Tag: labor market

All for One, and None for All

Let’s say you are a student of economics, and have got placed with a mid-tier firm, and with a ho-hum salary to boot. Not what you were expecting at the start of placement season, and not as plum a placement as some of your peers.

Worse, the rules about placement mean that you can’t sit for any other firms that come on campus. Should you then try to get a job by searching on the labor market all by yourself? If you find a better offer, you can choose to not take the job your placement cell got for you.

How should you model this problem as a student of economics?

Two questions that you might want to begin with:

  1. At what level are you analyzing this question?
  2. Over what time horizon are you analyzing this question?

Let’s deal with the first of these questions.

  1. Should you be analyzing this question at an individual level or an institutional level?

    You might think that the answer to this question is fairly simple. Of course it should be at the individual level! What does any institution have to do with your career?

    But hang on for a second. You ditching the job that you got through the placement cell is you walking back on your word – and you will be seen as a representative of the institution. The firm in question will call up the placement cell breathing fire and brimstone about “the students from your institute”. The placement cell will attempt to placate the f&b breathers, and will, in turn, breathe f&b while haranguing the student in question.

    No “character certificate” will be issued to you, the institution will threaten. And not just now, it will say ominously, but forever more. Just you wait and see, good luck getting a character certificate from us for the rest of your career.

    Are you tempted to shrug your shoulders and say “So what?” I would be, in your place.

    But sit in your little time machine, go back to the start of your placement season, and imagine learning about some of your seniors. Learning what about them? That they remorselessly and thoughtlessly pulled the same stunt that you are thinking about. And as a consequence, that particular firm no longer comes on campus.

    Fair? Of course not. Of course not, that is, from your perspective back then. Now that the shoe is on the other foot, and now that it is you who might have to sacrifice a higher salary so as to give your juniors a better chance at placements, you don’t want to think about what is best for them. You want, of course, to think about what is best for you.

    In fact, you have always been thinking about what is best for you. At the start of the placement season, you disliked your seniors for having pulled this stunt. Now, you dislike your juniors, and so see no reason not to pull this stunt.

    Try drawing a 2×2 matrix and see if Uncle Nash deserved his Nobel.

    So, should you be analyzing this question at an individual level or an institutional level? Well, it very much depends on whether you’re about to sit for placements, or have been placed with a mid-tier firm, and with a ho-hum salary to boot.

    The truth, you see, is relative. Just as a politician will change their opinion about something depending upon which side of the speaker they are seated in Parliament, ethics when it comes to placement is an elastic, relative concept.

  2. And now for the second question: over what time horizon are you analyzing this question?

    What do you want? The highest possible salary that you can possibly get, right here and right now? In which case, of course you should withdraw from the offer made via the placement cell.

    But think of the costs of such a move too, not just the benefits. At the margin (for we are economists after all, are we not?) do we make it more likely that we will never be able to apply for a job to this company ever again? Do we make it more likely that the placement cell will not provide us assistance in the future as alumni?

    Let’s say you’ve asked a senior, a mentor, a professor for help in getting this new job. What message are you sending these people? If these folks are asked five, ten, fifteen years down the line about your reliability and trustworthiness – what might they say? How are they likely to react if asked, “Is this person someone who will keep their word? Does a handshake with this person mean that this person can be trusted?”.

    In other words, what signal are you sending to your network? The signal of reliability and trustworthiness, or that of a fickle chaser of immediate gratification?

    Might it make sense to stick around for a year, see what options come up after a year, and leave with a year’s experience under your belt? Might not that mean a pretty good jump, but with your relationship with the placement cell, the firm in question and your network intact? In fact, if anything, your network will have increased in size, for having worked in this firm for a year.

There are other factors to consider, of course.

  1. It could be that you, or your family, have need for as much money as possible right away. Maybe you have a loan on your head, maybe there are health issues at play – who know? Life is tough, and none of us can know all that goes on in each other’s lives. Sometimes, jumping to a higher paying job maybe the right thing to do, even if it is the wrong thing to do. But in such cases, I would recommend that you have an off-the-record conversation with your placement officer and your mentor(s), letting them know that you’re jumping for personal reasons. Not only is that just fine, but you’re likely to get ongoing help and support.
  2. Maybe the firm in question isn’t the kind of work you want to do. I would still advise you to spend a year there, for you knew that when you sat for placements, surely?
  3. Maybe the location is an issue. You just don’t like Gurugram, or Bangalore is too far from home, or you might not enjoy the food in Kolkata, or something along these lines. I would still advise you to spend a year there, for that is no reason to give up on a job. Surely your word is worth more than that?

Finally, a thought experiment. What if the company that has hired you goes on to find later on that there is this other college that has much better students, and it makes sense to cancel the offers made to your Institute, and hire from there instead?

“Ho do you know they don’t do that anyway”, you might want to retort. And sure, I’m under no illusion that a firm will do what is best for itself. And believe you me, for all the “we’re one happy family” extended disco remixes that HR departments will play during your induction into a firm, firms can be pretty darn impersonal and ruthless.

But that’s my point: if that is the transactional view of the world that you hold, then go ahead and jump. Budget, of course, for the fact that this will be a two way street.

And if, on the other hand, you think this to be wrong, and that the word of the firm ought to mean something, well then. Do unto others…

There is, in conclusion, no “right” answer to the question of whether or not you should jump. There only needs to be clarity and honesty on your part when it comes to the answers to these two questions:

  1. At what level are you analyzing this question?
  2. Over what time horizon are you analyzing this question?

All the very best, and my thanks to the person who asked me this question.

How Would You Think About Hiring Freshers This Year?

Imagine you are an HR professional at a firm. This firm is considering hiring freshers in the placement season this coming academic year (2023-24). How should you think about your hiring this year?

  1. The macroeconomic situation in the coming year is a factor, as it is every year. You will want to bake in formal assumptions about the state of the economy during hiring, and for whenever these students join your firms (typically sometime between January 2024 and July 2024). If not formal assumptions, you will still want to have a “gut” feel for this point. My personal opinion is that you should expect a marginally worse macroeconomic situation in the coming year than is the case now, at best. This will have a negative impact on your hiring decision.
  2. Your senior management will either already have asked you, or will in very short order ask you to come up with an estimate of how much the productivity increase has been across all teams as a consequence of ChatGPT and its competitors.
    • Say you work for an analytics firm. Let’s imagine a team working on credit card risk analytics. How much more productive is each member of an existing team because they can now work with ChatGPT? Does it take less time to rustle up code? Less time to summarize a report? Less time to cook up a fifty page deck? Less time to <insert activity here>? If yes, how much time is saved per week? Whatever your answer, can this time be used to do the work that the new, inexperienced joinee fresh out of college would have done instead?
    • Say you work for a telecom firm. Repeat.
    • Say you work for a market research firm. Repeat.
    • Say you work for a think tank. Repeat.
    • Say you work for a financial research firm. Repeat.
    • Say you work for a media outfit in the print domain. Repeat.
    • Say you work for an advertising firm. Repeat.
    • <Insert firm of your choice here>. Repeat.
  3. Of course I asked our new overlord this question, specifically for analytics firms. “Say you work for an analytics firm. Let’s imagine a team working on credit card risk analytics. How much more productive, on average, is each member of an existing team because they can now work with ChatGPT? Give me an estimate of hours saved per week by a typical member of such a team.”
    It tried to avoid giving me an estimate at first, but I insisted, with a little bit of prompting (“A lack of accuracy is fine, and give me a range, if that works better. Assume that a team member works for about forty hours per week. Very roughly speaking, what range will the number of hours saved fall in?”). It guessed somewhere between two to eight hours. Let’s use the midpoint of that estimate, and assume four hours. Assume it is a ten member team, that’s forty hours across the entire team. That’s a work -week for a new joinee. Should we pay two thousand rupees per month to OpenAI, or (say) one hundred thousand rupees to a new joinee?
    Yes, the one hundred thousand rupees is a somewhat random number, but my point holds, so long as the new joinee earns more than two thousand rupees per month. Why? Because that is how much it currently costs for paid access to OpenAI’s ChatGPT4.

It is a slightly different, but fairly similar conversation in the case of lateral hires. We’re about to find out very soon, but if I was a betting man, I would bet on lesser hiring across academic campuses this coming academic year. And with a slightly lower probability, less hiring in general because of the advent of LLM’s.

We all keep saying that jobs will be lost – I tried to ask myself what the initial steps, in reality, would actually look like. This scenario looks all too plausible to me.

If you are working in a corporate organization and reading this, I would like to hear from you. Are these conversations taking place? I’m not (for now) looking for concrete data. I just want to get a sense of how far along the curve have discussions such as these reached.

If you are a student hoping to sit for placements this coming year, I would like to hear from you. Have you thought about such a scenario? How likely do you think this scenario is, and how are you planning for it?

We live, as the curse (apparently) goes, in interesting times.

A Useful, Informative, Optimistic and Worrying Thread About India’s Labor Market