Ever wonder what makes up your salary? Risk, Responsibility, and Replacement.
The most apparent R of your salary. How many things do you do for your company and how important are they? Are you in charge of a $5M capital project or company merger? Are you in charge of operating a fork lift or balancing the payroll? If you are the CEO of a company, directing and planning the way your company moves forward, you are a probably going to be paid more than if you are the janitor within the same company.
Some risk goes hand and hand with responsibility, and sometimes blurs with the previous R. If you are in charge a major project, and something goes wrong, you are the one who will take the heat. Another form of risk is hazard, thus we have “hazard pay”. Say there are two operators in a chemical plant, and one works with carcinogens. He or she is going to be paid more because of the risk involved. The more risk you have, the more you will make.
I think this R is the hardest to see and the major cause of people leaving their job. How much would it cost to replace who you are? how you interact with people? the potential savings you bring to the company? what you know? the experience you have? Basically how much it would be to replace the things that make you… You. Maybe you’ve worked the same job for years and know the ins and outs of what you do. Hiring someone with the same experience would cost a company a lot more than someone who didn’t have it. Most positions can reach a salary ceiling and lose room to grow, but you continue to grow. When you think you have become worth more than what you are being paid, ask if you can get a raise. Why? A company is not a machine; it is a group of people with ideas. You can make them rethink about how much value you bring to them. Keep in mind, they always have the option to say no, but you have the option to leave and find someone who values you more.
All positions are important. If they were not, they would not exist.
Published in: Personal Finance