These days, so much attention is paid to “side hustles,” or small-ish entrepreneurial gigs done in people’s down time. It’s important not to forget the primary way for most people to increase income on the way to FI…as an employee (gasp!).
If you are going to spend signficant time each month being an employee, then you should be good at it. Performing highly is the best way to get yourself noticed, and stay on an increasing pay trajectory. You’ll probably still need to ask for the raise, but being good and helpful lays the groundwork for your boss to say yes.
It’s basic economics. A company is made up of owners and employees. Owners will pay employees for the value they create, dampened only by the availability of people who can create this value. The trick is to deliver unique and increasing value. And be recognized for it.
I write from a position of experience in growing salary from an employer. I’ve changed employers only one time – to switch to the real estate development industry after a brief stint in strategy consulting. I’ve grown my compensation pretty steadily at a 17% compound annual growth rate for the past 12 years…leading to 7x my 2003 compensation. Here are my lessons from the grind:
- Work hard: in any role, maintain a good attitude and a high level of effort. While you are working, be efficient and task oriented. Make this a personal value, and understand that recognition will come in the long term. This doesn’t mean you always have to work the most hours (but sometimes you should).
- Get people to like you: First, keep a positive attitude. Second, take time out to talk with people – regardless of position. Stretch yourself. If you are an ass, and don’t value talking with the secretaries, then do this. If you are a wallflower, and fear talking with upper management, then do this. Don’t know what to talk about?…not a problem. The answer is them. Talk about the other person – dogs, or kids, or travel, or work. The goal of any conversaton should be 80% them, 20% you. Read How to Win Friends and Influence People by Dale Carnegie.
- Educate yourself: get the skills you need to be better. Most companies will pay (and give you time) for continuing education. Analyze yourself and improve your weaknesses. This could be finance, accounting, sales, negotiation, management, or a host of other areas. Which assignments are not given to you?…get better at that. During off hours read books (not just the internet) on those topics.
- Make your boss successful: A key to your own success. Constantly think of your work in terms of what information your boss needs and how he/she should think about it. Set them up for success at all times. If your boss succeeds, you will be pulled in the updraft. Either by him/her, or your boss’ boss.
- Let yourself be hazed: almost every lucrative profession comes with a trial period. Doctors have residency; investment bankers have the analyst role. I was hazed as an investment banking intern and a junior associate at a national consulting firm. Both positions took advantage of me in the short term, but gave me long term lessons and tremendously marketable skills.
- Know when to stay, and when to go: As we discussed in #1, work will not always be fun. Jump ship when the opportunity presents itself, but don’t become a “jumper.” If you are unsure, and have some upside at your current job, then err on the staying side. We are a generation of wimps. The average salaried tenure of US employees was 4.6 years based on the 2014 numbers. And even shorter at 3.0 years for employees aged 25-34. It is hard to contribute significant value (and get rewarded for it) in 3 years. I’ve worked at the same company for 10 years. Sounds long to most, but it has certainly been rewarding – both in compensation and accomplishments.
- Do a job you’re good at: While analyzing yourself above, pay attention to what you do well. Focus your job on these things. If your company won’t let you, then this is the best reason to jump ship. Find an industry or company that values what you can best deliver.
- Make your company successful: in line with #4, also think of what will deliver value to your company as a whole. Growing your company, or department, provides ability for growth. And owners will notice growth.
- Be flexible in a downturn: remember #4 and #8 – in a heavy downturn, be patient. Instead of looking to get paid that day, take on more responsibility without expecting a pay raise. Your boss is being pushed to do more with less. So give him that option. You will have the opportunity to learn & grow. Also, you will position yourself for quick raises once the economy swings back.
- Create a competitive advantage: think of yourself like a company. You don’t want to sell a commodity. Commodities are valued much lower than unique products. Become the expert on your company’s systems or develop deep relationships with important clients. Whatever fits your particular situation, make your contributions seem irreplaceable.
- Produce revenue: owners in most businesses value revenue over cost cutting. If you can grow or control revenue then you have leverage over what you get paid. Good salespeople get paid more than good accountants. I saw my pay increase dramatically as I moved away from analyst work into making deals. As I brought in cash flow to the owners, my value to them increased and they paid me accordingly.
Succeed in your day job if you want to minimize the length of time to financial independence. Side hustles certainly get more love than crushing extra spreadsheets for the man.* But don’t confuse cool with profitable, or try to make it a get-rich-quick scheme. For most people, the most profitable way to spend your working time is at your specialized day job.
There will be plenty more time for cool when you step into early retirement.
*Of course hobbies and learning are important in a balanced life. Balance is about more than money. This post is about money. Try to learn & grow your abilities in a broad array things.