Graduate starting salaries: you're missing a very important part of the equation

Once in a while I come across something on social media that really irks me, like this: I would like to respond to a piece I have come across on Facebook - Grad salaries expectations: $4k …the reality: $2.7k. The piece is actually really short and talks about the mismatch in the expectations of graduate starting salaries with what awaits them in the Singaporean job market - it is mostly based on a survey carried out by STJobs. However, there is a vital piece of the equation missing and I found it so disturbing that I simply had to scream about it on my blog. And here it is:

You can't treat all graduates as if they are a monolithic entity.

Not all graduates are equal.

So. What do you think league tables are for?

So you are a graduate - what do you think you're entitled to?

Allow me to speak as someone who has played the part of a gatekeeper in the corporate world. When the company advertises for a position, I would receive loads of CVs to sort through and naturally, my job is to find the best candidate for the job. It is a pretty ruthless, cruel process as I narrow the field down from a big stack of CVs to just a handful whom I am willing to let through to the next round where they are actually granted an interview with the management.  If someone is from a good university, then naturally I am impressed and they usually make it through to the next round. If someone is from a university at the wrong end of the league table, then I would think, "what went wrong? How did you end up wasting three or four years of your life at such a crap university? "Then I would most probably reject that candidate unless s/he has some extraordinary work experience.

Don't get me wrong.

In my most recent role as a gatekeeper, I strongly recommended a graduate from a Romanian university - now I did my research, I didn't want to discriminate against him just because I was unfamiliar with the Romanian university system. So I did my research online and I also consulted a few Romanian friends about his university - as it turns out, my candidate was from one of the best universities in Romania. I just needed to know that this young man had proven himself within the system he was brought up in and had emerged as one of the brightest students from within his cohort. Indeed, in the Romanian universities league table, there are a total of 73 universities and it should come as no surprise that the best Romanian universities attract the brightest students in Romania and those at the wrong end of the league table attract the very worst. Let's apply some common sense to the situation please. If you were a straight-A student in Romania, would you opt to study at a university at the top of the league table or at the very bottom?

Have you managed to prove yourself at university?

Thus for us as gatekeepers, we have a job to do and we take it very seriously. I have made errors in judgement before as a gatekeeper and when things go badly wrong, it does reflect very badly on me when the company invests time and money, training up a candidate who clearly isn't suited for the job - only for the candidate either to quit the job out of frustration or for the company to be forced to fire the candidate a few months down the line when the candidate simply couldn't deliver. When things go wrong like that, I have to bear a lot of the blame for making a serious error of judgement. Thus gatekeepers like me are surprisingly risk-averse when it comes to our selection process. We would gladly play it safe by selecting a candidate from a very good university as it would be putting our necks on the line if we do give the candidate from a bad university (or who doesn't have a degree) a chance.

I know what you are thinking right now: it is unfair for someone like me to deny someone from a less reputable university a chance to prove himself/herself. Consider the way the risks and rewards are distributed from my point of view: if I pick a candidate from Oxford university and things go wrong, the boss would be surprised and say, "well clearly he was smart enough to go to Oxford, I can't understand why he was unable to do this job when he did appear to be a very credible candidate." If I were to pick a candidate from LMU and things went wrong, the boss would turn around and say, "what the hell were you thinking Alex, giving someone like that a chance? What do you think we are, a charity trying to help the underprivileged? What made you think someone from a university like that could do this job? Do you know how much money you have cost the company with this mistake?" My priority is to safeguard my position in the company, not to try to help anyone else when the risk far outweighs the reward. What do I have to gain?

What is my reward for giving the underdog a chance?

So, how is this risk mitigated in the job market then? Let's apply some basic laws of economics here: I'm sure you're all familiar with the concept of supply and demand. Graduates from good universities command a far higher starting salary because of the demand for such high quality graduates. Nonetheless, if a company were to hire a graduate from a university at the wrong end of the league table, it can mitigate the risk by offering a much lower starting salary during a trial period - this means that the candidate accepts a much lower pay during this period whereby s/he is given the chance to prove that s/he can indeed do the job. The company may fire the candidate at any time during this trial period if s/he proves to be unsuitable for the job or is unable to perform to a certain standard. This is a win-win situation because it allows candidates from chapalang universities a chance to compete with those from very prestigious universities - the companies reduce the risk they take with such candidates because the cost to them if these candidates fail after a few weeks or months is lower due to the much lower starting salary during the trial period.

Even if every single company wanted to hire only graduates from top universities, the fact is, the supply of graduates from such fine universities is very limited. Likewise, not all companies may be willing to get into a bidding war with their competitors over starting salaries when it comes to hiring the small number of graduates from places like Oxford and Cambridge. Many graduates from less prestigious universities do end up getting on just fine in the working world and it is really not the end of the world if you do not have a degree from top university. The only difference is your starting salary and if you do manage to prove your worth to your employer, then your salary can increase quite quickly - but that is entire up to you to make that happen. Likewise, an Oxford graduate who does not deliver as promised on the job will be sacked no matter how prestigious his alma mater is. Such is the working world, you must earn your keep.

What can you do for your company?

How much you can expect to earn reflects on a number of different factors: what you are contributing to the company, how rare your skills are, how good you are at the job. However, the most important factor is this: can the company replace you with someone who will do just as good a job for less money? Hopefully, your answer will be, "sure they can hire someone else to replace me, but will my replacement be as good as me? No way, that's why I have the job with this company." As a fresh graduate looking for your first proper job, it is important to calculate what you are worth to your employer based on those factors. I was aghast when I read the following in that STJobs survey, "Well if I put in so much effort at school, a high starting salary is a given”, said Lionel Tan, an undergrad at NUS. “Otherwise what do we study so hard for?” Hang on a second Lionel, are you trying to suggest that your future employer should somehow reward you for the fact that you studied hard at university? What utter bullshit.

Lionel, perhaps you have mistaken your future employer as some kind, doting uncle who will give you a big fat Angpow when you get good results at school - but the working world is nothing like this. If your hard work at university meant that you have managed to acquire some skills which will prove to be very useful to your employer, then yes your employer will reward you for having those skills. But let me be blunt: your future employer doesn't give a shit whether you studied really hard at university or if you cheated your way through all the exams - what they care about is whether or not you can actually perform well in your job. If I am hiring a person to do a sales job, I would gladly give the job to someone who has cheated his way through university, maybe even by sleeping with the professors. After all, my job is not to judge anyone's morals or conscience, my job is to find the right candidate who will do anything to close the deal and bring business to the company. Welcome to the real world.  Kindly wake up and smell the coffee.

Wah you study so hard, come uncle give you Angpow.

Don't get too hung up about starting salaries. It is not where you start that matters, it's where you finish the race that counts at the end of the day. My favourite example is Sir Alan Sugar who built a massive business empire from virtually nothing. That's it from me on this issue, feel free to leave your comments below. Many thanks for reading.