Generally, the subject of compensation seems to be taboo in this country. This seems to me, at least, to benefit employers rather more than employees. I’m going to break that taboo in this post; obviously you should not read it if you think you might be offended.
I have used the more American term “compensation” rather than a term like salary, pay, etc quite deliberately. I mean compensation to include whatever you get in return for doing your job. There are several important things to remember when calculating compensation:
- Everything has to be recorded in the same units. This is so that you can add them up and compare the total compensation from one job with another.
- For each aspect, what matters is the subjective value to the recipient. This means that two people with the same “package” will not necessarily have the same “compensation”. It also means that the cost of providing something and the benefit derived from it are not always closely coupled.
For the purposes of declaring my compensation I shall measure it in spendable pounds sterling per month. The cash number is therefore objective. The other numbers are how much more spendable cash I would need per month in order to be equally pleased with my compensation in the absence of that benefit.
| Cash | £1850 |
|---|---|
| Medical insurance | £50 |
| Pension | £200 |
| Technically interesting work | £1000 |
| Relatively low stress | £500 |
| Total | £3600 |
That’s what I feel I get. So I should switch from my job to a technically uninteresting, stressful job if it offered to double my take-home pay. Quite possibly I would, so these numbers aren’t obviously wildly wrong.
There are some things I value which are features of the compensation of other jobs but which I do not feel I get from mine. Pricing these fairly is much more difficult: if I estimated what amount of my current spendable cash I would forego to get them it would underprice them quite severely compared to those items above. There are two reasons for this, first the normal mathematical fact that a numerical subtraction of x causes a bigger percentage change than a numerical addition of x to the same initial value. Secondly, there is a minimum amount of free cash per month I need to continue my current lifestyle, which again biases me to underestimate the following values. I have tried to factor these biases out, but I have probably failed. Here goes:
| Making the world a better place | £1500 |
|---|---|
| Doing something I can show off | £750 |
| Learning useful/interesting new things | £250 |
One thing which is extremely difficult to capture in an analysis of this sort is future prospects. Anecdotally, I am lead to believe that cash compensation growth is lower than the average at my current employer. I am not sure how to factor this in to the above.
interesting article, basically the question is “am I happy with what I am doing?”
the more unhappy you are, the more you start thinking about something like am I being compensated (or do I get!) enough…
increasing your compensation will give you a quick fix to the problem at hand, but after a while you realise you are still unhappy no matter what the compensation is…
so stop thinking about compensation to make up for the unhappy feeling, start making yourself happy again even it means getting less compensation, trust me it will work!
In case the optimism didn’t give it away, that Michael isn’t Michael-formerly-mjc99, ie. me.
Anyway, I’ve often thought that the secrecy around how much people get paid (which is the (significant) objective component of your ‘compensation’) is self-defeating. How can people know they’re getting a decent deal if they don’t know what others doing similar jobs are getting?
As far as I can see, the world knowing I’m paid £14,250pa doesn’t hurt me. I know I’m paid a pittance, so does my boss. Any future employer (ha!) would probably ask me outright, so worst case is it makes it harder for me to lie about it (but what’s to stop them asking my boss for it in the reference?). But there would be obvious benefits for others knowing, and for me knowing what others in this company/industry get paid.
Of course, from the ‘compensation’ point of view never having to leave the house, or really do much work, are advantages. But you have to weigh them against never leaving the house or talking to anyone, which probably isn’t healthy. Every silver lining…