How much should I be paid?

How much should I be paidDear reader, have you ever asked yourself the question, “How much should I be paid?” Probably, I would guess. Most people do at some point. Certainly, it’s a question I’ve asked myself many times.

We live in challenging economic times, so we’re all keen to ensure that we earn as much as we can. The question is, how much?

What is work?

In the modern age, people tend to think in terms of their careers, and many lose sight of what work is all about.

A career is just a natural progression of jobs within a given profession or industry through which we develop our skills and experience over time. Each of those jobs represents work.

In simple terms, work is just doing something for someone in return for money. Essentially, we provide a service or solve a problem, and an employer is our customer.

So, we’re paid to deliver results for the employer. With the emphasis being on delivery.

How much should I be paid?

The financial reward you get for the work you do is based on two things: –

  1. The value you can add; and
  2. The laws of supply and demand (also known as the market rate).

The value you can add is directly proportional to the skills you have and your knowledge and experience of the profession or industry in which you are seeking to work.

The supply and demand for your skills and experience within the job market will dictate how much an employer will be prepared to pay.

Why don’t businesses pay people more?

Essentially labour is a commodity. By definition, a commodity is something that can only be differentiated in terms of price.

None of us will pay more for a commodity than necessary.

For example, say, you want to buy a loaf of bread and in one store it costs $1 and, in another store, the same loaf costs $1.50. Which store will you buy from? The $1 store, obviously, because that’s what any rational person would do. Why would anyone pay more than they must?

Well, businesses think in the same way.

Businesses exist to make a profit. Profit is sales income less costs and, almost always, the biggest cost for any business is the cost of labour.

So, businesses will not pay any more than they must for people. Why would anyone expect it to be otherwise?

An employer doesn’t care about what you think you’re worth.

Your worth to the business will be judged solely on the potential value you can add and the availability and demand for your skills and experience.

How do I measure the value I add?

Essentially value is another way of saying your skills and experience, dear reader.

Alternatively, for an entry-level job, your value would be your potential.

If an employer is seeking a junior staff member for training, then your aptitude and qualifications would be a proxy for the value you could potentially add once your training has been completed.

I think I’m worth more:

If you think you’re being paid less than you deserve, then you have two options: –

  1. Go to your boss and request a raise; or
  2. Test the (job) market.

Either way, you need to do your homework first.

  1. Request a raise:

Before speaking to your boss about a raise, do some basic research on pay rates for similar jobs to yours with a requirement for the same skills and experience that you offer.

Also, identify at least three significant things that you do in your current role that make a real difference to the company. Ideally, these should be things only you can do.

Think also about how you might be able to do those things you do best more efficiently to improve your productivity.

Once you have all this information, you’re ready to justify why you think you deserve more.

  1. Test the market:

Even if you’re otherwise happy with your current employer, it can be worth putting yourself about a bit in the job market, to see what other companies would be willing to pay you.

Apply for some other jobs and see what companies are willing to pay you.

And remember; most companies know that they’ll have to offer an uplift of at least 20% on your current salary to persuade you to take the risk of leaving your current employer, certainly if you’re highly skilled.

Once you have a suitable offer, you’ve then got two choices.

Either you accept the offer and move to the new employer, or you take that offer to your current employer and see whether they’re willing to match it.

I have done this more than once and it does work.

Given the cost to the employer of losing a highly valued member of the team, most employers will match an offer rather than lose you.

And if they’re actually willing to let you leave, then they didn’t value you and therefore you might as well go.

How do I earn more?

Another way to think about this is, how do you make yourself more valuable?

And you should be building your value, constantly.

If you want to earn more then learn more.

Work hard on building your experience too. Be willing and ready to accept new challenges, however daunting, for rough seas make skilled sailors.

Become the ‘go-to’ person for some activity that is perceived as valuable to the business.

Your focus should be on ‘what you’re becoming’ rather than any short-term gain and eventually, you have a good chance of becoming very valuable.

Think about it this way. Whatever you’re doing, you’re just there to serve customers and solve problems for them

There will always be customers for goods and services, some not even invented yet. Goods and services are another way of saying problems customers have which need a solution and you’re the provider of that solution.

The greater the skills and experience required to solve those problems the more you will earn, assuming you have those skills and experience.

How much should I be paidKnow the market rate:

Every business keeps a close eye on the market rates for given skills and experience. They do this to ensure that they’re not overpaying.

You should keep a close eye on market rates too, to ensure that you’re not being underpaid for what you’re doing.

In short, you must be very disciplined and business-like in your approach to work and selling your skills.

Think of yourself as a small business providing goods and services to your boss, your colleagues, and the customers of the company for which you work.

Conclusion:

You won’t get paid more than you’re worth.

However, if you increase your value by learning more, constantly, and building your skills and experience then you can earn more.

Choose a highly skilled discipline with high demand and an undersupply of potential candidates and you can earn a lot of money.

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