How many of you work in a corporate office that has a culture where getting ahead requires “playing the game”? You know what I’m talking about right? Keeping up appearances. Showing up early. Working late. Regardless of the actual amount of work done, you need to put in the time, be there, and appear busy.
There are probably some corporate soldiers out there that are happy to burn the midnight oil out of pure altruism motivated by nothing other than the success of the company. But I suspect most are putting in the hours only to boost appearances and their chances at a better merit increase, bonus, or hopes or promotion. But here’s my question: “Is it worth it?” Let’s analyze the return on this time investment.
Imagine you’re working a corporate job with a respectable middle of the road salary. In this case, let’s say you’re a bit above the median income and that you make $65,000. Employers typically have an annual performance review process, and at the end, you’re rewarded with a merit increase for your diligent efforts. A true meritocracy. Or is it?
If you’re a fairly low-effort mediocre employee, as long as you don’t attract too much negative attention to yourself, you’re still likely to earn around a 2.5% merit increase every year
I’ve worked in HR and seen some of the politics behind performance review scores and how they align to merit increases. As an HR professional, I’ll let you in on a little secret.
If you’re a fairly low-effort mediocre employee, as long as you don’t attract too much negative attention to yourself, you’re still likely to earn around a 2.5% merit increase every year. Now, this isn’t a fantastic merit increase, and with increasing benefit costs and inflation, you might not even be breaking even. So it makes sense to put in more effort in hopes of getting a better merit increase right?
Well, how much better is better? Based on this graph from hrdailyadvisor.com, you would have to be in the top 4 percentile to exceed a 5% increase. For your extra hours and effort, you’re going to have a chance at a 5% merit increase. Of course, there are exceptions out there, but this is what the data is showing on average.
If we figure that Joe slacker can achieve a 2.5% annual merit increase, then our dedicated corporate worker bee that grinds away tirelessly all year long and squeezes out a 5% merit increase achieves a marginal increase 2.5% over Joe Slacker.
So while it’s not guaranteed, our dedicated worker has a decent chance at a 5% merit increase which has is a 2.5% marginal improvement over our hypothetical slacker.
Let’s do some granular analysis over what our dedicated worker is contributing and what he’s getting in return.
So let’s do a bit of speculation on what is likely required to achieve this marginal 2.5%. You’re going to need to be a dedicated hard working employee that not only does his job very well but also presents as a hard working dedicated employee. It’s not enough to be a great worker and do your job well. Many of us could wrap up our duties and do a bit extra and from time to time be able to take off at 4:00 on a Friday afternoon. But how does this present to the boss and your coworkers?
Even if you’ve completed all your work, you need to stay and appear busy. No one wants to be the first to call it a day. In short, you’re going to need to put in more hours and face time.
But how much? Well assuming that our diligent worker bee takes a one week vacation once a year, he’ll be working 255 days a year. Joe Slacker is putting in his 8 hours, and then he’s out the door. But our over-achiever is more likely to come in 30 minutes earlier than Joe Slacker. And he’s likely to stay another 45 minutes later at the end of the day grinding out spreadsheets or sifting through email or just looking busy. He’s donating an extra 1.25 hours of his day towards the cause of excellence and a better merit increase. That’s about 318 additional hours of “work”
This extra effort and time aren’t for naught (hopefully) and our faithful, dedicated employee is likely to earn a higher merit increase. So back to our corporate employee. He started at $65,000 for an annual salary. Joe slacker did also and got bumped up an additional 2.5% and now is at $66,625. But our high effort employee got a 5% increase and is now sitting at $68,250.
For the extra efforts of 318 hours of above and beyond office work, our dedicated employee yields an extra $1,625 per year before taxes. This amounts to working these hours for $5.11/hour before tax.
For the extra efforts of 318 hours of above and beyond office work, our dedicated employee yields an extra $1,625 per year before taxes. This amounts to working these hours for $5.11/hour before tax. After tax, it’s likely a bit under $4/hour. But is it worth it to hand over your personal time for under minimum wage? If you stay with a company for many years eventually these merit increases start to compound but it’s something worth considering.
It might be time to instead consider freelancing or starting up a business. In my opinion, you’d be better off just picking up a side hustle or doing some freelance for just a few hours a week. This also puts you in a better situation should you ever get downsized. I’m just saying.
Subscribe To "Go Catch Life"
Join the mailing list to be notified when I've created a must-read post. Get a FREE list of money making tips as well.