Q. Similar to other top MBA programs, last year’s MIT Sloan graduates earned healthy compensation packages which included a median base salary of $170,000 as well as a median signing bonus of $30,000. [1] While salary and bonus are key elements of the total compensation equation, what else should alumni and students be considering as they consider prospective new employers?
A. (Cappelli) There are several additional elements and I recall that over 65% of the MIT Sloan Class of 2023 reported other compensation beyond a signing bonus, with a median value of $40,000. [2] Still, one should consider a prospective employer’s overall approach to human capital management and its impact on employees. For example, are people really the most important asset at that firm? Over the past 12 months, I have shared some research findings which included:
- The employers’ emphasis on costs per hire over the quality of hires
- The replacement of regular employees with “leased” workers
- The shift to unlimited vacations and
- The transition of hiring responsibilities from professional recruiters to more expensive line managers.
- The deployment of dry promotions (new job title but no pay increase)[3]
If these actions are in place at your prospective employer, recognize their leadership team is undercutting the evidence about what works to improve the quality, productivity, and creativity of employees.[4] Therefore, my advice as you consider new employers is to carefully assess the whole picture of total compensation that might support your career growth trajectory. Beyond the salary and bonus financials, evaluate their hiring, development, and retention strategies. If you ask what percentage of their promotions come from internal appointments and they don’t know this simple but important statistic, it should be a warning signal that developing their most important asset, their employees, is not a strategic priority. Also, be cautious about joining a firm that offers “unlimited vacation.” While it sounds great in theory, it can create ambiguity around what is acceptable, resulting in inconsistencies for how much time employees can actually take off. The lack of structure can lead to some employees feeling uncertain about taking leave. As I recently shared, moving to an unlimited vacation policy enables a company to go from an explicit contractual obligation to a kind of moral obligation, an informal obligation for a key benefit which we all need and value.[5] Finally, uncover candid employee experiences via platforms such as Glassdoor which enable current and former employees to anonymously review companies and their management. While such employee comments on platforms including Fishbowl[6] for consulting and Cafepharma[7] for the pharmaceutical industry should be taken with a grain of salt given some extremist commentary, there can be valuable fair-balanced ideas to help serve as additional points to consider for joining a potential employer.
Q. With the evolving job market and workplace changes occurring at hiring companies, what are your recommendations for people to consider given each firm’s total compensation offerings?
A. (Cappelli)
First, despite some sectors going through layoffs, recognize that we actually have a healthy US job market[8]. For instance from 1970 to 2017, other than in 2000 when the unemployment rate was 3.9%, all other years had rates consistently over 4% and were especially brutal in 2009 and 2010 when we had nearly one in ten people out of work. Compare that to our relatively stronger job market since 2018. Other than 2020 (6.7%) when we were faced with the pandemic, the US unemployment rate has been below 4%. So, be confident about your capabilities to secure a role that supports your career aspirations.
Second, while RTO (return to the office) seems to have captured the headlines of future of work conversations, your readership should recognize that nearly 75% of US employees have no remote work. [9] While work from home is a benefit important to some job seekers, people need to recognize that not every employer is offering such options.
Finally, recognize the importance of emerging technologies to support your career aspirations and tune out the doomsday predictions of how generative AI will eliminate most jobs. For instance, one Oxford University study “…indicated that 47 percent of U.S. employment is in occupations that are at high risk of being automated within the next decade or two.”[10]. Fast forward to today (as the article was published in 2013) and it is clear that automation did not automate and eliminate such jobs. The reality is that unless you have a potential use case such as a typing pool where the workers prepare documents and their entire workflow can be automated, it is very challenging to reduce most positions.
Instead of spending time worrying about how generative AI might replace you, invest those hours in building new skill sets that are valued by prospective employers. Companies are looking for new employees with the right experiences. But as I shared earlier this year[11], the most pressing issue for America is that everybody wants to hire somebody with three years’ experience, and nobody wants to give them three years’ experience. Looking at the data around investments in training, it continues to spiral down. If your current employer is not providing adequate training as part of their total compensation package, tap into MIT Sloan’s alumni programming as well as other MIT resources[12] for everyone to secure experiences which are valued by potential employers.
Peter Cappelli is the George W. Taylor Professor of Management at The Wharton School and Director of Wharton’s Center for Human Resources. He was recently named by HR Magazine as one of the top five most influential management thinkers. He insights have been shared in various publications including the Harvard Business Review, The Wall Street Journal and HR Executive. Dr. Cappelli received his B.S. in Industrial Relations at Cornell University. At Oxford University, he earned his Doctorate in Labor Economics and was a Fulbright Scholar.
Partha Anbil is a Contributing Writer for MIT Sloan Career Development Office and an alum of MIT Sloan. Besides being VP of Programs of the MIT Club of Delaware Valley, Partha is a long-time life sciences consulting industry veteran, currently with an NYSE-listed WNS, a digital-led business transformation company, as Senior Vice President and Practice Leader for their Life Sciences practice.
Michael Wong is a Contributing Writer for the MIT Sloan Career Development Office and an Emeritus Co-President and board member of the Harvard Business School Healthcare Alumni Association. Michael is a Part-time Lecturer for the Wharton Communication Program at the University of Pennsylvania and his ideas have been shared in the MIT Sloan Management Review and Harvard Business Review.
[1] https://mitsloan.mit.edu/sites/default/files/2023-12/MBA-Employment-Report-2023-2024_2.pdf
[2] ibid
[3] Nehmeh. Ranya, Cappelli, Peter, It’s Time to Do Away with “Dry Promotions,” Harvard Business Review, July 18, 2024
[4] Cappelli, Peter, Our Least Important Asset: Why the Relentless Focus on Finance and Accounting Is Bad for Business and Employees, Oxford University Press, 2023
[5] Ivanova, Irina, Unlimited vacation can save companies billions. But is it a bad deal for workers?, CBS News, August 7, 2023
[6] https://www.fishbowlapp.com/bowl/consulting
[7] https://www.cafepharma.com/
[8] https://data.bls.gov/timeseries/LNS14000000?years_option=all_years
[9] https://www.demandsage.com/remote-work-statistics/
[10] Frey, Carl Benedikt and Osborne, Michael, The Future of Employment, Oxford University, September 17, 2013 /Users/michaelosborne/Documents/Research/future_of_employment_paper/original/.texpadtmp/future_of_employment_original.dvi (svdcdn.com)
[11] https://www.hbs.edu/managing-the-future-of-work/podcast/Pages/podcast-details.aspx?episode=2101851700
[12] https://openlearning.mit.edu/courses-programs/mit-opencourseware
