Three keys to determine your market value
You are an entrepreneur and your company is you. Your paycheque is the revenue generated from the services you provide your employer. Like any successful business, you want to maximize your revenues and retain the customer – in this case, your employer. This is achieved by providing high quality service and charging a fee that is competitive and worthy of the value provided. Put simply, you want to get paid what you are worth.
To accurately assess your fair market values, start with reliable employer-reported pay data like that found on Salary.com and follow these three steps:
- Match your job description to a benchmark job
- Assess employer factors
- Evaluate your performance and compensable attributes
Match your job description
The first step is to match your job description to a benchmark job. A common mistake that many people make is trying to compare their value based on a job title alone. The problem with trying to match pay to job titles is that titles and their associated responsibilities are not always consistent across companies. Matching only title, you may find yourself comparing your salary to people performing completely different jobs.
When trying to align your job description with a “benchmark” job, the compensation professionals at Salary.com recommend a minimum 70 percent match of your job responsibilities to the benchmark description you are trying to match. If you intend to present your findings to your employer, use employer-reported that has been matched on job descriptions and considers factors that actually influence pay, such as a job’s responsibilities and required skills.
Your manager will likely check the source of the data, which is where the difference between employer-reported and self-reported data (from employees) really matters. In fact, a recent survey concluded that 95 percent of employers do not trust self-reported data and more than 75 percent will not negotiate salary based on self-reported data because they believe it is less accurate and less carefully matched than employer-reported data.
When you speak to your manager, he or she may want to know more about your process for determining the benchmark job description and may have his or her own input. This should be considered a positive development. By discussing your job responsibilities and job level, both you and your boss will gain a better understanding of what needs to be done for you to succeed in your current position and earn your next promotion.
For example, you may think that you are performing your position at a senior level (called Level III by Salary.com, but perhaps “Senior” or “Experienced” by your employer); meanwhile, your manager is evaluating you at a middle level (Level II). By discussing this with your manager, you may have a “meeting of the minds” and you may become eligible not only a raise, but also a promotion. If your manager disagrees, you will now have a clear idea of what it will take to get the next promotion. Don’t be discouraged – this is really an opportunity for you to shine.
Assess employer factors
Salaries vary across locations, industries, and company sizes. Salaries are also affected by job’s position within the company pecking order: the number of people a job may supervise and the role of the job’s supervisor. As a rule, larger companies pay their employees more than smaller companies because larger companies have greater spheres of influence and higher revenues per employee. Larger companies also tend to generate greater productivity and efficiency per worker. The trade-off is that small companies offer more direct access and exposure to senior level executives, and sometimes offer a better professional experience. These factors must be considered if you are to accurately assess your market value with your current employer.
The industry you work in may also have a significant impact on the final value of your job. More profitable industries can afford to pay more and be more demanding at the same time. It is a widely observed trend that biotechnology employees typically earn more than their counterparts in manufacturing, who, in turn, earn more than those at non-profit and government organizations.
Again, if you intend to present your findings to your manager, using employer-reported data will lend greater credibility because it accounts for all the company factors that influence pay. Meanwhile, self-reported data provides minimal consideration to company, industry and geographic factors.
You may find that a Personal Salary Report will help you interpret the impact of employer information.
Evaluate your performance and attributes
Having benchmarked your job, and accounted for employer factors, you should also assess how your performance and personal attributes impact your salary value. You must be realistic and practical when evaluating your own worth to an employer. All relevant skills, education, professional experience and past performance should be considered when trying to determine your final value.
When you are new to a position, you are likely to have some of the required skills but may still be developing others. Conversely, if you are a seasoned veteran, you are likely to have all skills required by the job and are performing the job more efficiently than a recent hire. This increases your worth.
In addition to assessing your proficiency and job skills, your valuation should also consider how the less tangible elements of job performance—like attitude, teamwork, punctuality, education and certifications—increase your value. If you have attributes that are important to the company’s success and they are in high demand, then you can expect higher pay. For example, a specialized technician at a chemical plant plays a pivotal role in keeping the plant running properly. The technician’s employer may decide to pay above the average market value to avoid losing rare skills critical to the employer’s success.
Calculating your final worth
After completing a thorough analysis of your worth, you can make the best assessment of your current pay. If your pay seems fair, you can focus setting the goals that will signal that you are preparing yourself for your next promotion. If you are underpaid, it may be time to present your findings to your manager and ask for an explanation of your employer’s pay practices. The objective is not to present an ultimatum, but rather to understand your employer’s pay philosophy and to provide your employer with your research so that you together may discuss your performance and pay. There will be details to work through, but you will have opened the discussion and built a strong case for a pay raise and possible promotion.
Reprinted from Salary.com