Lets assume that we are good friends and work in the same office complex.
Once in a while, in the evenings post work, we drop into a really nice jazz bar around the corner and enjoy some nice cocktails – made more tempting by the ‘happy hours’ that run till 7 pm (meaning buy one drink and get one free).
One day, as usual, we head to the bar and instead of the small blackboard outside the bar that says ‘Happy Hour on NOW’, it reads ‘Employee Hour on NOW’.
Intrigued we step in and get a bar stool each. On equiry, the bar tender says very grumpily – ‘you guys ain’t gonna like this… during employee hour, you will pay TWICE for the same drink – NOT get two drinks for the price of one’.
First we think its a joke, but then seeing no one around, we shrug off and walk towards the exit. The barman grunts loudly behind us and yells ‘thank the employees for this – they demanded a 50% increment – so the owner said – sure why not….lets also raise our margins 50% (double the price of drinks) and make it happen’…….
So, I hope you have understood the lesson by now.
If the price of the goods and services and entertainment you pay for suddenly is increased by 50-100%, will you EVER GO FOR IT?
Well, when some employees jump jobs like frogs in a pond and demand 50% increments for each jump – this is is exactly what they are expecting!
Businesses run on people like you and me. Think of the job you do and the rate cards you sell at (if you are into sales) or the rate cards your colleagues in sales operate with. Ask yourself or them if they can RAISE THEIR SALES PRICES by 50% OVERNIGHT?
A country expands in productivity and growth each year and that is the anual growth %. India is growing at 8%. Add a couple of points to it and you get inflation – which is 10% in India currently.
Just managing to recover inflation year on year is a major challenge for most businesses – forget increasing margins 50% YEAR ON YEAR!
These same businesses operate on COSTS – a bulk of which are salaries. The rest of the costs are linked to purchases etc from other Companies that in turn pay salaries. If the salary base of these companies goes up 50% EACH year – most of these ventures will close down.
So, the moral of the story is:
– Understand the business of your COMPANY BEFORE you try and make reasonable or unreasonable demands. Think HOW your company will get more revenue to pay for your increased costs.
– If you have significantly IMPROVED your skills (say from being an account executive to a effective SALES person) – then sure you need more compensation – but on the basis that you should be earning MORE for your Company in return!
– This does not apply to entry level jobs or people who are between industry changes and even for entrepreneurs who switch from being dependent on equity to taking up a job (if I were to ditch all my businesses and join a VC as an employee).
Real businesses run in the real world and sell to people like us. Think of yourself and what you are prepared TO BUY before you threaten to TO SELL yourself for more….
*****
Interesting and related posts by me:
The perils of Job Hopping – “which train are you riding“
What a job is really worth “Are you bribed to work or is your job a bribe“