Assesssing employee value
January 5, 2008 9:44 PM   Subscribe

How can I assess the economic value of an employee (namely me)?

So I've just been offered a very good job in technical writing, for a large sum of money, and I'm curious how I would even begin to assess whether I am adding as much value as the company is spending. Any theoretical basis for assessing the value of workers like product developers, technical writers, HR people, etc. would be much appreciated.
posted by Palaverist to Work & Money (8 answers total)
they're worth what companies are willing to pay them on the open market. if you got offered a job with salary x, it means you're worth at least x.
posted by bruce at 9:57 PM on January 5, 2008 [1 favorite]

Response by poster: That's one way of assessing value, but my question is more about assessing value added. How a company can decide whether paying the cost of a particular type of employee is in its economic interest? How does one assess the value added by, say, one additional HR employee, or one additional technical writer?
posted by Palaverist at 10:36 PM on January 5, 2008

You might be valued in terms of how much customer support time they save. For example, if a better manual results in 20 fewer support calls per 5 working days in a 52-week year and those calls would have cost your company $25 to service, your position saves the company $130k a year. Your whitepapers might improve lead conversion, resulting in $50k more in sales each year. A better GUI or training program might also reduce customer support calls or improve customer retention, reducing costs by $10k and increasing ongoing professional services revenues by $75k a year. It might also encourage people to upgrade to the newest version, meaning that the firm doesn't have to support legacy code and so on, saving $150k a year. So, for example, your position might save the company over $400k a year. (Just citing some examples, not anything real here.)
posted by acoutu at 10:48 PM on January 5, 2008

The concept of "value addition" is easier to apply to raw materials and manufacturing. Crude oil goes into a refinery, gasoline comes out. The value added by the workers is the difference between the raw material and the product made from it.

In the case of technical writers and HR staff, it's less clear cut. What's the raw material? What's the product?

Is the raw material of the HR worker the total number of employees with any kind of problem whatsoever? Is their product a workforce entirely free of employees with problems? What would be the negative consequence/opportunity cost of the organisation not having HR staff at all? Everything involved is rather intangible.

Hypothetically, a very disgruntled employee might blow up the whole place. Value added by someone who prevents that is around 100%, I'd say.
posted by AmbroseChapel at 10:55 PM on January 5, 2008

There's a large body of research that tries to measure employee performance and productivity in an empirical fashion. In real terms your salary is probably a function of the current market price of someone with your skill set, the premium or discount your perceived quality or value-added gives to the company.

Unless your results are easily verifiable, management has a hard time measuring how much you are worth. The easiest definition is they have some idea of what the market will bear and there is some sort of weight given to your job and the company's competitive advantage.

There's also a reinvestment risk that is discounted in the salary, or should theoretically be. In reality the manifests itself as why most jobs are underpayed in the beginning and then overpayed the farther you advance. It also explains why it is so expensive for someone to change career paths. So it is not just wha tyou add to the company but what you are not costing the company.
posted by geoff. at 1:30 AM on January 6, 2008

This is an age-old problem in technical writing. I know somebody that is trying to figure out the value proposition of a multi-million dollar writing department. In the meantime, the company continues to pay the multi-millions of dollars annually without a written justification of the value of the writers. It's a hard problem. Please let me know if you figure it out.
posted by crazycanuck at 7:13 AM on January 6, 2008

Not sure if I understand the question, but my stab at the answer is that you are bringing more than that value to the company and if you writing products for other companies, they know your exact value.

At my current company I do a lot of medical writing and content development. We bill the client per hour for each project.

For myself, the company is charging 3.5 times per hour (3.5 X my salary)

I looked this up on the server at work. I found estimates for projects, hour charged per hour, and compared that to my salary.

Mind you the company pays overhead cost, so it's not complete profit.

If you are trying to calculate whether you can gain more per hour as a freelancer, the answer is also probably yes. I'm sure there is an organization for technical writers, with freelancers included in that pool. See if you can find any surveys on that site as to the pay per hour and compare that to your new salary. Sometimes writing organizations also have list serves, and you can post your queries there.
posted by Wolfster at 8:11 AM on January 6, 2008

Remember also that some of these functions reflect the need to fulfill legal, quasi-legal, or other business requirements, even if they don't produce profit. For example, if your company needs to be ISO9000, than the expense of paying for the people who do that and their support staff, benefits, and so on simply has to happen,. You can't do business without it. The same thing applies to many HR and regulatory compliance functions.

Another way of looking at it is that if your company doesn't have people who "do that" -- whether in-house or outsourced or whatever -- then it simply cannot "do" what it "does".
posted by Robert Angelo at 6:08 PM on January 6, 2008

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