Thursday, May 24, 2007

Money in Exchange of Value

A lot of people feel that earning a salary is in exchange of the work one does in an organisation. You can work endless hours, and still not add value. Its not the work but the value of that work, that gets you to earn money.How do you calculate the value you are adding with your work ? It's simple. Does your contribution increase profits ? If yes, you should earn atleast 5% on net profit increase as a result of your efforts, as a salary.
So if you are a sales person and you bring in a minimum of Rs. 2,00,000 worth of net profits to the company every month, then your salary should be a minimum of Rs.10,000. The net profit can be reviewed every 6 months.
If you are in PR, be aware of the increase in net profit of the company as a result of your communication and do the math on your salary.
No matter in which department you work, you have a direct impact on the profits of the company.
As i was discussing this, the office cleaner walked up and asked how he contributes towards the profits of the company ? I was impressed with his willingness to step forward. "Save on detergent, and you increase our profit," I said. No matter what you do, you can contribute. Its the attitude of adding value that i want to encourage. Just working is not enough to get a pay raise.
And when you do ask for a pay raise, SHOW the profits you have caused. Your raise should be seen as a re-investment for the company and not an increase in the monthly over heads.
Want a pay raise ? Show me the value :O) And yes, the value must be monetary, because the pay raise is monetary. If the value added is intangible, then the compensation would also be intangible.


Anuj :) said...

That was such a super theory.
Thank you so much for having such a brilliant blog. I simply love it.
It makes you think..makes you smart..makes you smile.. :)

Amrita said...

That is such a cool perspective, quite pragmatic. Never thought about it that way. I know what I should do. Thanks for adding this thought.

nupur said...

good theory to keep in mind.
It is so true that in an organization your value is recognized when you add monetray value to the organization.

Vishal said...

So, does that mean I answered the question correctly :o)
I agree with your theory but I guess there are other factors too. Sometimes the value-add is short term and is seen right then..and other times, it's a long term plan. The seeds sown now might take a while to grow into a tree, and thus for the value to be seen and noticed..

nupur said...

well at times monetory gains to a company may be seen in the long term but in the short term even though the individual is contributing other ways and not monetarily is not recognized.

Should be money be the sole criteria for a raise??
How does one deal when he is not recognized for the value he adds which is not monetory?

Suraj said...

I totally agree to what you say & i agree that a person should be paid according to the value he/she add, monetorily. Bcoz i think most of the people do join an organization to earn salary which is a monetorily & not in kind or something else. So for me its a smart thing to think about.Thanks