Wednesday, August 22, 2007

Feeling underpaid ? Assess your actual value from an employer’s perspective

A lot of people would like to think that they themselves are underpaid, and their roles in the company are very important. However, your actual value may not be as high as what you perceived.

A logistic manager F from my ex-company, who was around fifty years old, was being asked to leave. He was being replaced by a thirty-year-old guy whose salary was just slightly more than half of what F got. Moreover, the new guy was able to work for longer hours. F may claim that he had twenty years more experience than the new guy, but in reality F’s experience may not be as valuable as he thought.

Thus, your actual value (to your company) does not equate to the amount of money you are drawing, or the amount of experience and qualification you possessed. Your actual value is in fact the amount of money your company has to pay for the next best alternative to do the job that you are doing. If you are a software developer drawing S$3K per month doing some software development, while an indian IT professional is able to do the same job at the same quality drawing only S$2K per month, then your actual value is probably only S$2K. If you are a manager drawing S$6K per month doing some project management job, while a young manager with 3 years of experience can do the same job at S$4K per month, then your value is actually being inflated. If you are just doing a data entry job, it doesn’t matter that whether you are holding a first class honour degree or not. The fact that you are handling a million-dollar project doesn’t mean that you are worth a million dollar. You are worth the amount your company has to pay for the next best candidate who can handle the million-dollar project equally well, or at least at a standard that your company is willing to accept.

So, by assessing your actual value, you can have a clearer understanding of your actual worth (in the eyes of your employer). If your actual value is higher than the salary you are currently drawing, then you probably are eligible to ask for a higher pay. If your actual value is lower than your current salary and you feel that your abilities are not fully utilized, then you may want to seek greener pastures or request for an upgrade of job scope, because it is very likely that one day your employer may realize they are paying more than they should for that particular job scope. When that happens, you may either be asked to leave, or have your pay stagnant for a long time. If your actual value is lower than your current salary and you feel that you have already applied most of your abilities in your job, then you should start to do something about your future rather than whining about being underpaid.