John Borrowman, CPC
Borrowman Baker, LLC
You would have to be asleep not to notice that pay is changing in the BV world. The salary numbers you’re hearing about are going up. And in some cases, way up. Is there any reason not to see that as a good thing?
Go back to Isaac Newton for a minute. He told us in his third law that for every action, there is an equal and opposite reaction. In your case, the equal and opposite involves the interplay between benefit and risk at the heart of a valuation opinion. You can’t touch one without moving the other.
In most cases, your current pay reflects the boss’s view of the benefit you bring and the risk you represent. You probably think it should be higher. You would be unusual if you didn’t.
When your pay rises significantly, of course, so does your risk to your boss. When those raises occur within a practice, the benefit and risk balance more easily. It’s the extraordinary offer from a new employer that changes things.
You would assume that the bigger paycheck reflects a greater benefit that you bring. But what do you understand that benefit is to the new employer, or why it looks so much higher to them than where you are? Somewhere in there is an expectation about your performance.
It’s also the case that the bigger paycheck introduces more risk. There’s more risk in terms of expectations for your performance and more risk that, longer term, your higher cost makes you more expendable if the work you do slacks off.
Yes, pay is changing. More importantly, the benefit/risk is changing. The more you know about that, the smarter your decisions will be.