Game in the Brain

The most a company can realistically promise is that “they will help you grow”. Growth means better skills, capabilities, and income. This does not mean within the same company, they may help you grow but let you leave for greener pastures when your needs change. This also means that the company’s needs change you will do fine in what ever situation you come to be in.

The Philippines has a 4.5% inflation.

Lets take a starting fresh grad who’s skills as Tech Support Lvl 1 earns him minimum wage of Philippines at Php12,000 basic, the job salary after 4 years of experience is worth about Php16,000.

That is about 33% increase in 4 years. We cannot use linearly because the rate of improvement is relative to the principal amount, It is easier to use compound interest relative to principal amount because it changes every year. So its 4 root of 1.33 = to 7.5% compound growth per year. Relative to Inflation that is 3% real compound growth per year.

Every-time the Person adds a new skill-set that is different and of a higher value career progression, we may adjust to the relative increase of the new career path.

So If in 5 years the IT acquires the new skill-set of System Admin. System Admin is 12,000 to 18,000 after 5 years of experience. Experience is a broad term here, people don’t go into measuring them precisely, and different people have different rates of learning. one can master it in a year while others in years. For the sake of argument most companies dont’ look closely in the details.

Now in 5 years the fresh grad is 5 years and follows the Management career path by adding leadership, project management and organizational skills. So from 12,000 to 20,000. During that time he basically experienced a 11% compound growth rate, which is 6.5% real growth rate.

Another factor is the savings, let us just look at what is considered a good savings rate which is 15%. At 15% a 12,000 basic employee with about 11,000 after taxes saves Php1650 a month. In a year the person’s savings which we start at 0, is now php21,450. At 21,450 at the end of the year the buying power of that savings went down by 3.5% assuming 1% savings interest goes down to 20,913 (loosing 500php to inflation). If his salary increases another real 3% growth his saviings is now 20,913+22,200.75. let us ignore the 50% increase first, and look at the rate of change based on his skillset. The person may have 43,000 in the bank now and earning 7.5% more.

The main thing I look for is how much better than inflation I am doing given my choice of career path. We all have to beat inflation, and we do that by skill upgrades through experience, training, certification and education. Leveling up in the real world is hard, and I believe SCHOOLS are the ones who should be taking on the strategic burden of getting the best jobs for their students and increasing their overall productivity.

The more the school pushes up the student’s rate of income growth through training, the more revenue the school can generate.  If the school follows the technological curve in improving its service delivery, the will grow along with their students and will suffer the least from market correction.

The leanest businesses relative to Margin have the least to suffer from Market Correction because they have their buffers. If a business tries to increase productivity at these rates and consciously they are actively problem solving and have less to fear from the ambiguous threats of the changing tide of technology, economies and demographics.