Question

Companies come for campus placement where through interview they
try to estimate the candidate’s future marginal revenue product and
after the process decide the salary. After one year’s performance (or
any decided tenure), the candidate is either promoted or sacked. What
economic calculations are taken in account to arrive at the decision?
Explain the answer in detail.

Answer 1

After one year of performance, the companies tries to evaluate:

1) The revenue that the candidate has helped in generating, net of the salary.

2) The cost savings that the company made due to on-the-job training conducted by the candidate

3) The cost saving that the company made due to the candidate taking pro-active steps to engage the employees and their committment towards the company , thereby bringing down the attrition rate

4) The business growth rate recorded and the extent to which the share of such growth be shared with the candidate

5) The skills that the candidate has developed in the course of 1 year tenure with the company and evaluation of the market demand for resource with such skill sets

6) The economic situation of the country and expected growth rate of the business line for the next 2-3 years

7) The economic worth of the credibility that the candidate has developed with different stakeholders

8) The expected revenue growth and future projects in the pipeline

9) The dynamics that exists in the job market