get unimaginably complex.
Here are some random real-life cases that are eye-openers of some sort:
The salary offers by some startups are so insane and out of whack that it's surprising they are not questioned by investors for offering such large salaries while their loss-making business models evolve randomly with no strong analyses or arguments backing their decisions, that go with endlessly dragged excel sheets with ever increasing growth to back the monetarily obese recruitment. And the investors turn blind eyes to all this drama, as their bonuses are tied to short-term bets, hoping a majority work out in a booming market. You can't blame a herd for grazing where it's green as long as the grass is growing. It's considered fair in capitalism to try to get a bigger bite. Someone who cautions the group that the grass may get exhausted if eaten at that rate is only considered a fool. The wisdom - as taught by dominant economic thought - is to eat the most you can when all are eating, and conserve your energies for when the grass is gone. The weaker ones will die of hunger, the grass will regrow to satiate those who remain, and the cycle goes on. You are not supposed to question as to why there have to be cycles, coz when you do, you are called insane and kicked out of the race... and there has to be a race.
Everyone is in a hurry now. And in recruitment at IITs and IIMs, the hurry is by design - to create mad rush and chaos, and thereby a hype for the institute. In my experience it neither benefits the candidates nor the companies. A friend of mine heard his ex-boss say this to his CEO - you can't put 9 ladies together and expect them to deliver a baby in 1 month. Very short placement periods - like a placement week - often lead to random candidates getting hired for random roles. Large organizations don't feel the hit so badly when misfit people play crucial roles, as there is already a flab that can be afforded due to economies of scale that cushions things out. But in startups it is impossible to grow strongly when certain parts are weak... and all of the few parts of a startup are very crucial. High quality products have their own lifecycle which cannot be expedited beyond a point just by investing heavily and blindly and falling prey to people-pricing wars.
It is therefore high time everybody questioned their decisions and the way things are bubbling up unnecessarily:
The bubble is not bursting. Only those who have inflated beyond their capacity or have skin too weak are releasing the winds to the stronger players.
Most of the contemporary managers and even CEOs of these start-ups do not have a mature understanding or point of view on these things. They do most of their hiring in an ad-hoc manner and expect everything to settle and resolve in the long run. Can't really blame them for their lack of experience or foresight, coz while that is truly their weaknesses, these are still extremely complex issues with lots of variables at stake for the people running the businesses. Large companies absorb their flab - if they consider some of their workforce as such - until they have to shed some, and economies of scale allow some sustainability to them, in spite of the inefficiencies. For start-ups, even leaders with the right intentions fail to find right and good solutions for managing their human-resource-pool. In the absence of any standard systems and practices, and resources and scale to afford those, things often get unimaginably complex.
Here are some random real-life cases that are eye-openers of some sort:
- A guy with 4-5 years of technology experience, struggling in his current job, is offered a salary of 98 lacs INR per year from a startup that was recently in news for wrong reasons.
- An e-commerce startup which had multi-million dollar investment was forced by its investor to hire only IITians and to push the employee count to 20+ in a few months time. The startup ended up hiring fresh graduates from IIT at 10+ lacs INR salary. Those guys failed in their jobs coz lack of any work-experience and absence of training programs in the company to groom fresh recruits.
- Highly skilled employees getting burned out due to being heavily overworked - 100+ hours per week - and forced to quit companies and sometimes even industries, just coz most of the other employees are not competent enough to handle tasks at work.
- This guy has good grades from an IIT - hire him - he'll build our next-gen product!
- This girl is in a good company - hire her - she must be good coz she's got this big brand on her resume!
- This guy has a high salary - let's pay him higher and get him - there must be a good reason he's paid that high!
The salary offers by some startups are so insane and out of whack that it's surprising they are not questioned by investors for offering such large salaries while their loss-making business models evolve randomly with no strong analyses or arguments backing their decisions, that go with endlessly dragged excel sheets with ever increasing growth to back the monetarily obese recruitment. And the investors turn blind eyes to all this drama, as their bonuses are tied to short-term bets, hoping a majority work out in a booming market. You can't blame a herd for grazing where it's green as long as the grass is growing. It's considered fair in capitalism to try to get a bigger bite. Someone who cautions the group that the grass may get exhausted if eaten at that rate is only considered a fool. The wisdom - as taught by dominant economic thought - is to eat the most you can when all are eating, and conserve your energies for when the grass is gone. The weaker ones will die of hunger, the grass will regrow to satiate those who remain, and the cycle goes on. You are not supposed to question as to why there have to be cycles, coz when you do, you are called insane and kicked out of the race... and there has to be a race.
Everyone is in a hurry now. And in recruitment at IITs and IIMs, the hurry is by design - to create mad rush and chaos, and thereby a hype for the institute. In my experience it neither benefits the candidates nor the companies. A friend of mine heard his ex-boss say this to his CEO - you can't put 9 ladies together and expect them to deliver a baby in 1 month. Very short placement periods - like a placement week - often lead to random candidates getting hired for random roles. Large organizations don't feel the hit so badly when misfit people play crucial roles, as there is already a flab that can be afforded due to economies of scale that cushions things out. But in startups it is impossible to grow strongly when certain parts are weak... and all of the few parts of a startup are very crucial. High quality products have their own lifecycle which cannot be expedited beyond a point just by investing heavily and blindly and falling prey to people-pricing wars.
It is therefore high time everybody questioned their decisions and the way things are bubbling up unnecessarily:
- Investors: Do I have the scientific and economic basis to invest in a certain company? Am I unnecessarily forcing my biases to run the companies in my portfolio? Am I setting the right terms and guidelines to help groom my companies for long term success, rather than making headlines for investment volumes and crazy salary figures?
- Founders / CEOs: Is my hiring based on the right principles? Am I doing justice to the talent I am hiring and to my company in return? What is my explicit and implicit messaging to attract talent - do I project the vision, mission and culture of the company, or the salary I offer?
- Employees: Is this the right salary for me - for the capabilities I bring and the expectations of my role? Is the company's business model sustainable enough to pay me this salary with the expected year-on-year growth for the long term? Will I be groomed as a professional in this company?
The bubble is not bursting. Only those who have inflated beyond their capacity or have skin too weak are releasing the winds to the stronger players.
With thoughts from Manish Kumar and Ravindra Naik
