Workplace Reality #1: Organizations care for value, not you

This post is part of the series on 9 Realities of Modern Workplace.

In this post, we talk about Reality #1: “Organization doesn’t care about you, it only cares about the value you create“.

A job is a financial arrangement: you offer to provide value, and the organization pays you for it. Like any other business transaction, the organization expects to make more money off of the value you create. When you start adding more value, organization pays you more, resulting in salary hike. When you start adding less value, organization tries to help you produce more (training, counselling, transfer, etc.), or tries to get rid of you (since it can’t reduce your salary!). The difference in the value you create and the cost incurred on you is the ROI (Return on Investment) for the organization. Organization will want to maximize this ROI as much as it can. This is the essence of this reality.

Keeping the ROI equation in mind can help explain lots of organizational behavior. Look at these points:

• Organizations don’t need to care about individual’s career growth if it doesn’t impact ROI positively. They may care if ROI becomes negatively impacted (to recoup their investment), or when they are confident it will increase the ROI.
• Organizations will use stack ranking, bell curve and all other means to differentiate performance. This is how they improve their ROI, reward better performers and fix or let go worse performers, keeping average ROI improving all the time.
• Training is a known way to improve ROI since cost of training is assumed to be less than the skill improvement achieved. So organizations invest in training, and will stop the investment when they stop seeing ROI impact.

Many individuals, esp. those in IT in India, fail to look at a job in this way. They think they are so much in demand (because they are much cheaper than their European or US counterpart) that market pressures don’t apply to them. They seem to think they generate significant value just by showing up! Their behavior at workplace and expectations from it doesn’t keep ROI equation in mind. They follow a disastrous career path with unintended consequences. When they are let go, they are surprised and feel victimized.

So how much value does an individual create that warrants the salary he gets?

I teach organizational behavior at a business school. I asked one of the batches to identify and quantify the value they create for their organization. Most students didn’t even attempt to solve it – some said this is too tough a problem to solve, while others said this problem is unsolvable! Those who did attempt found it a very hard exercise.

Modern organizations have such complex inter-dependencies that it is hard to do the math of the value you create. One of the easiest (and crudest) measures is to look at revenue per employee. In general, the way is to understand how money is made and spent, and what role you play in that process. It is better to be in a role that directly and visibly contributes to revenue generation (sales, R&D, delivery) than the indirect ones (cost-saving, internal efficiencies, support roles, etc.).

Once you know how to calculate the value you create (even if approximate), you can understand and control the ROI equation in your favor, and that is one of the best ways of proactively managing your career.

In the next post, we will discuss the Reality #2: “Organization deliberately sets up goals for people and departments that conflict with each other“. Stay tuned.

Image: freedigitalphotos.net