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.