The Compensation Question: What Is My Labor Worth?

I saw this article, "Consultant Lets Clients Use 'Gut' To Set Final Fee," in Monday's Wall Street Journal. It describes how consulting firm Trium "states a figure and takes on a project if the sum is acceptable. After the project is done, dissatisfied clients can pay as little as half the quoted amount. Happy customers pay up to 35 percent more than the quote."

"Interesting idea," I thought to myself. "Let the customer set the price paid." It's a fine way for a consulting firm to distinguish itself from the pack in an industry that's fraught with hard-to-quantify results. It took awhile, but it finally dawned on me: Here's a consulting firm acting more like an at-risk employee of the client than a take-it-or-leave-it hired gun.

We all struggle to understand how employers value and compensate employees. If the fans were in charge, this weekend's five-game sweep of the Boston Red Sox by the archrival New York Yankees would probably lead the New England faithful to pay Red Sox management and players a LOT less than they would have a month ago or two years ago when the Sox finally won the World Series.

It's the same for many of us in our regular jobs -- our compensation is based on the employer's assessment of our value to the company or organization at a particular moment. Some employers use elaborate performance-measurement systems, some set flat compensation levels, some just use "pay for performance" following the time-honored commission approach. But in nearly every case, the customer for our labor -- the employer -- holds the purse strings.

The WSJ article quotes Harvard Business School professor Benson Shapiro, who says Trium's strategy "acts as an insurance policy for buyers and sellers and improves communication." We can all apply this strategy to our own employer/employee transactions -- good communication, clear expectations of performance and common definitions of success help employers and employees succeed. It might even win you a bonus.

Compensation is a very complex topic. Here's a sample of Monster's career advice in this area:

• "A Job's Worth"
• "Power Relationships and Negotiation"
• "Realistic Salary Expectations"
• "Salary Negotiation Know-How"
• "Three Steps to Making Smarter Counteroffers"

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