result

WHAT ARE YOU WORTH AS AN EMPLOYEE?

 Measuring Employee Worth 960x720

 

In General

The job market today is tough and highly competitive. The first concern of many employees is to just hold onto their job. Labor force mobility (workers quitting one job to begin another) is at an all-time low. But all workers need to have an accurate assessment of the worth of their work, based on skill level, experience and other assets. And all employers must know the value of their workers in order to attract and retain good employees.

 

 

Publicly traded corporations always know their worth because their stocks are traded constantly on stock exchanges throughout the world. The value of employee labor, on the other hand, is harder to quantify. It is essential that every worker know what they are truly worth so they can make decisions about who they want to work for and what they could do to increase their value in the market.

 

 

 

How Employees Can Determine Their Value

While there are valuation principles that can be used to estimate the market value of a worker's labor it must always be remembered that value is measured with respect to a particular employer.

 

 

If you work for BigCo, a multi-billion dollar corporation, the value of your labor to them might be X (whatever X is.) Alternatively, you could perform exactly the same work for a small family business in Central Maine. It is almost certainly the case that the value of your labor to the small family business would be less than X.

 

 

Free information on median pay by occupation is provided by the Bureau of Labor Statistics and can be found at this website:

 

https://www.bls.gov/oes/current/oes_nat.htm

 

This data gives you national averages for a wide variety of occupations from accountants to zoologists.

 

 

One of the largest and most comprehensive sources of compensation by occupation and zip code is offered by the Economic Research Institute and can be found here:

 

https://www.erieri.com/salaryassessor

 

This website is a more sophisticated source of data likely to be preferred by employers trying to find out the amount of compensation they should offer their employees.

 

 

 

The Rule of Three

There is a simple rule for determining not only what to pay an employee but also what price to charge a customer. There is a strong relationship between the price a company charges its customers and the wages it pays its employees. The Rule of Three says that for each dollar paid to an employee the company should charge its customers approximately $3.

 

 

The first dollar charged to the customer covers employee direct labor costs.

 

 

The second dollar covers administrative costs, payroll taxes, workers compensation insurance, and overhead.

 

 

The third dollar should be profit. Profit is a reward paid to the business owner for taking risks, implementing a business model, and (frequently) being the last to be paid if all goes well and the first to be charged if things go wrong.

 

 

A Stable In-Place WorkForce Unlocks the Earnings Potential of a Business

A reliable in-place workforce is an intangible asset for business owners. Stable, reliable workers allow business owners and managers to focus on more important tasks including growing the business, and improving product or service quality. Lower employee turnover means lower training costs, more experienced and more motivated workers, and according to many empirical studies a more profitable business. See:

TRAINING

 

 

The Struggle To Win

Employees and the public in general should understand that every business owner must fight three battles for each dollar of collected revenue: 

 

FIRST: The business owner must fight for the opportunity to earn income in his choosen trade or profession, and pay up-front for all start-up costs including licensing, inventory, loan fees, etc.

 

SECOND: The business owner must fight to perform the work required in his industry and meet or exceed minimum quality standards. Excellence may be taken for granted while the slightest problem may be grounds for a lawsuit against the business.

 

THIRD: The business owner must fight to actually collect the money he has earned from his hard work. Sometimes (sadly) this is the hardest battle of all. 

 

The business owner must win all three battles merely to exist. And he must win many, many more such battles to succeed. Nothing is guaranteed to business owners other than difficulty, risk and hardship. One could paraphrase the great military commentator Clausewitz and say that business is a continuation of war by economic means.

 

Good employees will be loyal and effective soldiers helping their employer (and themselves) to win in the long run.

 

 

If You Don't Ask for a Raise You May Never Get One

It's a simple fact that if employees never ask for a raise they may be the last to get one. Employees must have an accurate knowledge of the value of their work to their employer. If this value increases because of greater experience, improvements in efficiency, or the acquisition of greater skill, then both basic fairness and the laws of the marketplace require that the employee's compensation be 're-priced.' Instead of asking for a raise ask to have your compensation re-priced based on demonstrated improvements to your work performance.

 

 

 

Increasing Your Value

Here are some specific steps workers can take to increase their value to an employer:

 

 

(1) Increase Existing Job Skills and Acquire New Skills

Many occupations offer educational opportunities to advance your skills and 'know-how.' An employee who improves himself is, in effect, saving his employer the cost of paying for training. This avoidance of training costs plus the increased skill level of an employee means its time for a raise. Knowledge is knowing a particular technique, skill or formula. Wisdom is knowing how to apply knowledge in the real world in a highly effective way. Wise workers are worth their weight in gold.

 

 

(2) Demonstrate Reliability

The best workers will do whatever it takes to get a job done. The least valuable workers may have a 'nine to five' mentality where they may stop working sometime around 3pm and just countdown to the moment they can get away. Do half a job and there will be ten times as much work overall. 

 

 It's difficult to run a business, especially in a high-tax state like Maine. Reliable workers delete risk and uncertainty for their employers and this is a fact that's worth money.

 

 

(3) Focus on Acquiring Experience

Regardless of their academic credentials or training a worker's first day on the job is the start point for climbing up a long ladder. In general, the more experience a worker acquires the greater his value to the employer. Experience means the worker survived on a job for a significant period of time and wasn't fired for incompetence or other reasons: this means value. Experience also means the worker absorbed on-the-job training not found in textbooks or classrooms: this is another source of value. Finally, experience means the employer benefited from retaining an employee and saving the cost of training a new worker: this is yet another source of value.

 

 It isn't good enough to actually achieve these three ways of improving your value as an employee. You must also be able to prove it. Employees should continuously document their achievements and improvements and also study and learn from their failures. A worker who failed at a major task and actually learned from the event and improved how he works may be more valuable to an employer than another new worker who never made the same mistake.

 

 

"Even a mistake may turn out to be the one thing necessary to a worthwhile achievement."

Henry Ford

 

 

 

LEGAL DISCLAIMER

George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339

©2015 Copyright George Adams CPA MBA. All Rights Reserved.

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Telephone: (207) 989-2700
Email - georgeadams@intelligenceforrent.com
Address: 450 South Main Street: The HQ of IQ
               Brewer Maine 04412-2339

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