You are compensated according to the value you deliver to others. This is the case whether you own a business, work for an organization or operate as an independent professional. Therefore, if you want to increase your compensation, you first need to increase the value you create for others. How can you do that in the easiest, fastest and most elegant way possible?
Your compensation is based on three key elements:
What you do: the nature of your work. There is a compensation ceiling in whatever you do, whether it is making hamburgers, programming computer code or being a dentist. To get paid more, you always have the option to move to a better paid job. However, doing so may require you to learn additional skills.
How well you do it: the quality of your work. It is about how close you can get to the compensation ceiling in your current job. If you want to be compensated better, you have to become better. However, there is a maximum pay for people serving hamburgers (even if you are the best hamburger chef in the world!) The same applies to IT programmers or dentists.
How easily you can be replaced: the importance of your work for the future of your client or your company. This is often the greatest overlooked opportunity to create value and accelerate your compensation. Making yourself increasingly difficult to replace will increase your compensation. Examples are athletes, celebrities and titans of an industry (Oprah Winfrey, and Steve Jobs, to name a few).
So, what can you do to become more difficult to replace, either as a professional or as a business? Here are three suggestions:
The fungus principle: build your work on a product or service that requires continuous use and replacement. A great example is SAP (an IT system for businesses). Once SAP is installed, it nearly nestles itself like a fungus inside every nook and cranny of an organization. Continuous maintenance and updates are required, and abandoning the system is costly, risky and therefore nearly impossible.
The giraffe principle: become Preeminent in the eyes of your client. This means that you and your business stand out like a tall giraffe surrounded by tiny field mice. Once you have achieved Preeminence, the question is no longer if people will use your product or service, but how they will use it. You can become Preeminent by picking a niche and becoming the absolute thought leader in your field. For example, McKinsey has achieved Preeminence in the field of strategic consulting and Tony Robbins has done the same in personal development.
The sidekick principle: step up your service level to your clients (or boss if you work in an organization) to dazzling heights. Once you decide to go out of your way to help your clients (or boss) achieve their goals and become more successful, they will become more and more dependent on you, your work and your expertise. And if they become more successful (for example, your clients grow faster than ever), you, in turn, become more successful, and you will undoubtedly be compensated accordingly. As an example, the biggest customer of Coca-Cola is McDonald’s and together, these companies are mutually successful. Being a sidekick can be very lucrative and worthy. Without his sidekick Robin, even Batman would be only an average superhero.