What am I worth? 1

[FrankyEng]

Quick Background:

I am an Engineer in Training with 3 years of experience, 1 year was pre-grad and 2 are after graduation at the same job. I have always enjoyed my work and the people I work with. About a month ago our local Professional Organization released the most recent salary survey. It turns out that I would need over a 25% raise to bring my salary up to the average EIT salary. So, I'm in my 4th year out of 4 years as an EIT and I am in the lower quartile for salary. I realize I need to take these surveys with a grain of salt and that I also need to consider that they consider multiple disciplines in multiple fields of work. But still, something doesn't seem right. Money isn't everything to me but at this point in my life that extra 25% of my salary would be extremely helpful. I work for a small company with <10 employees.

With all that said, I don't want to walk into my boss' office waiving a survey around asking for more money. I would rather try to figure out what I'm worth to them and compare that to what I am paid.

I know the answers to these questions will vary by region and discipline etc...but I'm hoping to get some general answers.

My questions:

How much profit does an employer expect to make from their employees? Is it a percentage of their salary?

What is the true cost of an employee? I know what my salary is and I know how much my health/dental costs them but there must be other costs involved. Can this be estimated as a multiplier of my salary as well?

I'm not worried about talking to my boss about a raise but I want to make sure that I have at least the slightest clue as to what I'm talking about.

I appreciate all responses but would really like to hear from the guys (or gals) that run their own business and deal with these numbers in real terms regularly. Thanks in advance!

 

[ajack1]

There really is no magic formula; there are just too many variables.

For example if a company produces a product then it is probably the line operators who generate most of the income and they will be amongst the lowest paid so their mark up would be huge. Someone like an accountant would be on a much higher salary, but would generate no income, although it could be argued that they save the company money, ditto buyers, project engineers etc.

It is highly unlikely that R&D would generate any income but without them the company would probably fail in the long term.

If on the other hand the company is a small consultancy firm, you would not have anyone making the kind of mark up that line operators do, but you would also have much lower overheads to cover, so more people would generate income but at a much lower mark up rate.

Without a much greater knowledge of the financial side of the company and the company structure no one will be able to give you a meaningful answer.

 

[Forensic74]

How are you figuring your earnings for the company? It completely depends on if you're working on fixed fee projects, how efficient you are, how many questions you ask your mentor and spend his time, etc.

One way I knew I was getting underpaid at my last job (small firm) is when the owner of the firm would roll up in his high end BMW every day.

 

[moltenmetal]

FrankyEng: be careful with salary versus bill-out rate calcs, as they show your ignorance if you do them wrong.

I still don't know where you work, but the 4 yrs for a PE with one year pre-grad leads me to believe you're in Canada.

If so, your payroll burden will be in the 15-30% of salary range, because health care is covered out of income taxes rather than via private insurance. The 15-30% is just taxes, benefits, holiday pay etc.

The overhead of your company is added to that, and can vary between 0.5 and 3x your salary. That overhead is a real cost, unless your company has no building to heat and light, pays no insurance premiums, and everyone is at least 100% billable every single month, i.e. your company has no management or sales staff or accountants or lawyers or HR department and never, ever does a free proposal etc.

All in all, a bill-out rate that is only 2x salary would be considered very low, and a bill-out rate which is more than 4x salary would be considered high. How low or how high depends on your industry, which you still haven't identified but I assume is consulting.

So: unless you know what those overhead numbers are (because you manage projects, see the numbers and understand them), you will have no idea what profit your company makes on each hour you bill.

It would be safe to assume that they make 15% free and clear profit on every billable hour you work, and that they keep every single dollar of every billable hour you bill that you provide by working uncompensated overtime.

Best of luck-

 

[buzzp]

You only have 3 years of experience and going in asking for a raise would not be a good idea. If it bugs you that much, you have to deal with it or look for another job. When you have another offer this will give you some negotiation ability but with limited experience, could still back fire if you really want to stay at your current job. I believe someone already indicated that most pay raises (significant) come when you change jobs.

Throw the survey in the garbage as it means next to nothing unless its based on your industry, your job qualifications and your location.

Good luck!

 

[jmcoope3]

Buzzp is right, if you get a raise at the company you're at you'll get a %raise. A %increase in not enough is still not enough.