cc-maiIt’s that time of year when literally millions of people will be receiving their annual performance appraisal, setting objectives for the current year, and having career development discussions.

For most people these discussions will focus on how well they performed versus five or so previously agreed upon performance objectives. There will most likely be some discussion about how you achieved your objectives and what you could be doing to improve your performance. The year end performance review normally feeds into the annual compensation process.

Often these conversations are pretty much one way and center on whether you performed at or above your objectives and if you “earned” your compensation. There is nothing inherently wrong with that conversation, but it leaves out an important part of the equation. The missing component is how much value you are adding to your employer for the investment they are making in you.

It is generally understood that when buying a product or service you have to consider not just its price, but also its value. Similarly, your yearly performance discussion needs to focus not just on how well you performed versus your objectives and your compensation, but also how much value you are adding toward the achievement of your employer’s overall business objectives.

One method to quantify the value a person adds for the investment their employer is making in them is by calculating a “Personal Return on Investment” (PROI). When calculating your PROI the “keep it simple” principle applies. There is no need for elaborate spreadsheets. Perfection is the enemy of good in this exercise.

Here is a simple PROI calculation example. You are a front line telephone customer service representative. Your total compensation (pay and benefits) is $50,000 per year. Let’s assume that the replacement and lost profit cost of losing a customer is $5000. Next, assume that you speak with 50 customers per day, 200 days per year, equaling 10,000 customer interactions per year. Now, let’s assume you influence a modest 1% of those 10,000 customers to stay with your company rather than switch to a competitor. That translates to 100 customers who would have left your company if you had not done a great job of servicing them. Next, multiply those 100 customers by the $5000 they are worth to your employer and you can confidently demonstrate that you added $500,000 worth of value for the $50,000 you were compensated. That translates into an excellent 10:1 PROI. What company wouldn’t be excited about a 10:1 return in todays economic environment? Great job!

Including your PROI in your performance, objective setting, and developmental discussions, will ensure that in addition to discussing your performance and compensation, the discussion will also be about the value you are adding in your current role. Perhaps more importantly, you can engage your manager in a discussion of how you can provide even more value going forward to increase your career advancement opportunities.

Whether you are on the front line with customers, selling to potential customers, building products and services for customers, marketing to customers, fixing customer problems or managing teams that do so, you add quantifiable value to your employer’s bottom line. Knowing you PROI can be a source of pride, motivation and career advancement.

Mike Israelite
MAI Career Coaching – Coaching is our Passion, Your Success is our Goal