Personal valuation - economic

How does one decide what is the appropriate value that a potential employer associates with you ? Got thinking about it the day Ishan got an offer for internship (he is as yet completing 3rd year engineering). 

The answer is a complex amalgamation of multiple variables. Let’s look at the main variable - The HR department of the organisation will have done some market research (or is expected to do it) to arrive at a band, with upper and lower limits based on experience of the candidates. A few times based on demand and supply HR departments are allowed to stretch the band just to get the right resource. Make no mistake an HR department is measured on their ability to source candidates that could fit in the lower end of the band and not by the quality of the candidate. 

The second variable is the candidate- most folks tend to underestimate their value and quite a few overestimate it. There are a minuscule amount of folks that value themselves correctly. 

If a balance can be met in the candidates own perceived value and that of the organisation trying to hire the candidate- the candidate is successful. The other time a candidate is successful is when the organisation believes that the value extracted from the candidate is much more than what the candidate perceived as value (I know so many folks that have joined jobs only to realise a couple of months later that they could have gotten a better pay check only if they had negotiated a little more) 

The question then really is how does one value themselves for a job or any other situation?  At some level, we all have an internal gauge for how much we assume our worth is in terms of time. For example, if someone offers to pay you $0.50 for one hour of work, you would immediately decline.  On the other hand if someone offers to pay you $1000 for one hour of work, you probably will immediately accept. We make decisions like this almost all the time; it’s based on a gut feel . Very few can tell exactly what their time is worth. 

There exists a method that could help one decide exactly what their time is worth. It involves understanding a. The income that has already been accrued for a particular duration of time  b. The actual amount of time that is spent on accruing that income (this is probably the most difficult to do - humans tend to short change themselves when accounting how they spend time). These two numbers will allow you to have an understanding of what it is actually costing you to earn what you do. The next step is to look what the delta is vs the market. You would get a rough idea of value - however this is historically and potentially you are earning what you do because you undervalued your self and the Hr department was quite happy to give you what you asked. Also this does not calculate the time that you are supposed to spend on your self and the value associated with it ( classic reason why a lot of folks in India are willing to do overtime without any compensation) one needs to cost that personal time too maybe at the same rate ; yes you don’t see a number at the end of the month in the bank that reflects it but that calculation is necessary- it gives you a truer picture of what your value is and will help when it comes to negotiations with HR departments. 

I have consistently been guilty of undervaluing my self - both while running a business as well as in a job situation. It seems to be changing as I grow older. 

C