How the market value of a job seeker or employee is calculated

Is there an objective criterion for measuring the market value of employees and applicants

If we consider the keyword “market”, then it exists. Cost is determined by the ratio of supply and demand. The market value of a job seeker or employee is the average wage that employers offer in the labor market to someone with similar experience, knowledge, and skills.

Why is the market value of a job seeker or employee calculated

The market demand for specialists of a certain specialty or qualification is the objective reality that employers, job seekers, and employees can refer to when negotiating wages.

If you do not seek to bargain more, but agree on a fair amount of remuneration, you need to justify your position in the negotiations. For the salary paid to the employee to be competitive and the offer for the jobseekers to be attractive, it is worth understanding what the “price order” is in the labor market.

Pricing Logic

Different for all market participants – employers, job seekers, and employees. Some employers are ready to pay as much as “it is not a pity”, someone is ready to pay “more than anyone else”, counting on the direct dependence of the employee’s performance on the amount of salary.

Someone is fighting to improve the profitability of the business, carefully assessing the share of personnel costs in their costs and calibrating their proposal, someone is doing so well that he can pay his employees “above the market”. As for the requests of applicants and employees, they are often not related to the ratio of supply and demand in the labor market.

The desire to earn no less than at the previous place of work or the employee’s assessment of the results of work in the company as the basis for a 20-50% increase in wages is quite understandable and understandable, as are other personal motives that determine the needs of everyone who works for hire.

How to calculate the market value of an employee or job seeker

If you have read the article about the Salary Calculator, then remember that to calculate the market value of a position, you need a sample of vacancies with a job content close to what you indicate for your position and/or with the same requirements for job seekers as your company.

The point is to understand how much is offered on the labor market for a certain job, or how much is offered to someone who can do it. The approach to assessing an applicant or employee is different. To understand what kind of salary he can count on, you need to make a sample from the vacancies on the market, guided by the criterion of matching experience, knowledge, skills, etc. employers’ requirements. By collecting a sample of “suitable” vacancies, you can calculate the amount that a job seeker or employee can count on if he is ready to enter the labor market.

How to take into account and calculate everything – a step-by-step algorithm with examples

Step 1

Determine the list of positions that the applicant/employee can apply for, taking into account the existing knowledge, skills, experience, and other data.

Step 2

For each of the selected positions, create an array of available vacancies. Choose only those vacancies for which the applicant or employee could apply, taking into account the content of the work and the requirements of the employer.

Example:

You have been working as a designer for many years without any special education. Analyzing the market, and you see that most design jobs are not available to you – many employers require an art education.

There are few vacancies without such requirements and wages are low. What to do? Study the market – look for other positions/specialties where your knowledge, skills, and experience will be in demand and worthy of compensation.

For this example, for professionals who own both graphics packages and 3DMax, employers offer higher wages than “regular” designers. And do not require art education from them.

Step 3

Critically evaluate the selection of vacancies.

Example:

Let you be a mega-experienced programmer-developer for about 30 years. You like programming and don’t really like to lead – you want to program and be responsible only for yourself. Formally, all the vacancies of ordinary programmers are available to you – you can do any job, you meet the requirements 100%.

If it is sensible to assess your chances of taking up the vacancy of an ordinary programmer, then they are low – you may prefer a specialist whose qualifications and requests correspond to the work tasks and the proposed level of remuneration.

Therefore, in reality, only vacancies of ordinary programmers with complex tasks or vacancies of team leaders are available to you, where your experience and qualifications will be in demand. By the way, maybe it’s time for you to become a team leader or boss

Step 4

You make allowances for the unspoken requirements and expectations of employers.

Example:

Employers rarely hire male accountants. Reaching a certain age or “the wrong gender” makes finding a job challenging for certain jobs and occupations. This also needs to be taken into account by studying job descriptions and choosing from their array those that are available to you.

Step 5

You process the array using the Salary Calculator or manually to figure out which offer on the labor market is considered average.

Step 6

If you are an applicant and the amount received upset you – go back to Step 1 – look for an area in which you can earn the desired amount. If you are an employer, think about how you will use the information received when negotiating with an employee.