We read these days that Startups are paying fantastic salaries, and on top of it, they are providing a lot of perquisites like vacation trips, etc.
Economic Times reported that few startups increased salary by 150% and provided several perquisites, and the promoters appeared rather proud.
This is an AVOIDABLE EXCESS unequivocally.
- This excess is coming from capital funding Hence, investors should exercise due control on the increment rates by reigning in on such moves in board meetings.
- It is not that talent is so irreplaceable that we need to break all rules by doubling salaries totally
- This has a negative impact on the other parts of the economy which is fairly large and opts for simplistic inflation plus approach
- Productivity comes not only from talented employees but also from a highly productive culture and environment, energizing vision of the entity, and being part of a great team. It is critical that companies spend money and effort creating such a culture rather than frivolously throwing money and thinking that they are buying talent.
- I have seen several such employees who have gone way out of the market median finding it difficult to get a new job when such startups go bust (remember mortality is high among startups).