The only way you can command a higher salary is to make your employer more money than anyone else who could do your job.
You make money for your employer by producing profitable goods that will be bought by his customers (who are also his employers).
This is why your employer is not your employer, but your employer’s employers.
Who’s Your Employer?
As the saying goes in B2B (“business-to-business”) industries: “Your customer is not your customer but your customer’s customer.”
To be successful in selling your products or services to your customer, you need to make your customer successful in selling his products or services to his customer.
As the manager of “ME, Incorporated,” you are in the B2B space. Your customer is your employer. If he doesn’t buy your services, you are out of a job. Your employer’s employers are his customers. If they don’t
buy his products, he is out of business...
And so are you.
Value Is In The Eye Of The Beholder
You buy a product if and only if you prefer
it to any other use to which you could put
your money. The seller sells her product if
and only if she prefers the money to any
other use to which she could put her
product.
For example, if you buy a computer for
$1,000, then you must believe that you will
derive a higher benefit from the computer
than from the $1,000. Similarly, if I sell
you a computer for $1,000, I must believe
that I will derive a higher benefit from the
$1,000 than from the computer.
One of the greatest revolutions in economics
was the discovery that “value” is not an
attribute of things per se but, rather, an
assessment made by the person for whom the
thing appears to be valuable. Beginning with
Aristotle, economists believed that “value”
was an objective quality such as size,
weight, or material composition. This
thinking culminated with Karl Marx, who
argued that “the labor incorporated in the
good” was what made it valuable .
They were all wrong.
A computer might be valuable to you because
you don’t have one, but worthless to me
because I have two. Neither of us is
“wrong,” because the computer does not have
an intrinsic value; it only has value for a
particular person at a particular time under
particular conditions. No matter how much
effort the producer of the computer put into
it, it’s still worthless to me.
The next time someone pleads with you, “But
I worked so hard on this!” remember that the
labor theory of value is hogwash. If his
product doesn’t help you achieve your goals,
all his effort has been for naught.
By the same logic, remember that your effort
means nothing to your employer unless it
helps him achieve his goals.
What Makes You Valuable?
You are selling your labor to your employer.
(By “labor” I don’t just mean physical
activity, but also everything else you do to
contribute to your employer’s goals.)
Your employer buys your labor if and only if
he prefers it to anything else he could do
with his money—and that includes the labor
of any other potential employee.
Your value to your employer depends solely
on his ability to derive extra gains from
your labor. (By “extra gains” I don’t just
mean monetary profits but also everything
else that matters to him and his
organization.)
Of course, he combines your labor with other
factors of production, such as the labor of
others, capital equipment, and natural
resources, so it is not a simple matter to
calculate your contribution to the mix. But
even if it is only an approximation, your
employer will be willing to pay you only up
to the monetary value that your contribution
has for him.
A rational employer, one that wants to stay
in business rather than overpay you and be
undercut by more rational competitors who
will bear lower costs, will never pay you
more than this; and he will prefer to pay
you less.
How much less? Well, how much would you like
to pay for a computer? I wouldn’t mind
getting it for free; would you? Well,
neither would your employer mind getting
your labor for free. The less cost, the more
profit!
What Makes You Payable?
The upshot of all of this is that being
“valuable” does not mean you are “payable.”
As I said in my last post, your ability to
negotiate your compensation is not limited
only by the value of your labor in terms of
extra gains for your employer. It is also
limited by your employer’s best alternative
to a negotiated agreement with you (his
BATNA).
Your employer’s alternative is to hire the
next most valuable person, where “value” is
the difference between the extra gains he
could make by hiring her minus her
compensation.
So for your employer to hire you and keep
you employed, your compensation must be in
line with that of anyone else who could do
as good a job for him as you can.
This is why the only way you can command a
better salary is for you to be more valuable
to your employer than anyone else who could
do your job. And therefore, the only way to
raise your salary is to make a higher
contribution to your employer than you are
making now.
"How Do Managers Add Value to an
Organization?"
Right from the office peon who is made to
multitask to the head honcho, everyone needs
develop personal strategic plans to ensure
that their bosses cannot afford to lose
them. Here are some tips on how to do just
that:
Become the chosen one
A winner is one who develops "fast-start"
actions to make himself/ herself the
favourite one in the eyes of the management
right from day one. The good old analyising
of one's strengths, weaknesses and how they
can add value to the organisation sets the
foundation of a long-term relationship.
"Can Do" what others won't
Employees who can get things done are highly
prized in an organisation. "Can do" people
rarely turn down a new assignment and always
give their best despite possible initial
rejections. They believe that new challenges
improve their cross functional capabilities.
Communication
All employers want employees with good
communication skills -- starting with
'willingness' and ability to listen.
Business communication should be accurate
and brief. No long winding sentences where
short ones would work. Also, perhaps the
most damaging error in communication skills
is losing your cool or whining. However
justified your complaints are, cool down and
peacefully express yourself if you want to
be heard at all.
It's not personal
This may seem a difficult proposition in a
place where you spend most of your waking
hours, but you just have to learn the art of
being objective at work. In a growing
organisation there are bound to be
differences of opinion. The ability to stay
focused on issues and remain impersonal
helps you to stick to the work objective.
Says Vaishali Achrekar, marketing manager at
one of the leading FMCG companies in Mumbai,
"I always thought that my efficiency
justified my anger at those who wouldn't
deliver. It would naturally become personal
when I lost my cool with my team. Finally,
my appraisals revealed that my team was
petrified of me. It was an eye-opener that
without a team, my efficiency was of no use
to anyone."
Be caring
Think of the favourite senior in your office
and it is easy to point out that he/ she is
someone who genuinely cares about people and
so can get anyone to deliver.
Helping sincere colleagues from other
departments too during bad days, and being
empathic towards one's team is always
recognised. Also, such people command
leadership and fierce loyalty from their
teams/ colleagues. Organisations would
definitely not question such leadership.
Be proactive
Take responsibility for your career
advancement. In a forever "right-sizing"
workplace, don't expect anyone else to hold
your hand and take you to heights you wish
for yourself. In times of transition,
individuals must be proactive and make
themselves useful in related departments.
Puja Masand, wealth manager with ABN Amro
Bank, started her career in banking as a
junior level customer service officer. Her
career graph has soared to unbelievable
heights over seven years, with every team
she worked with labeling her indispensable.
"Being in a service role I was good with
people, and went that extra mile to solve
any customer problem that reached my desk.
Gradually, I won confidence of our top-notch
clients and helped the bank achieve their
sales targets for many new products," shares
Puja. "I overshot sales targets for my team
month after month, along with my other
duties. It was a consistent performance, and
I made sure targets didn't slip after a good
month's performance. That's when my boss
realised that I am capable of moving to a
more pivotal role of wealth management."
Puja is now working on complete penetration
of the banks existing customer base and
customising products and services for high
net worth individuals. She unfailingly
manages to win a trip abroad every quarter
as incentive on beating huge sales targets.
No chalta hai attitude
Employers don't like people who restrict
their job profile. Take ownership of all
your responsibilities by seeing your
department as a profit centre (even if your
productivity doesn't easily translate into
numbers) and yourself as an integral driver
of that profit.
Give your best to the company
Remember, it is positive attitude and
experience that hold weight above skills,
between two equally qualified employees.
Prashant Panday, CEO, Radio Mirchi, selects
three defined traits that make an employee
valuable, in a high-growth competitive media
environment. "Employees with a good
(positive, helpful) attitude, energy
(passion for their job) and an ability to
successfully work in teams, definitely
clinch the attention of top management," he
says.
Health/ fitness
Health is key to reliability. Frequent
absences or poor performance related to
neglected health puts one on the short list
when it is time to downsize.
Appearance
Having said that, all companies generally
have an acceptable dressing requirement.
Most media companies don't enforce dress
codes, but even the most fun-loving
organisation will not take an employee
dressed like a hippie seriously. The
perception of whether or not you belong has
more to do with appearance than you might
think.
Loyalty
This is a rare commodity in times of
frequent job jumping and three-month stints.
Loyalty can be demonstrated through refusal
to gossip, delivering high performance and
sticking with a company through its highs
and lows. You can also project loyalty by
carrying out instructions as best you can,
by disagreeing civilly and when you have
been overruled, doing the job the way the
boss wants you to.
Says Ankush Agarwal, founder and CEO of Mint
International (a human resource consulting,
resourcing and training organisation),
"Today, while recruiting CEOs, middle and
junior management levels, organisations are
reference checking for high levels of
integrity. They seek people with high energy
who take pride in their work and have the
capacity to make themselves feel like part
of the bigger picture."
"Even during our corporate training
sessions, we stress on qualities such as
humility and work ethics, along with
ownership for one's work, which goes a long
way in forging a relationship between
employer and employee."
Avoid bad blood
It is not easy for huge organisations to
appreciate everyone all the time. This
naturally leads to some dissatisfaction,
which can be dealt with a talk with your
immediate senior. However, if an employee
chooses to proclaim and believe that he/ she
is the only undervalued, overworked,
underpaid professional, his/ her whining may
boomerang to make the HR department feel
that the office might be a happier place
without them.
These all means helping your employer or
organization serve his customers more
profitably than he currently does.
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