Tuesday, October 19, 2010

Passion Party #289 - The Law Of Compensation

My dad was president and owner of a sheet metal company in Queens, NY. They manufactured and installed duct-work for office buildings in New York City. During a few summers I worked in the office above the factory as a helper and sales assistant to earn money for college.

One of the lessons my dad wanted to teach me was that to really make money - to be in the "upper middle class" or above - you needed to be the boss. Hourly wage was fine for the factory workers, but to have a high level of compensation, you needed others working under you. You had to get beyond an hourly wage, and be The Boss.

But I didn't want to be The Boss. I saw the basic conflict between manager and worker, and it felt bad to me. It seemed like a pursuit of money for money's sake, and I ran as far away from that as I could.

Now I realize that my dad was teaching me a fundamental Law of Compensation:
The Amount of Value you Create X The Number of People you Impact = The Amount of Compensation you Receive.

This is why professional athletes and the most popular musicians are paid so well. This is why Bill Gates is the richest man in the world.

It's not about being "the boss". It's about impact. If you want more success, you need to serve more people. It's about how many people you serve, and how you serve them. My dad's company was successful because they made a superior product at a competitive price and they delivered and installed it on time: quite an accomplishment in the building trades of New York City.

My dad was teaching me the right lesson, he was just teaching it to me the way he learned it. And perhaps I was too young to hear it.

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