Salary Misconceptions and Myths
1) Big Companies Pay Better Salaries:
Probably the biggest salary myth among many. Having said that, there is a bit of truth behind it. As an example, consider two purchasing managers. The first one works at a 10,000 employees company and another at a 100 employees company. The salary of first one will be definitely higher than that of other but not because he works at a bigger company. The true defining reason is the “size of responsibility”. As we all know, more responsibilities mean higher management skills and thus leads to a higher salary.
While comparing similar jobs with exact workload and responsibilities at companies with different sizes, we found that there is no direct relationship between salary and company size. As a matter of fact, we will list two reasons why small companies may pay higher wages to their employees (not always of course):
a) Small companies rarely do salary market research. They pay employees based on personal experience or relative to others. As a result, it is entirely possible for an employee to earn well above the market average. Large companies have their own specialized HR professionals who are always up to date with the salary trends. It is very tough to negotiate with those people.
b) In small companies, employment has a more personal aspect. The employee may actually do an interview with the business owner. The business owner usually sees value in people and is mostly interested in what they can offer to the business. They are easier to negotiate with than HR professionals or department heads. Department heads wrongfully assume that chipping on the budget in general and on the salaries of their staff in particular will make their superiors happy. Cutting on the costs is good but not when you are trying to hire the best talent.
2) Education Beats Experience:
We can hear you screaming already, hold on. This has always been a source of debate in the HR medium as well as among the employees. There is no correct answer. This is a highly subjective matter and to give a general rule would be absurd.
The question most fresh graduates and employees face is whether to invest their time in earning higher degrees or work harder in climbing the career ladder and increase their experience (assuming you can only choose one). Doing both at same time is best but this option is a luxury that many people cannot afford.
In some jobs education out performs experience and for others it is all the way around. We believe that such a decision needs to be assessed per individual, so stay away from the general rule.
3) Industry Type Is Not Important
Most people are not aware of this point and assume that a job is a job anywhere. Salaries depend on value and the employee’s value increases if he/she is a source of revenue to the company.
Example: a doctor is the most important unit in a hospital because he is the main source of revenue in it. All the other departments in the hospital (accounting, IT, purchasing, marketing, etc…) are in a way or another in service for the doctors to do their jobs. The doctor’s value is maximized at a healthcare institution because money flows through him. Now compare that to a doctor who works in a school, occasionally seeing students not feeling well.
The same applies for other jobs: an accountant earns best at an accounting company, an engineer at a construction company, a programmer at an IT company, etc…. You get the idea (there are exceptions of course). Moreover, working at company in your domain of experience insures extended career development which in turn means higher salaries on the long run.