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Your degree does not determine your salary

02 Jun comments

Companies don’t pay salary for,

  • your degree
  • your hard work
  • the college/university you went to
  • skills, knowledge, experience, etc.

You get paid for getting the results your employer hired you to accomplish. 

 

Don’t believe me? You want proof?

 

We pay salary based on results
Link to the original LinkedIn Post

 

It is a common misconception among students that, companies hire and pay salary purely based on the degree, grades, the country and college. There is a correlation between degree, college, job and salary, but correlation does not imply causation (it means, even though degree and salary are correlated, degree may not be the actual cause for your salary, rather it can be something else). There are other factors like job location, experience, company size, industry, market condition, demand & supply and a lot many.

 

Correlation between degree and salary does not imply causation
Correlation does not imply causation

 

So why do companies pay you salary?

Your salary is directly proportional to the value you provide.

Let’s make this concept even simpler. Imagine a company is making Rs.100 profit using you. Then the company will be ready to pay you a certain percentage out of that 100. They are not even paying for the knowledge and skills you possess. They are paying for getting things done. Not everyone who possess the knowledge and skills know how to make use of it.

So in short, your salary depends on how much money you are helping your company to make.

 

Now let’s look into the related factors like your grades, degree, college and location. Recruitment is a very sensitive process for every organisation.

One bad employee in a critical role can cause a lot of harm to the company. So they try to reduce the risk as much as they can. Your degree with good grades from a good institution is giving an impression to the recruiter that you are a consistent performer. It is like a guarantee certificate.

 

Finding the right talent from a large pool of candidates is a very expensive process. That is why companies who can afford to recruit students from top institutions pay them high salary. Top institutions have already done many elimination rounds (during the time of admission) for the companies. And companies does the final elimination and choose people they want. Finding an employee from a group of 100 exceptional candidates, who have already proved that they are good enough to get into a Tier 1 institution costs much lesser and takes less time.

This does not mean someone who could not clear few elimination rounds for a top institution are not good. But unfortunately they have to work extra smart to make themselves visible in the crowd.

 

Location, Demand and Supply

The salary will be more if your skill set is rare.

But you also need to look into demand. India right now don’t need huge number of forensic experts. The number of opportunities are less. But, if you are better than other available talents, you will be the one who gets hired. Computer Science has a lot of niche sectors within it. If your skill set is easily available in the market (high number of people with same skills), then the demand will be less, and you won’t get paid much.

 

The Message

It is all about value exchange and you need to know how to make that exchange if you have certain skills.

So next time when you think of ways to get high salary make sure you have something valuable and rare to offer. So choosing a particular degree or college is not the only thing. Good colleges provide you better environment to learn, which is really important. Pick a subject which interests you continuously to learn.

If you are good at something which is in demand, you will get paid enough anyway. It is difficult for companies to find dedicated ones from a large crowd. So make yourself visible to them.

 

A tea vendor on a busy street might be making more money than an average Engineer would make in his life time. Most likely he won’t even have a degree. So please don’t think some magical degree can make you wealthy.

Note: There are exemptions. Many government jobs are examples. There you get paid for being present and for your qualifications. I did not mean to say that they don’t do any work. They don’t have much negotiation power and the salary is set by the government based on certain criteria.

There are companies run by people who don’t understand this. So obviously there are organisations out there who does pay based on your degree and attendance. You can decide whether you want to be a part of such firms and spoil your career growth.

 


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