Let’s start with some simple arithmetic. Joe Ordinary is 25 years old, makes $28,000 a year, and gets ordinary 3% to 4% yearly increases. Over a 40-year career, he makes approximately $2.3 million. Elwood ETR is not satisfied with ordinary. He follows the advice he gets here every morning and averages a 6% increase in wages over the same 40-year period.
By the time Elwood retires, he’s earned about $4.3 million. As you can see, increasing your income — even by as little as 3% or 4% a year — can make a giant difference over the course of a lifetime. Imagine what would happen if you could do even better than that!
Well, you can. Today, I want to talk about how you can get BIG salary increases — double, triple, or even quadruple what your peers get. And to get your New Year started right, I want you to set a “category-A” goal for yourself — to increase your salary by at least 10% this year. Let’s start with a very short discussion about how salaries work in a normal, free-market economy.
Businesses exist to make profits. As an employee of a business, it’s your job to perform a function that helps produce those profits. The more important your work is seen as being in terms of creating profits, the greater your salary is likely to be.
Thus, salespeople generally make more than accountants and profit-center managers have higher salaries than engineers. In other words, if you want to get a higher salary from your boss, you have to make yourself more valuable to him. So that could be a “category-B” goal — to make a resolution that you will find a dozen ways (say) to become more valuable to your boss.
Take a moment right now and list the ways you are currently valuable to him. Then make another list of things you can do to increase your value. That list will be a good source of ideas for writing up your monthly objectives. This month, for example, you might make it a point to get your boss his most important report a day earlier than normal.
Next month, you might tell him he can delegate to you the sales call he hates to make. As the months roll by, your boss will recognize that you are operating at a higher level. He may be surprised at first — even threatened a little, if you aren’t diplomatic about it — but he will appreciate how you are making his work life easier and more productive. And he’ll begin to depend on you.
Eventually — and this may happen in four months or it may take a year — he will see you as an entirely different and more important employee than anyone else he deals with. He will begin to think of you as indispensable. At that point, you will have no trouble getting that 10% raise. You might do much better than that.
Here’s a key point: The habits you will develop this year in order to get yourself the 10% raise will be the same habits you need to double or triple your salary in the future. Superstar employees don’t do a hundred things better than ordinary, good employees. They usually do just a handful. You’ll discover and perfect your handful this year in seeking to please your boss, and you’ll be able to use your new skills to go all the way to the top. One caution: It’s not enough just to do a better job and make your boss’s life easier.
To get that raise you want, you sometimes have to ASK FOR IT. You have to promote yourself not only when your salary review comes up but throughout the year. (Remember, it’s your responsibility to make sure you get noticed — it’s not the responsibility of those you work for.) Another caution: Sometimes, what you have to do to please your boss is not necessarily the best thing for the business. Some businesses — and this happens more often with larger, corporate businesses than with growing enterprises — become fractionalized and politicized in parts.
In such businesses, it’s possible to get a job working for someone who doesn’t really care about making the business grow profitably. He cares only about himself. If you have such a boss, you have to be a bit duplicitous. You have to do everything you can to please your boss (or he will fire you) — and at the same time, you have to find a mentor at your boss’s level (or above) whose interests are aligned with those of the company.
Work to please your mentor at the same time as you work to please your boss. By pleasing your boss, you keep yourself employed and you’ll get your raise. And by pleasing your mentor, you will be able to get away from your boss (when the time comes to abandon his rotten ship) to a secure, inside position.
The work you do that makes your company better is the most important work you will do (for your company and for yourself). Only by making your business better can you expect to make dramatically more money than you do now. The greater your contribution toward your company’s success, the higher the salary you will demand. The best way to be a big contributor is to practice a financially valuable skill. I’ve made this point over and over again in past ETR messages.
For example, in Message #512, I said: “You can’t earn a high income, consistently, unless you have a financially valuable skill. To merit a lot of money for your time, you must do something very well that creates value for others.” In business, there aren’t a whole lot of financially valuable skills to choose from.
Though it’s good to know how to analyze a spreadsheet, write a balance sheet, or engineer a new design, if you want to break into the big bucks at work, you are almost certainly going to have to start doing at least one of the three things businesses traditionally pay big bucks for:
* marketing, and/or
* managing profits
Yes, I know you’ve heard it before. And, no, I won’t be angry with you if you decide to stick with what you already know. I’m just pointing out that in going after this goal of increasing your income, there is the standard ladder (i.e., becoming more valuable to and pleasing your boss) and then there is the jet-propelled way — which might mean changing your profession. Whichever way you take, you can and should be able to boost your salary by 10% this year.
That is what your goal is — and here is how you are going to do it:
1. Make a resolution to be more valuable to your boss (and/or your business — see above). Do it now. Write it down.
2. Make a resolution to develop one or more of the three financially valuable skills identified above.
3. Make a list of a dozen or so ways you can please your boss and/or improve your business. Write these down too. And pick one or several of them as monthly objectives for January.
4. Figure out some way to communicate to your boss or to your company’s president that you want to make a bigger contribution this year. (No need to tell him you want a higher salary. He will “get that” without your saying so.) Will this be enough?
Last January, an old friend of mine mentioned to me that she was struggling on her yearly $45,000 income. She told me she was “hoping for a 5% raise” but was worried that she might get less because her company was floundering. I gave her the advice I just gave you — and she brushed me off. Then, in April, in an e-mail message on an unrelated topic, she again mentioned that she was “struggling to make ends meet.” I told her — almost rudely — that I didn’t think she had any right to worry or complain, since I had given her the solution she needed. She e-mailed me back to say that she thought my advice was “just like all the good advice I read — well-meaning but not relevant to my situation.”
We discussed her “situation,” and, not surprisingly, it was not as special as she thought. This turned into a challenge. I told her that if she didn’t get a 10% raise by following my advice, I’d give it to her myself. She refused the charity (smart woman that she is) but accepted the dare. It wasn’t even six months later that she wrote to tell me she’d been promoted. Her new salary? $62,000. If you set for yourself the modest goal of getting a 10% raise this year — and get it … and then get an increase of just half that amount for the next 10 or 15 years … you’ll be worth millions more when you retire than you will be worth if you do nothing. So start with that 10% goal.
And develop the habit of making yourself more valuable. Don’t brag, but do promote yourself. Then watch your income grow. I’m working on a report on this subject, tentatively titled “99 Ways to Become Rich by Increasing Your Income.” Let me know if you’d like a copy when it’s completed by writing to firstname.lastname@example.org.[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]