Do You Know Your Market Value?By Ross Macpherson, President, Career Quest
Meet Janice. She is an experienced Marketing Manager looking for a new job. With her previous company, she was earning a $74,000 salary, and so this was the figure she had in mind when she went through interviews. In the end, she got hired at a salary of $76,000 and thinks she's done alright.
Wrong! The problem is, Janice mistook her current salary for her market value, and actually lost THOUSAND$ in potential compensation. Your salary and your market value are two very distinct ideas, and do not necessarily represent the same number. You don't want to make the same mistake Janice made.
If you are going to negotiate your salary (and I strongly advise you to do so), you need to know up front what kind of value your skills and experience are generally worth on the open market. I'll show you a basic formula for figuring that out.
Before We Begin
You must understand that determining an employee's worth in the market
is a very complex task, one that calls for the expertise of full-time
Compensation Analysts. So, you are not striving for an exact, written-in-stone
figure here, but rather a "range," and then ideally where you
would fall within that range.
There are also a lot of different criteria that can influence the salary range of a given position, and these include the level of responsibility, the target industry or field, the geographic location, and the current availability or desirability of your specific expertise. Any one or more of these factors can change the numbers.
A Quick Formula
Now, don't worry, I'm not going to go into a complex mathematical
algorithm using high-falutin compensation tables and market data to calculate
your value. It's really quite simple (there are many similar illustrations
of this formula out there…this is the one I use):
MV = RV + UV + PV
Market Value = Researched Value + Unique Value + Potential Value
Let's look at each variable individually.
RV or Researched Value:
Your Researched Value refers to that salary information that you gather from available compensation data. There are currently a gazillion sources of salary information available, some valid and reliable and some not so reliable, but this is where you start. The goal is to establish at least a range for your position within your target industry and geographic location.
There are many salary sites on the Internet where you can input the desired position title and geographic location to get what is purported to be accurate salary information for that job. The problem is not everything listed on the Internet is reliable (no surprise there). The accuracy of salary or compensation information depends entirely on the methodology used to get it, and not all methodologies are valid.
One site that I can recommend (and that is endorsed by many HR firms) is the Salary Wizard available through Monster Board. It's an excellent starting point, but still quite general:
http://content.salary.monster.com for the U.S.
http://salary.monster.ca for Canada
Other places you can find good salary surveys include:
- public libraries (in the reference section)
- professional associations (many have membership salary surveys)
- search firms/recruiters
- colleagues and your network contacts
- your local Board of Trade or Chamber of Commerce
For Executives Only - a great source for executive salary data is available in proxy summary compensation tables. Public companies must disclose the salaries, bonuses, and stock options for their five top officers, and these annual proxy statements are available through variety of sources, including the internet, many Boards of Trade, and Chambers of Commerce (within Canada you can go to www.sedar.com and do a search by company name to download a public company's proxy statements).
UV or Unique Value:
Once you have established your RV, which will give you a salary range, it's time to calculate that Unique Value that will place you within that range. Are you a superstar in the industry? Do you have a sizable amount of experience in this specific field or functional area? Do you have a particularly valuable, rare, or desirable skill or expertise? If so, this additional unique value that you offer should move you up within the range.
(It is important to note that your UV might also move you DOWN within a range. For example, if you are a recent graduate, or you're moving into an area in which you have little experience, or if you're switching careers, you may not have a great deal of UV to leverage.)
PV or Potential Value:
Your Potential Value refers to additional compensation that can be negotiated based upon your future performance. So, for example, if you know your performance will have a direct financial impact upon the bottom line of the company, your PV may be very high and you can negotiate additional compensation based upon achieving certain levels of performance. In essence, your PV is where performance bonuses, stock options, commissions, and so on are able to increase your market value.
Going through the process of calculating your market value is an absolutely
critical component for negotiating your future salary. If you have a good,
well-researched idea of your market value, you come across as an educated
and professional job seeker who understands your worth in an industry.
And armed with the ability to articulate your value in terms of past achievements, special skills, expertise, etc. (as you learned in last month's issue), you are now prepared to quote a market value, back it up, and negotiate a very attractive compensation.
© 2002-2016 Ross Macpherson
Ross Macpherson is the President of Career Quest, a Certified Professional Resume Writer, and a Career Success Coach who has helped thousands of motivated professionals advance their careers. To receive more valuable career advice, sign up to join his monthly newsletter "Career Quest Café" by visiting www.yourcareerquest.com.