The Truth Behind Your Self-Worth and Your Income

Recently I read an article on the taboo of comparing salaries.

Depending on your cultural background and beliefs, you may or may not compare your salaries with your family and friends openly. However, most of us are interested to know how much we earn relative to our peers.

Why is this so? The reason is simple – we are interested to know if we are valuable.

Before you start crying foul, hear me out. Obviously, you know that your self-worth is not dependent on your income. How much you earn has nothing to do with your value as a person.

But in reality, how often is this applied? I’m afraid it’s not very often. At least accordingly to my observations, it’s not so.

The fact that people compare their material assets is a good indication: the car that you drive, the brands that you wear and the kind of houses that you live in. All these material assets are proves of your earning capabilities. The more expensive these assets are, the better one feels about themselves.

So intrinsically, we have knowingly (or unknowingly) associated our self-worth with our income.

THE DAMAGE OF ASSOCIATING YOUR SELF-WORTH WITH YOUR INCOME

I have an ex-colleague, Mandy (not her real name), who worked in HR. Given her privileged position, she had access to personal information unavailable to others, including salary.

Now, Mandy has two bad habits:

• She likes to compare her salary with others’.
• She likes to talk about it.

Sometimes, she would tell me how little a particular colleagues was earning. Although she didn’t share the exact figures, it was obvious that she was very happy about being “more valuable” than that particular colleague.

Other times, she would complain to me how much more another colleague was earning. Again, it was obvious that she was very upset about how someone else was more valued than she was.

Over time, Mandy grew bitter about how others were earning more than she did. Her attentions were focus on how little she earned and how under-valued she was. As such, she started to push responsibilities and refused to do more than she was paid for. She would only do what she was paid for.

It became a vicious cycle – the more under-valued she felt, the lesser she contributed and the more opportunities she missed.

As you can probably guess, Mandy was passed over for a few promotions. In the end, she left the company.

Mandy didn’t realize that her self-worth is not dependent on her income.

THE BUSINESS REALITY BEHIND HOW MUCH YOU EARN

In my work, I am involved in many hiring and budgeting discussions. The reality is this – value is only one of the many considerations in hiring or promotion decisions:

Value – obviously, how much a person earns is dependent on the value of the work that he/she is doing. It’s related to one’s capability, knowledge, experiences. This is the reason why people link income to self-worth – how good you are.

However, as you will see, there are many other considerations.

Budget – There is always a hiring/staffing budget. A closed-minded employer’s goal is to hire the best person at the lowest salary possible. This is to ensure he minimize his cost and maximize his profits. From this perspective, the value of a person becomes a secondary consideration.

Market Rate – different jobs have different market rates. During the dot com boom, IT workers enjoyed a much higher income than most non-IT workers. Does this mean that an IT worker is really more valuable than a non-IT worker?

Market rates are usually driven by greater supply and demand forces. Something that is scarce and in demand will have more people willing to pay a higher price for it. My observation is that these market forces are not always rational or logical, and often, it has little to do with true value.

Having said that, to prevent hiring difficulty or risk of overpaying, employers will usually try to peg your salary against the market rate – despite the irrationality of it.

Urgency – If an employer needs someone to fill a position quickly, he is more inclined and open to salary negotiations. Otherwise, he may just pass over the demanding candidate and wait for the next one. After all, he can afford to wait for a “cheaper deal”.

This is simply a timing issue. If you chance upon such opportunity, then you have more room for negotiations. However, don’t count on that to happen all the time.

Ease of Replacement – If an employer can easily find someone else to do what you are doing, then he is less open to salary negotiations. Even if he negotiates, he will not be willing to compromise very much.

The implication for us is to increase the value we create. In so doing, you make yourself more painful to replace, and increase your bargaining power.

MY TAKEAWAY

Whether you are employed or self-employed, no remuneration system is 100% fair. It can never be.

It is a necessary evil that we need to live with for the world to function as we know it.

Learn how this imperfect system works; know that your income is not directly related to your self-worth as a person. There are many other considerations and forces involved. Don’t take it personal by comparing income – it probably has nothing to do with your true value.

At the same time, continuously increase the value of your work. Learn how to work the imperfect system in your favor and maximize your income, so that you don’t get exploited by ill-meaning employers.

It’s a fine balance, and each of us has to constantly work at it. It’s not easy but it’s worth it.

Lawrence Cheok writes about living a balanced life and provides tips to improve your career, relationships and money at A Long Long Road. Other than writing, Lawrence does business development and project management in his day job.