Know this before signing the offer letterImage Credit source: ai generated
For youth looking for a job, a big salary package is like a dream come true. The figure of lakhs printed on the offer letter often brings relief to the eyes, but does the entire amount reach the bank account? This is a question that is often ignored. Recently, a startup founder has exposed the bitter truth on LinkedIn that how companies attract candidates by showing huge ‘Cost to Company’ (CTC), whereas in reality the salary received is very less.
The surprising truth about the offer of Rs 18 lakh
Sahil Thakur, founder of ‘BlockseBlock’, recently shared an incident on social media, which has sparked a new debate on salary structure in the corporate world. He told the story of one of his students who got a job offer of Rs 18 lakh per annum (LPA) from a startup. This figure may sound amazing for a fresher.
When Sahil Thakur investigated this offer in depth, it came to light that this balloon of Rs 18 lakh was actually filled with conditions. After a detailed analysis of the offer, it was found that the fixed base salary of that employee was only Rs 6 lakh per annum. That means, if seen monthly, only Rs 50,000 were to come into the account. The remaining Rs 12 lakh were such that the employee might never get it.
The illusion of performance bonus
While explaining the ‘breakup’ of this offer, Sahil Thakur told how the companies had added various tricks to inflate the salary. Out of Rs 18 lakh, Rs 4 lakh was kept as ‘performance bonus’. The catch was that this bonus was available only when the employee achieved 120 percent of his target.
Sahil wrote that the reality is that these targets are set by managers and are often so difficult that only 10 percent of people are able to achieve them. That means it is almost impossible to get this Rs 4 lakh. Apart from this, the offer also included a ‘retention bonus’ of Rs 3 lakh. The condition was that this money would be received only when the employee completes two years in the company. The irony is that most of the people in startups leave the job within 18 months, due to which this amount also remains with the company.
Greed is given in the name of shares
To make the salary package huge, ESOPs (Employee Stock Options) worth Rs 5 lakh were also added to it. These are shares of the company, whose value is based on the current valuation of the company. The employee gets these shares in installments over a period of four years.
The biggest risk is that these shares have any meaning only when the company gets listed in the stock market (IPO) or a big company buys it. If this does not happen, the value of those Rs 5 lakh may become zero. Sahil Thakur sarcastically said, “So actually the candidate is getting Rs 50,000 per month, that is, a package of Rs 6 lakh. The remaining Rs 12 lakh is completely imaginary.” He gave clear advice to his student that you are not earning Rs 18 lakh, but you are getting Rs 6 lakh and a ‘lottery ticket’.
Freshers often cheat
This post of Sahil Thakur touched the sore spot of many professionals. He told that companies show the figure of Rs 18 lakh instead of Rs 6 lakh because it looks attractive. Freshers often do not ask for detailed breakup of salary and immediately say yes after seeing the big number. After this revelation on social media, many people shared their experiences. One user told how in the old company the founder had promised to give ESOP to everyone, but in the end no one got anything. At the same time, some experts say that not only freshers, but even experienced people are sometimes unable to understand this game of CTC and later get disappointed due to the low salary they get.