Thursday, December 3, 2009

India's Top 10 Paymasters

I posted a comment to the post at Trak.In, which was in response to an article on Economic Times.

It is surprising that newspaper would publish something without citing their methodology. I doubt they would have surveyed employees to arrive at the figure.

I think they would have taken the salary expense from the annual / quarterly statements and divided it by the total number of employees in the company.

Average in this case may not even be close to what most people would actually earn as averages are influenced by outliers. Consider a company with 11 employees. The CEO earns 1 Cr p.a. and other 10 earn 10 Lac p.a. the average will be around 18 Lac p.a.

When data has outliers median may be a better indication of the actual salary most people would earn. The median in my example is 10 Lac p.a.

So it is interesting to see the methodology employed by ET if they have just used annual statements then there is no way they would have median salary (or standard deviation around the average). If they have done surveys then median would be a better estimate.

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