Why your Boss Determines your Paycheck


About a hundred years ago,  Henry Ford had a serious problem.

Employee turnover at his Ford Motor Company automobile manufacturing plants was around 400 percent. He was paying workers $2.34 for nine hours of work. In an effort to stem employee turnover and pay Ford employees enough money to buy the cars they made, Mr. Ford raised workers’ salaries to the unheard of sum of $5 a day.

Although the higher wage seems a pittance by today’s standards, the offer was actually quite generous at the time. The idea worked. Over 10,000 people soon showed up at the company’s Highland Park, Michigan facility to apply for jobs.

The $5 per day offer set the tone for our compensation model today. In most modern day situations, the employer decides what a worker is worth, not the worker.

As a result, many employees begrudgingly accept the best pay they can find, even if the compensation is less than they expect and less than the employee thinks he or she is worth.

In many instances, the job candidate accepts the under-paying job even though it is not what he or she really wants to do for a living.

Workers in Michigan have been thinking about this a lot since the Right to Work law was passed in December 2012. Opponents of the law think that workers will have even less say about wages and and other conditions of employment.

But professional athletes and popular movie stars have been naming their price for some time. And now, a growing number of workers are playing the same game — and winning big.

Consultants, professional speakers, and other entrepreneurs, for example, often determine their own compensation.

It’s true that both parties must agree to the compensation terms, but there can be a big difference between you working with the employer’s offer and the employer working with your dollar figure.

To set your own compensation, position yourself as an industry expert.

One easy way to name your own price is by becoming a recognized speaker or author in your area of expertise.

It’s also a good idea to become a published author by creating and selling an information product, such as an e-book.

You can do this without quitting your current job. After all, your boss probably wants you to become known as an industry expert.