With the beginning of 2005 upon us my thoughts turn to compensation. And why not? Compensation is the reason that we work, isn’t it? Would you get out of bed and head to your job or business tomorrow morning if you knew there would be no financial reward associated with your efforts? Of course not. So compensation is important. It’s really important.

Given that compensation is so important, it’s never a bad time to take stock of your compensation needs along with your worth. That’s right, you need to consider what you are worth to your job or business. After all, we don’t work simply to meet our needs. We all want to exceed our needs so we can provide for the future and hopefully have a better life.

The first step in our evaluation involves assessing whether or not our basic needs are being met. Ask yourself a series of questions. Am I able to pay the rent or the mortgage? Can I afford a good car or other transportation to the places that I need to go? Am I able to put enough food on the table to meet the needs of myself and my family? Is there enough money available to pay for medical insurance? Am I saving money for the future? These questions address very basic needs that must be met in order to survive in today’s society. Sadly enough, not everyone is able to meet these needs. That’s one of the reasons why this evaluation process is so important to a working person.

Once you’ve assessed your ability to provide for you and yours it’s time to figure out in what direction you want to take your ability to provide. If you’re not meeting the basic needs then you’ll want to increase your level of compensation. Even if you are meeting the basic needs, you may want to meet other needs as well. If you’re doing really well, you might be completely satisfied with your compensation. If you’re in this situation then count yourself among the few and fortunate. In my case (and most other people’s as well) I can always justify attempts to increase my income.

The next step involves having an understanding of how you make money. I’m assuming that you’re onboard with the concept that increased compensation is a good thing in your life at this time. So how do you make money? Are you a business owner whose income is derived from the sales in your business? Are you a salaried employee who collects a paycheck from a corporation? Are you a freelancer who works from job to job with a host of different clients?

Take just a few moments to think about how you make your living. Then think about how you can boost your potential for earning. Is there anything new that you can learn? Is there anything more you can do that you are not doing? Are there new developments in your industry that you can capitalize on? Ask yourself questions. Seek out the keys to your earnings potential and those keys will start to find you.

Once you have a strong understanding of how that precious green stuff comes into your life, you’ll be in a very good position. There are still a couple of more things that you must do to make the assessment complete. The next important thing involves, surprise surprise, another question. And that question is this: Am I at least being compensated at a level that I am worth? Understanding this fact is critical to providing for all of your needs. Are you underpaid at your job? Is your businesses’ revenue too low to afford for a good salary for your self?

This step involves more than just the question and an answer. It involves an analysis of your business, your own abilities and the money that can be made as a result of these things. If you’re a business owner you might want to research some of your competitors. How many and what kinds of customers do they have? What do other people charge for their products or services? Are they getting their price? Where are the opportunities to boost business revenue?

If you’re a salaried employee, you might research salaries for your position, level of experience and skill level. You could find out if there are other compensation opportunities that you are missing out on, like bonuses and commissions.

The bottom line is that no matter what business you are in, you have to know the possibilities in order to know what level you want to shoot for.

The final, and most crucial step is coming to an understanding of what your worth really is. All the research and analysis in the world will not bring to a realistic expectation of what you are worth. Some people think they are worth as much as they are making at a given time. Others always think that they are worth more than what they are making. Two people with identical jobs (or businesses) and identical levels of experience can have very different views on this issue.

I’ve developed a simple benchmark for determining my worth relative to my compensation at any given time. I start, as always, with a question. Is the compensation that I receive from products or services that I provide the maximum amount available at that time? So if I’m selling a hammer for $10 and the business down the street is able to sell the same hammer for $12, then I don’t consider that I’m getting all my business is worth. At that point, it’s up to me to reset my expectations and sell that hammer for at least $12. If I’m getting paid $70,000 a year at my job and a peer who does a job comparable to mine earns $80,000 then I feel that I need to be compensated up to that level in order to be at least meeting what I consider to be my worth.

You might have other ideas on how to determine what you’re worth. That’s fine. As long as you have an opinion on your worth and you take action to improve your worth and your compensation, you will have the possibility of a brighter future.