Employee Compensation: How Much Value Do You Add on the Job?

By: Nick Thomas


The phrase "Value Added" is widely known around the world, partly because it provides the taxation basis that businesses charge their customers on purchases in many countries. And so to most of us, "Value Added" means the government and supply chains substantially mark up prices and we end up paying more for the things we buy.

That means the phrase has an unpleasant connation for most people - one all too similar to "highway robbery". And that's unfortunate, as the value that you add on the job is the single most critical factor in determining how easily you'll find a new job and how large a pay package you'll command.

Since businesses are in business to make money, there's no incentive to hire a new employee for (say) $40,000 if that person produces only $20,000 of value. On the other hand, there's substantial incentive to hire someone for $40,000 if that person can produce value worth $60,000 . $80,000 . or even $100,000 for the company.

This means that persons who can add $100,000 of value are likely to have many companies seeking to hire them. Companies have to compete for these special candidates and one way of doing this is to increase their offers to $50,000 or $60,000 or even $70,000.

Think of the value-added amount you can contribute as being the theoretical ceiling for your earnings. You won't get paid more than you're worth (at least, not for long if the company realises it), but companies are more than happy to pay you far less than you're worth if you settle for it. Most employees are in this position, unfortunately.

Are you one of those unfortunates? Probably, unless .

  1. You understand the amount of value that you can add (most employees don't)
  2. You can spell out how and where you would add that value (most employees can't), and
  3. You're a skilled negotiator (most employees aren't)
Do you know the answers to the three questions above? If not, the odds are good that you're not presently securing a substantial portion of the value that you add for your current (and future) employer.

How do you help your company make money? How do you help your company to save money? In what ways are you more productive? How much more productive are you? What good ideas have you come up with that have helped the company?

If you have good answers to these questions, you'll have a real advantage when competing for jobs and negotiating your compensation.

But most people don't know how to determine these factors on their own. And even if they do, they lack the ability to effectively market that added value in a way that portrays them in the best possible light.

Learning your true added value and communicating it persuasively to employers are two of the most important skills you can learn (or pay others to teach you). It will literally make a world of difference to your career.