Quote Of The Day

"Victory goes to the player who makes the next-to-last mistake - Chessmaster Savielly Grigorievitch Tartakower (1887-1956)"

Thursday, January 31, 2002

Can you do this in your head (I had to)?...
My boss came to ask my advice today. They are trying to put together a package to retain certain staff (not me I might add) and he wanted my feedback. So he asked me this hypothetical: Which would you rather have: EITHER a 3% salary increase per year plus a 12% salary bonus OR a 7% salary increase per year? How long would it be before both offers amounted to the same cumulative total?

I guessed most people would take the first option - a 12% annual bonus would be too tempting an offer to turn down. It took a spreadsheet to prove me wrong. The answer all depends how long an employee was going to to stay with the company (compound interest and all that). Can you guess how long someone would have to stay in the company before the second option was the better one? I was surprised.

1 comment:

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