This is the manuscript of fourth episode of the podcast Success and Inner Growth. Today’s topic is: How do I Get the Fair Share of the Fruits of my Work?
The answer to this question looks like a simple power game, at least on the surface. But digging a bit deeper, you will discover a pair of rather complex questions. They are:
- How much value do I create?
- How do I know what would be my fair share?
Both s are the subject of hot discussions between politicians and economists. These discussions are going on for centuries. Here is my take:
What is Value?
We ourselves are not the ones who can decide upon the value of our work. We can demand a price, and if we do not get the price we need, we can decline or stop to provide the service.
But deciding about the value of our service it is up to the user. To reach that decision, a consumer will look at the price of the alternatives, including doing nothing about the problem we promise to solve, and try to figure out how much he will be better or off using our service instead of the alternatives.
Thus, the value of a product or service is not the same for everyone. It is quite subjective, but it is also the upper limit of the price, a user might be willing to pay for our service.
What is a Fair Share?
It is easy to say: “I want my fair share.” But what exactly is that fare share?
Like the concept of value, the fair share isn’t clearly defined. But we can approach the fair share from two sides: We can define a minimum and a maximum for a fair share.
The minimum of a fair share of the fruits of your work is defined by your needs. This means generally spoken, that the reward for full-time work needs to support a life in dignity. This includes
- the daily needs like housing, food, clothing etc. for you and your family
- the resouces needed for personal development, further education etc., both for you and your family
- the resources needed for proper health care, including a free day per week and vacation time for recreation
- paid sick leave or insurance providing for your needs while you are unable to work because of sickness
- adequate contributions to a pension fund
The upper limit of the fair share is the perceived value of your work for the customer or company who is paying you. Whenever the perceived value of your service is higher than your minimum need, there is a profit to be shared. Your share of that profit is a matter of negotiation.
The Value of Your Rewards
Monetary and Non-Monetary Rewards
Not all rewards you receive for your work or service come in the form of money or can even easily expressed in monetary terms. Thus, it is important to track both, the monetary rewards and the non-monetary rewards you receive for your service.
Here is a list of the most common monetary rewards you receive as an employee.
- monthly salary
- annual leave
- health insurance contribution
- sick leave
- pension fund contribution
You need to consider them all together, not just the monthly cash payment.
As a freelancer or entrepreneur, you need to pay for health insurance and pension fund from your current income, and you must put money aside on a monthly basis to have a cushion allowing for sick leave and a yearly vacation. Therefore, it is a mistake to compare the monthly income of an entrepreneur or freelancer with the salary of an employee. Many entrepreneurs think they can do without health insurance, hoping they won’t get sick. And they ignore that one day they will want to retire and need at the latest then a passive income. But neglecting and disregarding needs for health care and retirement is a direct road to disaster.
Non-Monetary Rewards for Employees
The non-monetary rewards you receive through your work are often overlooked, because they are less visible and difficult to quantify. However, they are very important. But good skills, a personal network with customers, suppliers and peers, and recognition as an expert in your field are almost a precondition for working in a position with high productivity, generating also a high income.
Expert status and a strong personal network bring not only a higher income. More importantly, they provide independence and a strong bargaining position. And in turn independence and a strong bargaining position allow you to shape your work and working conditions according to your personal needs and ambitions.
Examples of non-monetary rewards are:
- the opportunity to acquire new skills
- job security
- building a personal network
- building expert recognition
- status inside work organization and in wider society
Please, do not disregard the non-monetary rewards, because they provide the building blocks you need to write your personal success story.
Non-Monetary Rewards for Entrepreneurs
In the context of entrepreneurship, the building blocks for a great brand are skills, networks, expert recognition and social status. Whenever the economic environment gets a bit stormy, a strong brand supported by excellent skills, expert recognition and trusted customer and supplier relationships turn into a lifeline for your business.
If You don’t Receive Your Fair Share
There are three main scenarios, which can lead to a situation where the rewards you receive for your work are too low.
Weak Negtiaton Skills
Some people are not aware of the value of their work and skills. And they are not aware of the value of things like health insurance and pension fund contributions.
An employer might pay you slightly more cash, but leave you without health and pension coverage, no sick leave etc. Another unfair situation would arise, if an employer lets you work in very unhealthy working conditions, knowing that you will eventually become sick. You would get a good cash salary, but after you are used up, void of energy and with health in tatters, he will just look for somebody else to use him again as a consumable item.
The negotiation trick would be in both cases to fix your focus on immediately spendable cash, without regard for future consequences.
For Business Owners
Businesspeople, who do not know their full costs, and look just for their current cash flow, will often work for prices which fail to provide for their needs.
In both cases, the key is: Know what you are doing, and be able to say no, if needed. Life will offer you a better chance.
Weak Negotiation Position
If you are in a very weak negotiation position, you need to look for a strategic change.
Signs of a weak negotiation position are:
- You can be easily replaced by a huge crowd of hungry competitors
- Your service can be easily replaced by automation
- Lack of access to a peer to peer network
- Employer or customer can play his employees or suppliers against each other
In such an environment you need to strengthen your bargaining power by strengthening your personal network.
Consider also to differentiate yourself from your competitors by offering some extras.
If both strategies do not lead to a decisive improvement of your position, you need to consider leaving that market niches completely and look for a better positioning in the market, providing adequate conditions for you.
Very Low Productivity
If the perceived value of your work is not enough to meet your minimum needs, there must be a change. If you don’t do your homework, you might not even recognize such a situation immediately, but you will bleed to dead if you do not take strong and immediate action.
For Business Owners
There are four possible ways for you if you are as a business owner in such a situation:
- Hone your skills, and add related skills to improve the quality of your service
- Modify your service and look for a different market segment with new customers, who perceive your service more valuable than your current customers
- Improve communication so that customers can use your solution more productively. This will allow them to perceive it as more valuable and offer a higher price
- Gain trust by strengthening your professional network and get better recognition as a trusted expert in your field.
Use a combination of all four strategies, and you have a good chance to turn the future of your business around.
If you work as an employee, and your work fails to generate the resources needed to take care of all your minimum needs, you might think “something is better than nothing.”
But that thought will set you on a slippery slope, bleeding energy. Even the value of your work and your ability to work will slowly decline. If you don’t change such a situation, you will see a catastrophic collapse in your life – financially, socially and healthwise.
A better way would be to become aware of your skills and their value, improve them and look sooner rather than later for a new workplace with better payment, and above all with good opportunities to grow your skills, expertise and personal network.
But, the longer you wait, the more your self-esteem, your skills and your network will shrink, and the more difficult will It become to turn your life around.
You could also start a part time business operation and use it to add and improve your skills, build a personal network and build a new, more productive line of work for yourself. This will not be easy, but with a strong will, endurance and resilience it is possible.
This was the fourth episode of the podcast Success and Inner Growth, discussing the fair share of the fruits of our work. The next episode will go online around July 20. That episode will look in more details at the concepts of a personal network, expert recognition and social status. If you look for transcripts of episode 1 to 4, you can find them here.