I’d like to suggest that you can calculate – and track – your professional net worth, in much the same way you can track the value of your investment portfolio. This is a number that almost no one tracks (hint: it is NOT your annual compensation), which means that doing this will give you a significant advantage in your career.
Since the specific way you do this varies greatly based on your profession, in this article I’m just going to explain the concept, and in future articles I will focus on exactly how to do this depending on your circumstances.
In my view, your professional net worth mainly revolves around five variables. To customize this approach for specific industries and functional areas, I sometimes add other variables, but for now let’s focus on these:
- The number of your strategic relationships (see below… this is a bit complicated; I identify four types of relationships)
- The strength of your strategic relationships
- Your demonstrated ability to deliver results that matter to these relationships
- Your perceived ability to deliver results that matter in the future to these relationships
- Your current income
Let go through these five variables, step-by-step…
Number of relationships: In an earlier post, I described the four types of strategic relationships. The deepest ones I describe as people you can call at 2 a.m. and have them answer, “How can I help?” The most superficial are situational acquaintances. To generalize a bit, the greater your number of strong relationships, the greater your professional net worth.
Strength of relationships: Most people have too many weak contacts. For example, some spend all day on social media chatting with people they’ve never met face-to-face or have a zero trust basis with. I spend all day – and many evenings – face-to-face with clients, peers, friends, and family that I treasure greatly.
This is where so many professionals badly drain their net worth; they focus on sheer if not highly transactional quantity, notreal, deep, or meaningful quality. They know many people, but are close to few if any.
If this is the case with you, this is where you need to focus your efforts immediately.
Demonstrated ability to deliver results: This is your track record. Do you avoid others when they call to ask a favor? If so, you have a giant pile of liabilities. Did you hire someone who promptly made life hell for many of your other employees? More liabilities.
Or maybe you brought in the biggest deal of last year, and others perceive you as a person who makes good things happen. Nice work!
Perceived ability to deliver results: An entrepreneur once said to me, it’s easier to sell future potential than an actual product. There are many factors that influence perception. Lots of professionals talk their way out of a bad result, sometimes even for good reasons. Maybe your last assignment cratered because the client had personal problems, not because of any fault of your own.
This is where clarity and positioning becomes a factor. The better your ability to understand what others need and to position yourself as someone who can help, the higher your net worth. But beware… there’s only so much positioning you can do without delivering actual results.
Your current income: This is important mainly as a way to convert the other four variables into an actual number. For example, the harsh reality is that management consultants get paid more than public school teachers, so a consultant’s professional net worth number will be higher.
By the way, I have no problem if you want to skip this last variable. It is seldom beneficial to come up with a number you can compare to other professionals. The main purpose of calculating your professional net worth is simply to track your ability to steadily increase it.
Compare yourself to yourself.
Why this matters…
Someone once said you can go a day without sex, but try going a day without a rationalization. People are very good at rationalizing their behavior to account for outcomes that don’t match their stated values, goals, vision, or principles.
It’s all too easy to say you have strong relationships, but to then spend months or years ignoring the relationships that matter most to your career. It’s easy to be overly superficial, or to get so caught up in your own needs that you become an unreliable supporter of others.
By calculating your professional net worth, you develop a means to measure your performance, month after month, and year after year. This, in turn, can lead to meaningful changes in both your behavior and results.
Stay tuned for specific examples, but in the meantime you might want to start thinking about the first four variables I described here.