We spend tons of money and time on work skills, but we rarely invest time in learning how to manage our careers. Change that by implementing these two strategies to get consistent pay raises in your field.
Career management – figuring out how to position and improve yourself for the fastest promotions and highest compensation – requires a set of skills very few people invest in. All the talk is about the technical skills required to perform one’s job. Obviously you need to be competent in your role, but the thing many of us ignore is that there are a whole set of additional skills required to make the most of your career – how to find and land the best job, how to get how to make your work the most visible to your superiors, and how to earn the highest pay raises.
What a shame.
You do all the hard work and then leave the final step up to chance, hoping that the world will judge your work fairly and clearly.
This view is a holdover from grade school, where our teachers were paid to create an environment of fairness and objective evaluation. While that didn’t always happen in actuality, it was certainly the intent. But in the working world, there is no such standard. And that’s why career management is so valuable.
So few people develop any skills at this that even a tiny effort will reap huge rewards.
Here are two strategies you can use to boost your career now.
Find Your Leverage
Roles With Leverage
When you have a heavy weight to lift, most people understand that it’s better to use a tool to multiply the outcome of your effort. That’s leverage. So when you go out in the world to try and generate money, where is your leverage? You have several options.
- Other People’s Money – A hedge fund manager is a good example. He spends 100 hours making the decision to buy a certain stock. If he had only $100,000 to invest, the effort he put in may not be worth the returns it generates. Even if it doubles he only makes $100,000. But if he is able to put $100 million behind that one day and take a portion of the profits, it is extremely lucrative. He leverages other people’s money.
- Other People’s Time – This is a business owner or a manager. You are evaluated and rewarded on the outcome of a team of people. And the value created by a team of people vastly outstrips what one individual person can create (and thus be rewarded for).
- Computing Power – This might be a software company or even a software developer (which explains why they command such high average salaries). By building programs that leverage computing power to do useful tasks, you create an army of “employees” that can work 24 hours a day, 7 days a week. They are employees that don’t need health benefits or a retirement package. You can sell the same package to thousands of people without a single extra minute of work on your part.
Where’s your leverage point? Are you investing in a career that has or eventually will have leverage? If not, there will be a very low ceiling to your earning power. Whatever field you’re in, angle for the role that has the most leverage to maximize your earning power.
Look For A New Job Every Two to Three Years
I know several managers and directors, particularly in the engineering function. They have observed to me that employees who have stayed internal for many years are often underpaid to those who lateral in with similar experience.
This makes sense when you think about it. A lateral hire is someone who the company has had to go out and compete against other companies to win. Their demands are heard with more urgency given the competition, whether that be role title or pay.
While I ultimately stayed at the same firm for my entire career, I looked for a job every two to three years. I got close to taking one and shared that with my superiors. That year, I was given what I was told was the highest bonus of everyone in my year. And I went on to be rewarded among the most handsomely at the firm thereafter.
By going to the market every few years, in the best case you will walk away with tens of thousands of dollars more by switching companies or getting your company to match, and in the worst case you confirm that you are being paid handsomely compared to the rest of the market. Know that the odds are with you by job searching. According to data from ADp and the Atlanta Fed Wage Tracker, job switchers see their pay increase on average 1% more per year. That may not sound like a huge deal in isolation, but keep in mind that that increase happens every year.
Over 30 years, that 1% difference in pay invested in the stockmarket at historical returns will be worth over $500,000 to you. Half a million dollars over the course of a career is a big deal.
That’s half of a cushy retirement, all from one strategy.
Source: Chart by Nomura. Data from ADP and Atlanta Fed Wage Tracker
Not only can you use job switching to get pay raises, but you an also use it to lateral into a more lucrative adjacent role. I have a friend who was working in a different, less well paid function at his firm. He wanted to swap over to the investing side but was told he was not qualified. He lateraled to another firm who would take a chance on him. Two years later, his original firm that turned him down has now offered him his desired position because he has the work experience, and he’s being paid almost twice what he was paid three years ago.
Make sure you’re getting the most value for the work you’re producing with a few simple career management strategies. With a small investment of time in building this skill set, you can make hundreds of thousands more during your career.
Have there been any strategies you’ve used to maximize your pay raises and promotions? Please share in the comments below.