How to maximise or increase your income and achieve your goals
The Secret Financial Lives of Americans report told us that Americans are open to coaching and guidance in maximising their income. (Indeed this could also equally apply to all of us!)
Who wants to give up the opportunity to maximise their incomes?
To do so, workers want to evaluate if they’re being paid fairly and to maximise their salary at their current job.
They also want coaching and guidance on planning career to grow their incomes.
Challenges are plentiful
These findings are not surprising.
We have had stagnant salary growth for many years. People are experiencing significant increases in the cost of living, health, and education.
Workers face increasing job transformation due to automation, demographic changes, and increasing population.
There’s also increasing underemployment, especially with university graduates.
People are financially struggling
Maslow’s hierarchy of needs clearly explains the key reason.
There’s really not enough money going around in meeting peoples’ everyday basic needs.
When people’s basic needs are not adequately met, stress and fear creep in.
As a result, people are just financially struggling.
It’s no wonder that many people around the world are financially stressed.
Mental health issues are also on the increase. People just cannot cope with today’s normal living.
Our response to financial challenges
Naturally, we will think about different ways of making more money. Or increasing our present-day salary or wages.
Workers also dream about getting more salary or wage. They are also thinking about growing their household income if their partners are working.
If you have teenage children, you will worry about whether they will eventually get a job and earn a fair salary or wage.
For some of us, we will first think about whether we are getting paid fairly or not.
Are you creating value?
We need to understand the concept of value creation within the context of getting paid fairly.
Let us use a self-employed consultant to illustrate a key point.
A consultant will attempt to sell his or her services to potential clients. For clients to hire this consultant there must be an exchange of real value.
Clients will pay a fair rate in return for work done. The consultant gives value to his or her clients.
The value provided could be for a problem solved. It could be for developing a service. It could be for innovating and designing a product.
The higher the consultant’s fees, the higher the value given.
The value could be tangible or perceived.
In reality, if the client is not totally satisfied with the quality and quantity of the work provided, the consultant will not get paid, period.
Or the consultant could just be paid a lesser amount. The value is determined by the client.
As a comparison, we are more than willing to pay big bucks for fine dining experience over fast-food convenience. There are different levels of value at different price points.
People pay for the value created and received. Value creation is, therefore, the key to getting paid a fair amount.
Now, let us apply this value creation concept to employees.
Value creation will take a different form.
In essence, when the value is created by an employee for his or her employer, it should be reflected in the salary or pay they receive.
That’s why a CEO often gets a much higher salary compared with a receptionist. The level of expectation to create value is different.
Whether the employee is paid fairly or not will depend on many factors. Out of which value is created.
Just because someone else with the same job title like you gets a higher salary doesn’t mean that you are not paid fairly.
That person may have five direct reports. You only have two or none.
His company has 11,000 employees. You only work with 2,000 people.
Are you paid fairly based on the value created?
To know whether you are paid fairly or not, you need to perform a job evaluation on the work you do.
A job evaluation is a systematic way of determining the value or worth of a job in relation to other jobs within the same organisation. It tries to make a systematic comparison of jobs. The evaluation assesses their relative worth for the purpose of establishing a rational pay structure for the whole organisation.
Factors to consider when you evaluate your own job:
(1) Knowledge and the skills required to perform the job – Know-how.
(2) Kind of thinking needed to solve problems commonly faced in the job – Problem-solving.
(3) Responsibilities assigned to the job – Accountability.
For any given job, there will be a relationship between these three factors.
The outputs or end results expected from our jobs (the accountability) will demand a certain level of input (the know-how). It requires a level of processing of our know-how (the problem solving) to deliver the expected outputs or end results.
Know-how is the depth and range of our technical knowledge to perform the job. It ranges from the knowledge of simple work routines to in-depth professional knowledge.
Apart from technical knowledge, we also need management breath knowledge and human relations skills.
Management breath is the knowledge we require for integrating and managing activities and functions. It is related to the size of the organisation. It also reflects other aspects such as functional diversity, geographic spread, and strategic scope.
Then we need human relations skills to communicate and interact with and influence individuals and groups both within and outside the organisation in order to achieve results through people.
Problem-solving measures our thinking environment. It is the extent to which our thinking environment is constrained by the context we are working in. It includes procedures, precedents, and policies, and the need to refer to others.
There’s also the thinking challenge presented by our jobs. It is about the complexity of the problems encountered and to be solved. It is about the extent to which original thinking must be employed by us to arrive at the appropriate solutions.
Accountability is about the answerability for our actions. The consequences of your actions are described in terms of our freedom to act. It is the extent to which our jobs are subjected to procedural guidance or managerial control.
It is also about the nature and magnitude of the impact which our jobs exert on the end results and area within the organisation.
Therefore, how fairly you are paid is based on how much you know, your problem-solving capabilities, and level of accountability given to you.
This leads to the value that is created by you for the organisation.
Alternatively, if you are not using a job evaluation tool, then yearly salary guides published by major search and recruitment firms can give some reasonable guidance as to whether you are paid fairly or not.
Be mindful that these salary benchmarking figures are averages. There are also based on a number of assumptions.
It does not cover the uniqueness of your workplace and specific job profile. It does not consider many factors covered by the job evaluation tool, as discussed earlier.