029: How to Determine Your Value at Work – In Dollars [Podcast]

What if your value at work was measured in dollars? What if someone took how much value you added to the company and subtracted it from how much you cost in salary and benefits? Someone is. But, do you know what the numbers are? Do you know your value?

In this podcast I will show you how to find a real number so you can actually calculate your value. Just think how powerful it would be to show someone on paper that you add a substantial financial value to your employer!

Photo courtesy of Flickr/Creative Commons/qthomasbower [/featured-image]

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Finding Your Value at Work

The steps to this are pretty easy to imagine, but doing it is a lot harder. So we will start with the easy stuff and move up.

Understand the Goal: First, get a clear picture of what you are trying to calculate. If you are operating as a Company of One (a service provider to your employer), then you need to be able to show value to them on their terms. While their terms may vary, money always speaks. So this is easy. How much profit do you bring? Here is the basic idea:

MeRevenue (extra revenue or savings you bring)
– Cost (Your Salary and benefits)
—————————————————————–
MeProfit (Value you bring)

Now it goes without saying (I hope) that your “MeProfit” needs to be greater than zero. In fact, it should be substantial. My rule of thumb is that your value to your employer (MeProfit) should be at least two times your salary.

Create a Word Formula: Get a clear picture of what you do to add value. I do this is a word formula. Write down, in words, everything you do that you think adds value.

In a recent example, a support engineer gave me these as part of her word formula. She actually had 10 items, but for sake of brevity I will just work with two.

• Installed software ahead of schedule (save labor)
• Located and tested new integration tools reducing equipment cost per location

For your word formula, you might have a few or dozens of items.

Find the Value of Each Item

Take the first example and get a value.

• Installed software ahead of schedule (save labor)
• Saves approximately $6,000 in labor costs with early install
• Last year installed SW at five plants within three weeks, two weeks before schedule

Total Savings = $30,000

Now these numbers are not magic. They took her a little research and some good educated guesses. In her case, she knew a software install required trucks and teams to be dispatched to the locations. And her company knew the cost of moving a truck as well as the average cost per man-hour. So, using these numbers she came up with a cost saved. Not bad, one thing she did saved the company $30,000.

Now consider her second value.

• Located and tested new integration tools being installed at sites therefore reducing equipment cost
• Saves approximately $5000 per site install
• Approximately 20 sites have new integration tools installed that I researched and tested

Total Savings = $100,000

Now assuming she makes $70,000 per year with 25% benefits, in two items she is over her salary and benefits.

I am not including the other items here, but you get the idea. Once she was done with all 10 items, she had generated a cost savings of $250,500 per year to her employer.

Find Your Number

Now we can find her number.

MeRevenue (extra revenue or savings you bring) = $250,500
– Cost (Your Salary and benefits)  = $70,000 x1.25 = $87,500 (her total cost to her employer)
————————————————————————————————————————
MeProfit (Value you bring) = $163,000

Having her show up to work yields her employer with a net savings of $163,000 per year. Wow!

Using Your Number to Demonstrate Your Value at Work

Now, depending on your number, here are actions to take:

• If your number is negative – Go and look for ways to add value. You may have discovered what your employer already knows, so time is not on your side. Get busy.
• If your number is minimal – that is less than one year of your salary, then you too have work to do. A positive number is not the key, you have to add value  well above your cost.
• If your number is over 2 times your salary – You are in a good position. But, no running to the bosses office demanding a pay raise. That action would decrease your value significantly. But, you do want to share with your internal customers what you have found, asking if this looks right and asking them how you can add more value. You want to be clear that you are not demanding a pay raise, but trying to become a powerful value provider. (They will understand the need for a pay raise on their own if it applies.)

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[reminder]What do you think? Does finding value make sense? [/reminder]