Income Rises or Falls on Contribution

“All money earned ethically is a byproduct of value creation.” Dan Sullivan

At my first job after graduating with an electrical electronics engineering degree, I learned the relationship between contribution and compensation. I didn’t say the relationship between position and compensation or income. In most companies, compensations are tied to positions or titles.

It was during this time I started working on the concept of the Levels of Employment. I got a job in a computer company. As a degree holder, I was assigned the role of the company manager. Then someone was employed who didn’t have a degree, but he had the skill that was needed to make money. He was the rainmaker; the value creator for the company. I was just a manager in a name.

While I was paid what the owner of the company felt that position should earn, the other guy negotiated what he would be paid. Each month he ended up going home with an income that was 14 times more than what I was earning as the manager of the profit. Rather than protest, complain, or demand a raise, I simply took in what I was experiencing and gained insight from it that would help me later.

The insight I gained, later helped me to become a consultant with the government and earn a seven-figure income each month. The secret is understanding that an employee's only power is to get to a place where you can negotiate your income. That is the place where you become known as the value creator.

When you focus on doing the things that add value to your employer, you will be climbing the ladder and separating yourself from other employees. This is what we teach engineers. They need to understand what 360-degree Value Creation is all about. You move beyond your department to create value for other departments.

5 Levels of Employees

As I started studying employees, I found out that there are five levels. You have more people at the lowest rung of the ladder and very few people who make it to the top. I found out that most CEOs are Level 3 Employees. That is to say, their income is based on the problems they solve for the company. Sports coaches are mostly level 3 employees. If they don’t get the result desired, they get fired.

Only Levels 4 & 5 are transferable. All other levels cannot be transferred. You have to do what is required to earn your income.

Level 1: Locational Employee

The income of this employee is based on the location where the company is situated. The requirement for recruitment is non-existence. All they want is someone available. Skills are not required for the position. You will be taught on the job. For instance, a retail outlet in New York will employ anyone to work for them but then may pay much more than a retail outlet located in Idaho. Income is all about the location.

Level 2: Positional Employee

Most employees with titles and job descriptions belong to this level. They are paid are paid for the title they hold. Their salaries or wages are tied to the position they are occupying. If ever their position changes, their salaries will also change. If they change companies, they can’t move with the salary they are paid. When this position is advertised, the compensation is always advertised with it.

Level 3: Hustlers Employee

At this level are the CEOs and VPs. Their compensation is based on the problems they solve for the organization. When a CEO is employed, he or she will be given the task of meeting certain goals and if they fail to do that, they get fired. However, if they achieve the goal they get paid for it.

Level 4: Relational Employee

Only a few employees have risen to this position. Their income is based on their network. Some of the employees are so good at what they do, that they consult for other companies or are recommended for board positions where they earn income. As you climb the ladder, make sure you are building the right network. Jesus said employees should use their incomes to make friends or build their network. This is a great advice. Their relationship is their currency.

Level 5: Value Giver Employee

This is the peak of employment and only one or two employees make it to this level. Their income is based on the value they create. They can negotiate what they are paid. They don’t have to spend every day in the workplace. They can come in once a day and create massive value for the company. They get paid not for the time they work, but for the value they bring to the company. They help the company create value for the marketplace and get a percentage of the value they create.

Always Make Your Contribution Bigger Than Your Compensation

“Do more than you are paid to do, you will eventually be paid more for what you do.” Zig Ziglar

You should do more not for what you will get out of it but for who you will become. I learned a lot from Jim Rohn. He taught me never to wish to do less in any job. The best way to build a reputation and network is to be known as someone who always does much more than you are paid to do. It is the best investment in your future.

How can that be an investment? That is because it helps you in different areas much more than the person you are doing it for. When you do more than you are paid, you benefit in the following way:

1. You Gain Confidence

2. You Develop Capability

3. You Become Creative

4. You Get Committed

5. You Gain Credibility

6. You Make Connections

One of the issues most employees I coach raise is that they can’t create value at the level or position they presently are. Value can be, and has been, created at every level in an organization. It doesn’t matter where you are; all that matters is your mindset and capability.

If you want future opportunities to earn more, then focus on making more contributions to people than what you are getting from them. Always make your contributions bigger than your compensation as an investment in your future. It is the best way to stand out and separate yourself from many others in the workplace.