It’s the deal that almost everyone relies on for the money that is supposed to last the rest of their lives. Yet few of us see the hours we spent at work as an investment, and evaluate the cost and return accordingly.
How much you are able to earn will affect just about everything else about your finances.
How do you explain that some are paid in millions, while others barely make it to the national minimum? There is no simple answer. But there is one common factor: focus and an extraordinary belief in one’s own worth.
You might recall that old saying: nobody knows how much you are worth unless you know yourself. Nowhere is this more relevant than in a negotiation over a job.
But how do you know what your work is worth?
Firstly there are industry averages. You’ll find them on government websites. And a visit to a head hunting firm will quickly tell you what the market will bear.
And that’s an important point. Because, hard as it is to see when you have your nose buried in a project in the office, your hours are on the market just like stocks and shares. Your worth can change, and you are as entitled as your employer to play the market – if you choose.
Another way of looking at the investment you make in your work hours is to decide how much you need. You’ll find other advice on the site about budgeting – working out what your monthly needs are, ensuring there is enough left over to save and spend on what you want and need. How is your current salary stacking up now?
Like any business, you need to watch your profits, losses and cash flow.
Salary negotiations can be difficult and awkward, and they can sometimes end up with the wrong result – like leaving the company when you didn’t mean to.
But remember – your boss is also playing the market. And asking for a rise means he must evaluate your worth to the company, and act accordingly.
If your work is valued, he or she will try and keep you. If it isn’t, you may as well know it now. In the grand scheme of things it is best to take a deep breath and decide – and this can be hard to swallow – you are probably better off looking elsewhere.
The truth is that unless you do your sums and know what you need – and what you’ll need in the future – you won’t know whether the deal you have with your employer is the right one. And unless you can assess your chances of promotion, you won’t know if it is the right one for the future.
Most companies will have review processes and appraisals where you can make your point, and in these situations it is best to be well prepared. This can even extend to keeping notes between reviews so you can present a coherent and detailed case to your employers.
As you ponder this issue, think about whether there are any work life balance trade-offs you want to suggest. A study of the so-called Millennial generation in the US by fund management company Fidelity found that four in 10 people surveyed would be prepared to take a salary cut of around US$10,000 if there was a work-life balance trade-off.
It could be that you would accept a lower salary, or continue at your current level, if your employers were to agree to some study leave or an arrangement such as working from home once a week.
For those wanting some tips on negotiating higher salaries, here are some points from US financial advice website LearnVest.
1. MAKE YOUR CASE FOR A SPOT BONUS
Okay, maybe there really is no budget for that 10 per cent salary increase—but what about a reward to recognise you for, say, the stellar customer service you provided, or that time you worked until the wee hours when your manager needed a board presentation?
If you knocked it out of the park this year, your company may be willing to throw you some extra, one-time bonus money. Ask your supervisor if the company has an annual award for standout employees, and figure out how to apply or get nominated.
2. SEEK OVERTIME
Asking to work overtime is, of course, one of the most obvious ways to fatten your pay without a pay raise. But depending on your position, you may not qualify for overtime, or it may not even exist in your company. One thing to note, however, is that any work associated with overtime pay may have to be done on your own time. The bright side? Going above and beyond, at least temporarily, means you can grow professionally while also reaping the financial benefits.
3. FIND OUT IF YOUR JOB OFFERS A REFERRAL BONUS
When a company hires someone new, there’s a lot riding on the success of that employee. Think about it: It takes resources (read: money) to train new people, and there’s potential for lost productivity when a worker isn’t up to snuff. In fact, more than a quarter of employers in a 2013 US survey by CareerBuilder estimated that one bad hire cost them more than $US50,000.
It’s no wonder, then, that many businesses rely on the judgment of their current employees to find people who will be a good cultural and organisational fit. If there’s no referral bonus for talent, perhaps there’s one for new business. Even if you’re not in sales, ask your manager if it’d be possible to get some sort of one-off commission tied to bringing a new client into the fold.
4. ASK FOR ADDITIONAL PTO
If padding your pay just doesn’t seem to be panning out, then your other option may involve taking advantage of company perks in a way that indirectly pads your wallet.
Consider requesting additional paid time off, for example; although it doesn’t necessarily mean more money in your pocket, time equals money. If your request for more PTO is declined, you could try negotiating for “comp time.” For example, if you attend a trade show, conference or continuing education course on a Saturday and Sunday, consider asking your manager if you can take two comp days to make up for those weekend hours.
5. SPEND MORE TIME TELECOMMUTING
Does working from home sound a bit more appealing to you these days? If the potential for a 10-second commute doesn’t automatically do it for you, then consider it for the cost savings: According US research from FlexJobs the average worker can save $US4172 a year by working remotely. These savings are comprised of items such as petrol, other commuting costs, lunches and dry cleaning. Even if you work from home 50 per cent of the time, that’s a saving to you of more than US$2000 per year.
6. GET ANOTHER JOB OFFER
So you’ve strategised all the ways you could squeeze more into each pay cheque, and you still keep coming up against a brick wall. In that case, ask yourself whether it’s time to start putting out feelers and applying to other positions in hopes that your employer will know just how in demand you are.
Showing you have an offer from another organisation might spark a counteroffer from your current employer. This tactic comes with risks, and you should be prepared to leave in case you don’t get a counter offer. If you’re unsure of this, just think hard about what you need to do to “crack the code” and make sure you get that pay increase next year.