What am I really worth today?

For most of the American workforce, compensation revision time has come and gone. USA Today reported the average adjustment this year at 3.8%. Whether that’s good or bad, or simply irrelevant depends on certain factors.

why do we get raises anyway?

Pay raises mainly happen for a couple of reasons. One reason is to retain good employees; people who help earn the money. Another reason is to adjust salaries based on inflation rates. Raises are generally slightly higher than the inflation rate for that year, therefore minimizing the adverse effect of inflation on net gains. In 2006, the average inflation rate was at 3.24%


Year -- AVE Inflation
2006 -- 3.24%
2005 -- 3.39%
2004 -- 2.68%
2003 -- 2.27%
2002 -- 1.59%
2001 -- 2.83%
2000 -- 3.38%
1999 -- 2.19%
1998 -- 1.55%
1997 -- 2.34%
1996 -- 2.93%



what is inflation?

Generally speaking, Inflation is measured as the growth of the money supply in an economy, without a commensurate increase in the supply of goods and services. This results in a rise in the general price level, as measured against a standard level of purchasing power. To over simplify, when demand exceeds supply, the prices increase, leading to inflation.

me and my co-worker have identical jobs, how come my-worker got a higher raise than I did?

Before we get into that, let’s first discuss how a business makes money? Generally speaking a business's success depends on its ability to drive down cost and to generate revenue greater than the cost. Efficient businesses reward their employees and especially those who perform better. As markets drive businesses towards more efficient operations, businesses are turning away from the traditional pay raises and more US businesses are turning to 'yield based pay structures'.

The WorldatWork survey found 79% are using performance-based pay, up from 66% in 2001. As employers recognize that they need certain key individuals for their business, they try to ensure that these people are discouraged from leaving for another job therefore these individuals get higher raises.

Top performers are compensated better, the rest however get compensated at a lower level. This trend has a compounding effect over time, and within a matter of just a few years, your peers maybe making significantly lower or higher salaries compared to you.

am I being taken advantage of.....should I be upset?

People often have a hard time accepting the truth about their real worth. We tend to believe we are undervalued or not fully appreciated. Somewhere deep down inside we know that we deserve better. That's a good starting point, however the short term reality unfortunately is that we are only worth as much as the value we offer to others, today.

In today’s marketplace where businesses are being judged by impatient investors, very few could afford the wisdom to see beyond today. This competition makes businesses make very harsh and sometimes unwise choices for investing in only the 'obvious' few. Making safer bets in whom to keep and reward and whom to let go.

This of course can backfire; people like Bill Gates, Ross Perot and Steve Jobs are living testament of corporate short sightedness of their previous employers.

So, the choice is yours, no one knows better then yourself on where you are in your organization, and your team. Are you a star achiever or someone who is barely hanging in there? Cues from management, and your peers can help you figure out these questions. Listen to your customers, whether external or internal and determine the factors which can help you succeed. Next, determine the best course of action for success, whether within that organization or elsewhere. Make a plan and work on achieving it, today.
Different approaches work for different people and situations. If one strategy is not working, devise a better one based on the lessons learned from the last one. All paths leads to success, the question is, which one takes you to your paradise island!

References:Table 1.1http://www.inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx