Know Your Employer's Internal Microeconomy

Many employees understand the macroeconomics of where they work, without being able to double-click on the microeconomics of their specific team; this article makes the case for understanding and mastering the microeconomics of your team as a critical step to personal job & pay growth, as well as, improved employment satisfaction.

Why the disconnect? In today's AI and Big Data paradigms, employees are getting much more real-time insights into their company's macroeconomic approaches, via Investor Day report outs, industry analysis, social media and financial metrics: how did the stock trade that day (public) or how was resulted consumed (private). These are all critical, though just like an overall national index rolls up data Gross Domestic, Product Labor Market Data, Inflation - an ocean of microeconomic data is rolled up to produce a single meaningful metric.

This only tells part of the story: solving the macro/micro gap is a great opportunity to improve career development and job satisfaction. Because macro-metrics for leaders who run divisions may not be directly tied to exact company performance metrics, many teams have a disconnect of understanding the very direct economic drivers that decide, in part: why were they hired, how they specifically can support each other, what skills and areas of growth, within the company, should the employee focus on. This divide also leads sometimes to the wrong people being affected by downsizing.

Foundational examples of an employee's microeconomic environment(s):

• Pay-to-play: many companies leverage an internal system of directly mapping an employee to currently funded projects, as a way to help prioritize overall backlog decisions the team should be working on. Benefit: directly shows each team member's connection and allotment to portfolio tracks. Challenge: pay-to-play can slow innovation and research, because employees are waiting on funding codes to be created to authorize their work.
• Baseline (for an employee: salary & benefits): some teams have employees tied to annual funding of a cost center, which means they're funded as part of a pool of money for that year. Benefit: this can empower more out-of-the-box thinking because employees work with their management on goals and areas to drive. Challenge: during difficult business decisions, baseline funding metrics makes it harder for management to justify size of teams and for individual employees to standout for strong (or weak) performance.
• Base plus commission: more prevalent in sales, though some flavors exist in multiple sectors, the concept is to provide a "steady" income stream for the employee to count on each paycheck and a stronger incentive to be successful in closing. Benefit: employees with the right planning and sales pipelines can stay with the company longer because of the predictive mixed-pay approach. Challenge: the sales variable is stronger than the base salary, thus still incumbent on the employee to have a strong pipeline access to remain viable. Many systems are set up rewarding the more veteran sales people, creating an internal niche tier system that can slow early earning potential of newer staff.
• Pure commission: most prevalent in sales, this is often referred to as the purest form of direct capitalism: sink or swim purely on how well you close that day. Benefit: employees wired for pure commission enjoy freedoms to be themselves and directly drive their own economic destiny. Challenge: family life and family economic stability can be the most exposed for income stream as violate as a penny stock index.
• Bonus: mostly within the context of management, also an opportunity for employees at companies that give an annual reward for performance. Benefit: direct motivation for the employee to be aligned with and producing towards the overall macroeconomic benefit of the company. Challenge: many times awarded for qualitative reasons outside the direct actual performance of the specific employee.
• and there are multiple other flavors of team microeconomics with benefits & challenges.

Mapping and mastering your company's microeconomic paradigm:

Take the hypothetical that you enjoy where you work but don't often feel as utilized as you know you could be, and also, feel it is difficult to be effective cross-functionally. Perhaps you have worked for years with your manager on qualitative approaches, such as, stretch assignments and more leadership rolls, and while positive, hasn't opened the doors you specifically were hoping for. It's time to follow the money -- how does money flow in microeconomic decision making within your specific team.

Step One: Make your microeconomic map -- work with your manager and colleagues to get a working draft how you all fit end to end, and specifically within the microeconomic dynamics of your direct team.

Step Two: Determine how you are assessed in your job against the microeconomics of your team -- this may open some personal heartburn at first, but can also open many doors to improved job performance, compensation and satisfaction. If you find large disconnects between how your performance is assessed and how you are funded within your team, proactively work with your manager on steps to reconcile the gap -- or suggest other areas in the organization you feel better aligned with. Either approach is win-win for the organization (#macroeconomics).

Step Three: Make this process as important & habitual as mastering your own personal finances -- it may very well be the first time doing this exercise takes a lot of time, though it's worth it. As is true for just about everything in business, the more you practice mastering your place in the microeconomics of you team, the greater the chance for strong returns in the macroeconomics of the company, and your personal career journey.

Summary: You don't need an MBA to master the microeconomics of your team; leverage available information, your manager's inputs and a firm determination that your career matters, because you matter -- and soon, you'll put a positive (macro & micro) dent in the universe.

Cheers, Dr. J

(Written by a human)