In the last article, we had examined the salary – experience continuum. The broad idea was to establish an empirical method to benchmark salaries in careers. I would not claim that the hypothesis is a clearly established one. We are speaking of a geometric progression. The multiplicative index “x” may not be a constant value and it could vary from person to person, education background, industry and sectoral status, individual capabilities and attributes and the general attitude to learn. So this “x”, the benchmarking index is very subjective (though one may establish objective pointers).
Moving ahead, today we deal with the other two theories: The Blank Cheque theory and the Critical Mass theory.
Critical Mass Theory
There comes a time every man’s career where his income exponential starts to differentiate itself very highly from his expenses graph. Once a person has gone past this point in his life and career, he becomes economically liberated. He has gone past the absolute essential stage in Maslow’s hierarchy and may well look at self actualization as the next ambition in life. A flight ticket to a tennis event or a grand prix or a final event, or a 15 day exotic vacation is not going to bother your bank balances. Your inflow far exceeds your outflow at that point of time. You would speak about charity, social good, making a difference to the nation and the state. Bottomline: You talk Nirvana. Four snap shots to discuss this situation:
Snapshot 1: Apprenticeship phase: You would have joined a new company and you are 25. Your salary would have a tax component, a education loan component, cost of living component and then there would be money spent one oneself which could include clothes, electronics, going out, dinning etc etc. You could save a lot here but the savings are generally low in absolute terms.
Sanpshot 2: Mid Management Entry level (around 30): You would just have been married. This is the phase where you would be investing in comforts like a Television, a refridgerator, an AC, a Car. Depending upon what your savings from Apprenticeship period is, you would have part or all of these on EMIs. Here your salary is clearly not meeting upto your demands in life, which is why you are hedging the payments in the future term. Your net worth ( Your Asset Base – Your Liability) is probably close to zero if not negative.
Snapshot 3: Mid Life (around 35): You got kids, you have invested in a property. You spend very logically and sparingly. You are keen on investments and savings. There are other running expenses of a house, the domestic things, the kids and theor schools, your insurance premiums, your EMIs. Your net worth is deep deep negative and if you are fortunate, close to zero.
Snapshot 4: Nirvana: In here, the critical mass theory takes care of your monetary commitments. Your incomes exceeds your present expenditure, you may also be closing all the hedges that you had picked up during stage 2 and 3. You can talk about the nuances in golf, and your kids are well on their way to complete education . You and your wife spend time on Sundays teaching slum dwellers.
Coming back to our original line of thought, Once you have achieved the Critical mass in terms of Salary/ compensation / Benefits, your Nirvana starts. Thus hitting the Critical Mass reasonably early post your mid life would define many things including your personality, moneys and career in a different perspective. This is then what you call “ I have arrived..”
Having understood these stages through which one moves forward through in his career, the obvious question is “ How do you pre-pone Nirvana?”
Moving ahead, today we deal with the other two theories: The Blank Cheque theory and the Critical Mass theory.
Critical Mass Theory
There comes a time every man’s career where his income exponential starts to differentiate itself very highly from his expenses graph. Once a person has gone past this point in his life and career, he becomes economically liberated. He has gone past the absolute essential stage in Maslow’s hierarchy and may well look at self actualization as the next ambition in life. A flight ticket to a tennis event or a grand prix or a final event, or a 15 day exotic vacation is not going to bother your bank balances. Your inflow far exceeds your outflow at that point of time. You would speak about charity, social good, making a difference to the nation and the state. Bottomline: You talk Nirvana. Four snap shots to discuss this situation:
Snapshot 1: Apprenticeship phase: You would have joined a new company and you are 25. Your salary would have a tax component, a education loan component, cost of living component and then there would be money spent one oneself which could include clothes, electronics, going out, dinning etc etc. You could save a lot here but the savings are generally low in absolute terms.
Sanpshot 2: Mid Management Entry level (around 30): You would just have been married. This is the phase where you would be investing in comforts like a Television, a refridgerator, an AC, a Car. Depending upon what your savings from Apprenticeship period is, you would have part or all of these on EMIs. Here your salary is clearly not meeting upto your demands in life, which is why you are hedging the payments in the future term. Your net worth ( Your Asset Base – Your Liability) is probably close to zero if not negative.
Snapshot 3: Mid Life (around 35): You got kids, you have invested in a property. You spend very logically and sparingly. You are keen on investments and savings. There are other running expenses of a house, the domestic things, the kids and theor schools, your insurance premiums, your EMIs. Your net worth is deep deep negative and if you are fortunate, close to zero.
Snapshot 4: Nirvana: In here, the critical mass theory takes care of your monetary commitments. Your incomes exceeds your present expenditure, you may also be closing all the hedges that you had picked up during stage 2 and 3. You can talk about the nuances in golf, and your kids are well on their way to complete education . You and your wife spend time on Sundays teaching slum dwellers.
Coming back to our original line of thought, Once you have achieved the Critical mass in terms of Salary/ compensation / Benefits, your Nirvana starts. Thus hitting the Critical Mass reasonably early post your mid life would define many things including your personality, moneys and career in a different perspective. This is then what you call “ I have arrived..”
Having understood these stages through which one moves forward through in his career, the obvious question is “ How do you pre-pone Nirvana?”
The answer to that is that: You probably cannot pre pone Nirvana. That way you would defy the Experience Salary continuum, the basic premise of this discussion. Mark the use of “probably”. This is because there are cases and way to pre pone the Nirvana.
Out of a few that come to my mind is, a meaningful switchover in jobs, roles and companies can do the trick sometimes. This is one of the most difficult things to achieve and lot of perspicacity required. In a few instances an international exposure can pre pone Nirvana basis the Dollar/Euro salaries. The way I plan it for myself, I would take a sabbatical and pursue a higher and meaningful study sometime during my Mid Life. This would have to be through one of the Ivy League schools. It may support my specialization as of now or I may do it to acquire a completely different set of competencies.
One pitfall in this whole argument is that I haven’t looked at a career from a talent, competency, learning perspective. That’s very correct. But in these articles, lets just say that I have worked by a yardstick, that is very well summed up by this one liner by La Schiffer, the villain in Bond flick, Casino Royale : “ I believe in a reasonable rate of return”.
Key Words: Salary Experience Continuum, Critical Mass Theory.
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