JUST recently, there emerged discussions about a college graduate rejecting a P37,000 starting salary as an entry level Marketing Associate. The said graduate was expecting a P60,000 income due to the fact that she graduated from a prestigious university (probably one of many reasons). This has sparked online debate on whether or not, the decision was correct. But before we make judgments of our own, perhaps we should look at things from a wider perspective.
All of us, at one point, expect an adequate compensation for the skills we have come to acquire. Whether it’s our parents who supported us in our education or we worked day and night in order to finish school, we all have expectations on what salary is enough (the amount of which varies per person).
We tend to believe that once you pass a bar exam or board exam, it is a sure route to financial security or success. The truth is, achieving financial security is not that easy; even for working professionals and entrepreneurs. Let us discuss the relevant factors that affect one’s compensation. One factor that determines compensation is competition. This affects employees, employers and those self-employed. For example, you are a young lawyer who handles big, but occasional, private clients. One day, you decide to charge either a fixed rate or a percentage based on the value of the document you will notarize.
At first, you get many people willing to pay the price you want, because you’re the only one that is most convenient to go to. As weeks go by however, you notice the dwindling number of clients that go to your office. You see most people now lining up at the much cheaper notary public located at the ground floor of your office. To sum up, supply and demand play an important role in what compensation can be offered to you.
The second market factor that determines compensation is one’s scope of responsibility. A vice-president of a large company with multiple branches and thousands of employees will normally have a much bigger compensation as compared to a vice-president of a small family-owned business. Likewise, working abroad overseas can offer higher salaries as well (but the cost of living is significantly higher too).
The third factor that determines compensation is the financial capacity of the employer. Let us say you have been a sales manager in a prestigious bank and you have been with the company for at least 15 years already. The income you get is more than enough for your family.
However, news has spread that the head office of your employer has shut down overseas and your company is next in line to close permanently. Though your contributions and skills have been crucial to the company’s success so far, circumstances beyond one’s own control can happen. You may end up accepting work at a smaller company, with lesser pay, when such a closure happens.
The last factor that determines compensation and is within your control is your work competency. Among all those applying for a job vacancy, what makes your credentials stand out among the rest of the applicants? Did you take internships in established companies prior to being offered a job? Did your skills impact the success of other companies’ marketing plans? Do you have years of relevant work experience that can support the solutions that you offer?
So, back to the question, should you accept a P37,000 salary for an entry-level position? It depends on your personal circumstances and decision-making.
Moving forward, what should one do then if the salary you end up accepting isn’t simply enough to cover your expenses? Here are the other things you can do: 1) upgrade your skills so that you can take on more responsibility for your company and possibly get a raise; 2) get a sideline work, start a business outside of your work hours; 3) invest your money in assets that generate additional income (high dividend stocks, rental properties); and, 4) start your own business (you can potentially earn more, but all of the responsibility lies with you, the owner).
To end, allow me to quote the Bible on the topic of being a responsible worker:
[Luke 12:48 ESV] “Everyone to whom much was given, of him much will be required, and from him to whom they entrusted much, they will demand the more.”Raymond Anthony Quisumbing is a Registered Financial Planner of RFP Philippines. Follow him at Twitter at @OhMyFinancePH. To learn more about personal-financial planning, attend the 90th RFP program this June. To inquire, e-mail info@rfp.ph or text at 0917-6248110.