One of the responsibilities of a manager is measuring employee worth. Although this could be a tricky task, it is a rather important one. You want to pay the right amount to get the best available talent, and you don’t want to overpay. So how do you go about finding that point that is considered fair to both parties?


Evaluating and measuring employee worth 


Companies are as diverse as the people who run them. But all organizations benefit by taking a systematic approach to assessing employees and attracting top talent. In measuring employee worth, you want to evaluate the skills they bring to the table. How much value do they add to the organization as a whole? What is their ROI?

In any organization, there are generally two calibers of employees. The first are those that bring in revenue, such as the salesperson or business development employee. We also have those that do not generate revenue but are indispensable, such as administrative and customer support staff.

For employees that bring in revenue, it is quite straightforward. You simply figure out if the sales they are generating cover their salary. For instance, if a salesperson can generate say, #500,000 in profits, then it would be fair to offer them a #200,000 salary, plus commissions to have them on board.

To decide the salary for employees who don’t directly bring in revenue, like your IT specialist, you use another approach. Note that; their value isn’t so much in the money they make but in the money they save. Consider how much time, money and effort it will cost if everyone in your organization had to configure their windows network themselves, probably a lot more. Now use this contemplation to justify their salary. Remember that not having them in your organization will be at a huge disadvantage to you.


Measuring employee worth -Underpaying an employee


“Underpaying is as bad and sometimes, even worse than overpaying. It breeds frustration and affects productivity and in the long run, you may lose your employees as well.” – Nidhi Ann Raj.


One of the major reasons employees quit a job in search of  ‘greener pastures’ and skilled individual’s rejection to join startups is to avoid being underpaid.

It is a bad company policy to underpay employees and employers should avoid it at all costs. Employees begin to show less commitment once they feel employers are taking them for granted. This will affect productivity and in turn, affects the business. Now as an employer, how do you make sure you are not doing just that?

First of all, you have to conduct a market survey. Find out what other industries, as well as competitors, are paying for that role. You can then use this to evaluate your own salary policy. Is your current salary policy fair or does it need to be reviewed?


Deliberate on a salary range to offer for a position. After appropriate research, you should have an idea of how much other industries are offering for a role. Now, considering this fact, set a salary range which you are willing to pay for such role in your organization.

Having done that, you can now negotiate during interviews based on your set salary range. However, remember not to pay less than their entitlement. Also, it is very important that you review salary policies regularly. It is only fair that an employee’s salary increases as they add more value to the organization over time. Consider this and other incentives such as accommodation or health packages to maintain employee loyalty.


Overpaying an employee


Perhaps not as common as the issue of underpaying employees. There are times when as an employer you figure out that you are overpaying for a certain role. Apart from the downside of reducing overall revenue of the organization, there are other things this might result in. Where underpaid employees start to show lesser commitment to work, overpaid employees may start putting in mediocre work altogether. The value of work they create is not relative to the payment they receive.

When this happens, a certain sense of entitlement also occurs, which discourages hard work. Overpaying an employee will most likely kill the drive and passion to do more for the organization. This results in lower productivity and lesser return on investment. This is not good for maintaining a high business standard. 

To avoid cases such as this, it is very important to scrutinize salary structures appropriately. Once you start overpaying for a role, you might be bound to that salary range. Therefore, employers should consider salaries appropriately before offering them to employees.

Also, conducting market surveys ensures that you have an idea of what other organizations are offering for that role.


Employee Job Immunity

This refers to the legal backings an employee has on a job. Once an employer offers you an employment, certain paperwork has to be filled and duly signed. This is called a contract letter. Here, details of your employment status are stated clearly. Asides basic elements like your starting date, job title, and responsibilities, it is necessary to document all aspects of financial entitlements. This includes starting salary, raises you’re promised, commissions, bonuses, profit-sharing and how you will be compensated for overtime.


This contract serves as a letter binding all the terms and services of your agreement with your employer. Employees should ensure they go over the details of this contract before signing them accordingly. In cases where you are uncertain about the details of such paperwork, you should request for time to review the document. If possibly, seek legal advice.

Employment can be negotiated, depending on whether you have leverage in the form of in-demand skills or specialized knowledge. It is common to omit certain benefits you were promised while negotiating your employment in the contract letter.  If there is something you don’t like or is missing in the contract, ask for changes.


Your contract letter is the most important immunity you have on your job, so take your time. Seek legal advice. And never sign on what you don’t understand.


Measuring employee worth to determine Employee Benefits


These benefits are optional. Non-wage compensation employees may enjoy apart from their normal wages and salaries. Incentives an employee may enjoy varies from firm to firm, mostly depending on how big such organizations are. Employee benefits may include; health insurance, retirement benefits, sick leave, paid vacations, sponsored trainings, etcetera.

Although expensive, it is necessary to provide employees with a comprehensive benefit plan. Such incentive helps to increase productivity at work. This is because assuring employees and their families security makes them more effective. 


Health insurance is the most desirable benefit employees enjoy. When an employee knows that his/her medical needs are partly or wholly catered for, they tend to be more determined to work. Providing health insurance shows that such organization cares about employees’ safety and increases their drive to do more. Employees with health insurance may also enjoy additional protection including income replacement in the event of serious illness.

Another benefit every employee looks forward to having is a retirement plan (pension). Basically, retirement benefits ensure that employees have enough funds to support them after they stop working.

Other benefits may include leaves and paid vacations. These give employees time off for personal affairs and rest. It also helps to keep the body in good working shape thereby increasing overall productivity, special trainings and so on.


Give employees the benefits they value, and they’ll be more satisfied, miss fewer workdays, be less likely to quit, and have higher commitment to meeting the company’s goals,” – Joe Lineberry.


Now that you know how important measuring employee worth is, go ahead and keep your business growing by having happy and productive employees.


Article written by Tosin Ridwan Lasisi



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