This one first ran March 4, 1996. It’s still one of my favorites and some of the best advice I’ve ever given. If I hadn’t written it then, I’d write it now and wouldn’t change one word of it.

– Bob

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“I’ve worked my tail off for 20 years and what do I get?” complained a former co-worker on his last day. “Doesn’t that count for anything?”

Here’s what I didn’t point out: we all work under an unstated employment contract. Based on financial mathematics, it supersedes all written contracts, union protections and employment laws.

It’s called the 70% rule (by me), and nobody ever seems to mention it. It says, “If you don’t deliver at least 70% more than your salary in value, you’d better start making other arrangements.”

Here’s why. Let’s imagine you earn $40,000 per year. Add 25% for fringe benefits, taxes and so forth, and you get $50,000. Office space, furniture, telephone, personal computer, and other facilities and overhead expenses — at least $10,000 per year — brings to $60,000 the amount your employer spends each year for your services.

Indexed mutual funds earn about 12% per year over the long haul. By paying you the money, your employer forgoes that income — $7,200 the first year. Add it in and you’re up to a whopping $67,200 per year. In round numbers you find the true cost of having you around comes to your salary plus 70%.

According to the 70% rule, working hard doesn’t matter. Managing the coffee fund doesn’t matter. Being right all the time doesn’t matter, and probably annoys everyone when you point it out, too. Your loyalty and all the great things you did five years ago don’t matter either.

If your job doesn’t add enough value, the quality of your work doesn’t matter, and you — not your employer — are responsible for recognizing the fragility of your situation.

Only one thing matters: delivering more in perceived value than you absorb in costs — your salary plus 70%. (Why perceived? Think of unheard trees falling in uninhabited forests. As with quality, recipients, not providers, define value. Nobody has an accounting system that can show the real dollar value each employee delivers, so value in this context is very much a matter of faith and perception.)

Ask yourself how much value you actually deliver. If your company suddenly decided to stop doing what you do, would it lose more than it saves from your salary plus 70%? Who at senior levels of your organization understands and believes in the value you deliver?

Here’s a harder question: will you and your job deliver the same value next year? The year after?

How many batch Cobol programmers failed to ask this question and now wonder what happened to their careers? They delivered value right up until the point nobody needed much batch programming anymore. Then these hardworking, skilled programmers had no way of delivering enough value in the new environment.

American workers have believed in the idea of job security for decades. You won’t find security in employer goodwill anymore. You won’t find it in union contracts, either, nor in an in-flight magazine or a 3-day seminar on making a fortune in real estate in your spare time.

You won’t find it because it doesn’t exist.

What does exist is opportunity. You have to read your own tea-leaves and peer into your own crystal ball — that’s your job, not your employer’s. Then, you have to ask for the kinds of opportunities that will give you next year’s skills, so you can continue to add value in the future. Good employers give their employees opportunities to grow.

You can still fall victim to office politics. Dumb decisions in the executive suite can run your organization into the porcelain facility. The latest management fad can catch you napping or, worse, you can support the old management fad two weeks after your new manager jumped on a different bandwagon. The dollar can rise in international markets, harming the export situation.

Heck, the sun could go nova prematurely.

In the long run, though, the 70% rule puts you in control of your career, and provides the surest guide you have to continued opportunity and job satisfaction.

Ever since mass acceptance of the personal computer, its proponents have sold it on how much it would improve productivity in the workplace. Ever since, economists and accountants have tried to find the productivity gains, without much success.

Try to take away employees’ PCs, though, and you’ll have the same success you’d have removing rifles from NRA members – you’d have to pry it from their cold, dead fingers. Hence, the “paradox.”
We’ve been talking about measures for the last several columns, and it seems appropriate to wrap up the subject (for now) with a column on productivity and how to measure it.

Step 1: Make sure productivity is a useful thing to measure.

The plain fact is, productivity just doesn’t apply to every role in an organization. That’s why so many intelligent and ingenious people have tried to develop white-collar productivity measures and failed.
When you measure productivity, you’re measuring how much stuff a person, group, or machine can make in a unit of time. Widgets per hour. Applications per day. Pages per minute.

Productivity only matters in repetitive processes that produce or handle similar items. The concept comes from factory work. A factory manufactures a particular kind of thing, and lots of it. The more things it produces in the same amount of time, the smaller the capital and labor cost of each item. That translates to lower prices and higher margins, both Good Things (to use the jargon of Economics).

Some white collar jobs do involve repetitive processes. Call centers, insurance claims processing, mortgage application processing, all have a lot in common with factory work. And in fact, automation demonstrably increases productivity in these areas.

Interactive voice response systems demonstrably generate 400%+ returns on investment. Just the screen-pop feature of computer telephone integration can shave 15 seconds from each telephone call – often a 5 to 10% productivity improvement. Some imaging and workflow systems have literally doubled claims-processing productivity. Measurably.

The only repetitive process in many jobs, though, is attending meetings.

To prove the point, let’s take the ultimate example: a Hollywood screenwriter. Let’s devise a good productivity measure – I know, words typed per minute! Yup, when we make a movie, let’s get our script from the fastest typist.

Well, I don’t know how fast Steven Spielberg and his friends type, and I don’t care. Productivity doesn’t matter at all. Audience appeal is what matters, and guess what? You just can’t devise an objective measure to predict it. You have to rely on judgment.

Productivity is just one measure of Effectiveness, a more general measure of value. For a factory worker the two are more or less synonymous. For a screenwriter, productivity has nothing to do with effectiveness.

That’s one reason we’ve failed to find any productivity improvements from the introduction of computers to the workplace – we’re measuring the wrong thing. What we need are measures of effectiveness, and we have to realize a nasty little fact: often, the only measures of effectiveness are subjective.

There’s another reason for the productivity paradox. Technology has enabled a complete transformation of the workplace. People type their own memos rather than dictating them and running them through several manual revisions. Often, they write e-mail messages instead and dispatch them immediately rather than printing anything at all.

Financial analysis now involves graphing dozens of variations of a financial model instead of running a paper tape three times to make sure you keyed numbers in right.

Research now involves searching on-line databases and the Internet, instead of making trips to the library or asking your company librarian for help.

Basically, the jobs we hold now may have the same titles as 15 years ago, but they have little in common.

Statisticians call this “non-stationary data” and they don’t let you use it in analyzing trends. (I was hoping to use a related term – heteroskedasticity – but couldn’t work it in. Maybe next time.)

Productivity paradox? I don’t really care if I’m productive at all. I care how effective I am. That’s what you should care about, too.