Translating What You Know into Future Value
Discovering your skills is very important; putting a dollar value on them is equally important. Knowing both can help you capitalize on your real potential and realistically evaluate your earnings potential.
Most people equate their worth with how much they are paid. That assessment can be wrong for two primary reasons. You can be overpaid because you have been with one company and in one position too long. Or you can be underpaid because you have had too many promotions too rapidly within the same company.
How You Get Underpaid
Companies from large to small are filled with successful employees who are underpaid. Employers would have to offer a great deal more money if they recruited outside the company to fill these same positions. At Xerox, for example, some people would leave the company for a few years and later return, receiving a higher salary than their peers who stayed. Xerox employees called this "the compression factor": a company promotes and gives salary increases that become a smaller percentage with each step, until a ceiling is reached. This is done for several reasons. Management wants to have a discernible salary gap between upper and lower management, and they want to keep costs under control wherever possible. Companies get away with it because many people feel comfortable with the company they have "grown up" with.
If you decide to change careers, the compression factor can be an advantage. You'll have no problem with a competitive offer. However, it also means that you must be effective in salary negotiations. Do not fall into the trap of divulging your salary to a potential employer, because if your salary is sustantially lower than average, they may reduce the offer.
When you are asked the question "What do you expect to earn on this job?" be sure to answer: "I expect to be paid a competitive rate commensurate with the duties of the job. What is your offer?"
Understanding Pay Variables
Some industries, such as the computer industry, are known for high pay. Others, such as the service industry, are known for low pay. If you figure that one frontline manager is needed for every seven service employees, that increase creates a lot of low-paying management jobs. By contrast, the pay given to savings and loan executives has been very high in some cases. Somewhere in the middle is the average company. Your industry could be an exception. For example, if you are in frontline management with a retail company, you may find you are underpaid. But if you are in executive management with a retail company, you could be overpaid, surprisingly. If you know your industry's pay is exceptional in either direction, take that into consideration once you have computed your earning potential.
How to Prepare for Success
Fail to prepare and you prepare to fail. That is truer than ever when interviewing. Adequate preparation quells your fears and shows you're the best candidate. The logical question is then "What do I prepare for and how do I do it?"
You prepare for the interview by learning as much as you can in three areas: the employer's skill needs and requirements, the company's background and culture, and the interviewer's personal tastes and characteristics.
What You Can Do
For the fun of it, look at the differences in your earning power if you were to increase your level of management, move to a bigger city, or work for a larger company.
Perhaps you are tired of the hassles of a large city, like Los Angeles, and want to move to a smaller one, such as Salem, Oregon. Brainstorming on these topics can give you an idea of the difference this would make in your earning potential. This knowledge can greatly improve your planning process.
Have fun.
