Compensation Etc.

For a change I’m keeping up a promise that I’ve made on my blog – I’m actually writing a follow-up post that I’d promised. In the past, I’ve guilty several times of promising to continue something in a follow-up post and then conveniently forgetting about it.

So I had mentioned in my last post that the word “compensation” as used to describe salary is not really misplaced. There has been a lot of debate on this topic. The opponents of the word have said that you aren’t losing an arm or a leg in order to be “compensated”. They say that you are only getting paid for the value you add, and so the use of the word “compensation” is plain wrong. I must admit I haven’t really bothered to read the arguments of the people who support the use of the word.

The basic fact: you work because you need the cash flow to fund the rest of your life.

I know a lot of career-minded folks among you will jump on me for this, but I stand by this. Just get down a little deeper, and ask yourself why you are doing what you are doing. Maybe you don’t get the kind of questions in your head that I normally do, and described in my previous post. Maybe your jobs have put you in the kind of comfort zone where you don’t really need to ask yourself such questions (I was in a similar state not too long back, I must admit). But I encourage you to make that effort and ask yourself this uncomfortable question. And it will be down to the money.

You might say that you are doing some stuff “for the sake of career development”. Rephrase that and you will find that you are doing that in expectation of higher future earnnigs. You might say that you are doing something because you want to “achieve something”. Dig deeper and you may find that you define the fruit of your achievement in monetary terms.

So where does “quality of work”, “impact on society”, “value add”, etc. all fit in? I know that in the not-so-distant past, I’ve also talked a lot about these things. I have rejected a number of potential job offers because I don’t like the “quality of work”. This definitely needs to be incorporated into the model, right?

The next basic fact: work is inherently unpleasant.

I don’t think I’ll spend too much time elaborating this here. Maybe I’ll explain this in the comments if you want. So this is where things like “quality of work”, “value add” etc. all fit in – they make work so much less unpleasant. For example, I enjoy spreadsheet modeling. So if my work involves a lot of spreadsheet modeling, I’ll feel so much less unpleasant doing it. Of course, what I am doing remains “work” and it has to be done, in a certain way by a certain day, and so it remains unpleasant. But the fact that I enjoy the core activity makes it less unpleasant.

Similarly, if you think that the work that you are doing gives you a sense of achievement, then it is as if you are doing a part of the work for yourself, and not for someone else, and thus need to be compensated less. “Compensated less”. So this is where it fits in. You get “compensated” because work is inherently unpleasant. You need some incentive to do the stuff that is inherently unpleasant. So you get compensated.

You may have to live in a city that is not your preferred choice – you need to get compensated for that. You may face an extremely long commute where you waste your time – you need to get compensated for that. You might have to work long hours which can intrude on your personal time – you need to get compensated for that. You may have to deal with lousy colleagues or customers, you need to get compensated for that. The list goes on. And if you think about it, a large part of the money that you get out of your work is just that – compensation. Compensation for your time, your effort, your mindspace, your willpower, etc.

So why work at all, you might ask. Go to basic fact one. You work because you need the money. You are in a certain job because you believe that after compensating for all your “sacrifices” for the job, it will leave you with some more money to fund your life. If you think that the money your job leaves you if you take out the “compensation” part of it is lower than what you need to sustain life, you need to question why you are doing that job.

Investment bankers (the inside the wall type) usually end up spending a lot of their time at work, and despite the reasonable bonuses they get, they might feel they are not being compensated enough. They are doing it because they expect that when they ultimately get promoted they will make enough and more to cover for all this unpleasantness. It is basically an “investment”. If, however, you think you are in a job where you are inadequately compensated but don’t see any hopes of significantly higher compensation in the future, you are cheating yourself by not looking for another job.

This also explains why it is a bad thing to compare your salary with your peers and your old classmates and then feel good or bad about it. No two people have the same needs. No two people find the same things unpleasant to the same degree. No two people make the same trade-offs. Comparing your salary with you peer gives little information.

On a closing note (I know it’s already monstrously long) I find the phrase “work-life balance” amusing. I think it is a construct brought about by the pigs so as to con the sheep into workign harder for them. There is no “balance” between life and work. Life is the master and work is the slave.

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15 thoughts on “Compensation Etc.”

  1. Strong agreer esp. with last-but-one paragraph 🙂 Also feel that all those millions of rock bands, authors and the kind make this trade off very consciously (as opposed to aam junta who may not) – investment for future returns as well as more enjoyment of core activity.

    1. i think it all boils down to how you price different things – such as freedom, enjoyment of job, pain, pressure, etc. each person has a distinct formula.

  2. In the initial phases of a person’s career money is the major factor for work he is doing. He is being “compensated”. But what about the millionaires/billionaires who still go to their office. For them i think its just a by-product and they are more doing it to cos they it , they like cahallenges , or want to prove that they are good in making more momney.

    1. there might be other kicks that the job gives them which subsidizes it. the marginal impact of each rupee in their bank might be low. but the marginal impact of each “kick” might not be which is why they werok

  3. Yeah, I always thought of compensation as the amount a company would pay you to stay a slave to the workplace and not do something else. Current MBA salaries for example actively discourage entrepreneurship – why struggle for 5 years till you can get to your MBA pay if your current co is already paying you that much?

    Also work is called work because it is boring in the short term, and supposedly has some long term payoff. Else they would have called it play.

    As for billionaires who continue going to office – there’s no need to glorify that… they do that only because now they are fully trained rats (from the rat race they won) and want to compete with the other rats that won. Which explains why Anil and Mukesh haggle over gas transfer prices when they could vacation forever.

  4. Nice Post Karthik.I like this particular sentence which aptly describes when a person should look for another job:
    “If, however, you think you are in a job where you are inadequately compensated but don’t see any hopes of significantly higher compensation in the future, you are cheating yourself by not looking for another job.”

  5. “This also explains why it is a bad thing to compare your salary with your peers and your old classmates and then feel good or bad about it. No two people have the same needs. No two people find the same things unpleasant to the same degree. No two people make the same trade-offs. Comparing your salary with you peer gives little information.”

    How about if we compare a combination of salary and unpleasantness that two jobs bring? Comparing, ignoring the completely different natures of jobs.

    Assuming that the degree to which a person finds his job unpleasant can be expressed in some form (I want to add that this is not a very unreasonable assumption), then, comparing your rupee salary per unpleasantness unit, with your peer’s rupee salary per unpleasantness unit should reveal important information as to who is in a “better” job.

    If I find my job to be unpleasant at a 7/10 level, and earn Rs 3 lacs p.a. and my peer finds his job to be unpleasant at a 3/10 level and earns Rs 7 lacs p.a., then should I not be “feeling bad” about it?

  6. I don’t know if you realize, but you’ve just made the perfect introductory warm-up speech and it will be a complete waste if your next post isn’t on how Amway will be the saviour from this vicious trap.

    1. i’m sorry i didn’t realize
      and i still don’t realize why amway is the saviour from his vicious trap

  7. oh! I had never comprehended the word “compensation” in this light! This is altogether a different perspective; it has spurred so many thoughts in my mind now…

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