In India, employers set a new hire's salary based on what she was earning it her previous organisation. But can there be a system when the remuneration is fixed on industry standards?
M Saraswathy | Moneycontrol News
From October, it will be illegal in New York City for prospective employers to ask for your past salary details. While many countries across the globe are now looking at barring companies from asking for previous organisation's salary details from candidates, it is still early days for this concept in India.
Once an individual applies for a new job, the first question that they are asked is how much was their cost to company (CTC). Depending on the company's budget for new recruitments, the final hiring decision is taken. However, whatever be the level of seniority, an individual applying for a particular position is required to submit the salary slips of atleast three to six months of the organisation they were working at.
Officials from background verification agencies said that for senior positions, a thorough check is done on the claims of an individual. "We have seen many C-suite executives fudging data and it is not practical to rely on industry benchmarks to fix the compensation. Documented proof is required," said the chief executive of a mid-size reference check firm specialising in executive leader position verifications.
In places like NYC, once this is implemented, employers will look at industry benchmarks for compensation, number of years of experience and also the value that they bring to the new company. Other benefits including stock options will also be allocated appropriately.
Rituparna Chakraborty, Executive Vice President, TeamLease Services said that India is very far from implementing such a concept. She explained that the mode of paying people based on the value they bring is still not there in India yet.
"Decisions are made on the key hire based on what salaries you drew in your past organisations," she added.
As per all company contracts, salary details are regarded confidential and employees are advised not to disclose these details to anyone. However, during job interviews when the question of compensation comes up for discussion, it is not just adequate to disclose the salary but employers also ask for proof of it.
Sunil Goel, Managing Director, GlobalHunt said that unlike many other markets, the gap between minimum salary and maximum salary is very high.
"It requires a different sense of maturity to hire talent without any details of past salary. This is also because we do not have any limits on maximum or minimum pay for professional workforce," he added.