{ "media_type": "text", "post_content": "Fish….. have discussed this w many ppl and so far have 1/10 as supportive of this idea but no clear feedback about why this idea won’t work..\n\nWould like to present a 5-10 yr NPV of the value I bring to firm (ie my bill rate x hours worked - salary) in order to illustrate why an increase in compensation for me would make sense to them - why wouldn’t it be persuasive!?", "post_id": "61747b0adad986002c501666", "reply_count": 30, "vote_count": 8, "bowl_id": "58f0df008ad7250010f8c590", "bowl_name": "Compensation" }

Fish….. have discussed this w many ppl and so far have 1/10 as supportive of this idea but no clear feedback about why this idea won’t work.. Would like to present a 5-10 yr NPV of the value I bring to firm (ie my bill rate x hours worked - salary) in order to illustrate why an increase in compensation for me would make sense to them - why wouldn’t it be persuasive!?

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Assuming you don’t have a very niche skill set that is hard to find elsewhere, you can be replaced with another manager that delivers the same stream of cash flows to the firm. Your salary is determined by supply and demand within the employment marketplace, and paying you more when the “equilibrium” salary is lower than what you desire only reduces the NPV calculation for your company. As such, there isn’t much incentive for them to arbitrarily increase your compensation unless you’re an exceedingly high performer, have strong connections with valuable clients, or have specialized knowledge.

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Both are true - skill sets are nice and clients request me

You are both a fungible asset and your future value flows are entangled dependently with the assets your firm provides. Put more simply, your value hypothesis is based on the idea that you cannot be effectively replaced and that your revenues are entirely attributable to you and not because you are a part of your firm (with the support, relationships, and surety it presumably provides). If you factor your likely bill rate as an independent consultant securing and delivering your own contracts I suspect your NPV would be closer in line to your salary, with the incremental cost of things like insurance / benefits as an individual eating up most of the remaining difference.

If you are truly that irreplaceable then a detailed analysis shouldn’t be necessary.

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Let me save you a ton of time and sadness. Go out and interview and get an offer for how much you want. Then leverage that with your current firm for that salary + a retention bonus.

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You must be an introvert

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Extroverts are more show don’t tell

Your bill rate is ALWAYS discounted by cheap margins cos the partner is desperate to win the work. You’re not that spensive

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When you actually do the math right, you probably won’t like the numbers. NPV is calculated from future cash flows that are guaranteed and tied to existence/ownership of this asset. What this means is that your NPV calc should use what you *incrementally* bring in as compared to anyone else in the firm or in the market (pure sales + billable rate), not what you perceive to be your actual numbers.

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So build it in, and try to explain your assumptions and model to HR and partners. The point it, it’s not a strong enough argument. The best thing you can do is prove market worth.

The partner you discuss this with is probably responsible for selling the work that’ll keep you employed throughout that time horizon so unless you’re doing the selling just go and get another offer

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Most of the responses here are trying to explain why “npv” is the wrong measure. I think that’s the wrong thing to focus on - even if it’s a perfect measure you should evaluate the idea based on what reaction it will elicit. And I think there’s a very high likelihood that the partner/hr you present this too will think you’re out of your mind or an idiot. Best case they just make fun of you about it from time to time going forward. Worst case it severely undermines your reputation. I suppose maybe 5% chance or something you hit a person that thinks this way and they take your presentation seriously?

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Definitely will laugh at the quantitative analysis.

This npv analysis would only be valuable if you could value the amount of revenue you bring in. Thats what matters, if its based on the work you do, someone might be happy doing it for less

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Market conditions rn….plus they pay below market

In consulting, the person that most value adds is the one that brings most of the revenue, the rest are more easily replaced. We are in the business of selling first and consulting second

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Of course but the harder part is selling vs delivering

Reinventing the union? If everyone in your firm + everyone outside that could replace you agree, it will work.

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Of course you’re net profitable for the firm. That’s not an argument that your comp should be raised.

The problem here is that you’re only considering your own salary and its potential dollar value to your firm. Your managers consider your salary in a much larger context, including the salaries of your colleagues.

If you want to stay at your firm, the solution is to do your research and figure out if you’re really being paid less than your actual market value. That could include getting a legitimate offer from another firm - but make sure it’s something you would want, because you need to be prepared to walk if you don’t get what you want.

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Why is your NPV any higher than others? If you want to justify value you need to justify it in relation to your peers and how they are compensated not how much revenue you bring in unless your out their selling your own work.

No, it’s not - at least not among white-collar workers. You’re replaceable.

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