How To Get Paid What You're Worth The productivity boom means that people are doing a lot more work for the same old pay. Sound a little too much like your life? Here are ways to better align your compensation with your contribution.
By Eryn Brown

(Business 2.0) – It was Christmastime last year when Jim Heaney, a manager at a Big Four accounting firm, decided he'd finally had it with his job. The holiday was his first break after 20 consecutive workdays--most of them 12 hours long. For more than a year, he'd been working like a dog, picking up new projects and filling gaps left by colleagues who'd been laid off. But even as his firm's annual sales increased by more than $1 billion, Heaney's salary languished. Feeling exploited and underappreciated, he began looking for a new position. "I didn't see myself making a career there in the long term," says Heaney, 35. "I couldn't find it in myself to work the hours or to get the people who worked for me to work the hours--I didn't feel good about it as a manager. I was burned out."

As Heaney learned the hard way, work conditions have been grueling the past few years--even for those lucky souls who've avoided being downsized. A surge in productivity has started to pull the economy out of recession and fatten corporate profits, but it has been built on the backs of tired, promotion-starved employees. For the past two years, the per-hour output of nonfarm workers has grown at a rate more than four times that of salary growth, which has trailed inflation. And as higher-ups cling fiercely to their own jobs, the rank and file see few opportunities to move up the ladder and into better-paying positions. It's no wonder knowledge workers like Heaney--and maybe you too--feel underpaid and undervalued.

That frustrating situation may not endure much longer, however. In the market for human capital, the power still resides with employers, but it's starting to shift. March saw the U.S. economy add 308,000 jobs, the largest growth in four years. Though one strong month of job creation doesn't equate to a seller's market, chances are good that you'll soon have a stronger hand for negotiating a salary that matches your output and your ambitions, whether at your current employer or a new one. Professionals who follow the job market every day say they can feel it coming. "There will be opportunities for high-potential people," says David Parker, founder of executive search firm D.P. Parker & Associates in Wellesley, Mass. Jim Zagelmeyer, managing director for Futurestep of North America, Korn/Ferry International's placement and recruitment service for midlevel employees, concurs. "Now is a great time to set yourself up for a better position," he says.

In a typical recovery, growth in economic activity and corporate profits inevitably leads to new demand--and higher prices--for labor. But as every overworked wage slave is well aware, this two-year-old recovery has yet to produce solid job growth. What's different this time is that many of the jobs lost in the current downturn appear gone for good--eliminated by bankruptcy, automation, or offshore alternatives. So a hiring rebound won't come from employers recalling laid-off workers, as it has in the past; it will rely on the creation of entirely new positions, at startups or at new divisions and product lines within existing companies.

This kind of job creation, however, depends on capital investment. Still smarting from the burst bubble, businesses have been reluctant to spend on new opportunities, and investors have shied away from funding new ventures. But the fear seems to be giving way to a new sense of promise: The volume of initial public offerings is on the rise, for example, and stock market indexes are up.

Another hopeful sign of a shift in the labor market's balance of power comes from an economic indicator designed by Jim Citrin and Rick Smith of executive search firm Spencer Stuart. Called the Human Capital Market Index, it tracks a range of factors that correlate closely with the value of labor in the marketplace, such as macroeconomic supply and demand (gross domestic product divided by the supply of workers available for hire) and what Spencer Stuart calls market liquidity (the number of open positions relative to the number of executives not currently employed). The HCMI is coming off its largest decline in three decades: For one long stretch during the recent recession, all the factors tracked by the index declined simultaneously--for the first time in 30 years--as people were laid off left and right and others toiled without raises. "It was the perfect storm," says Smith, a director in Spencer Stuart's Atlanta office. Now, Smith says, all the factors are on the rise.

The moribund job market and crushing workloads have created a vast reservoir of pent-up worker mobility. A 2003 poll conducted by Harris Interactive for Fort Lauderdale, Fla., staffing agency Spherion found that 52 percent of respondents wanted to change jobs. A full 75 percent of those would-be job-hoppers wanted to make the switch within 12 months. (Just four years earlier, only 33 percent said they wanted to leave their current positions.) While the Spherion sample represented the entire workforce, knowledge workers and executives seem, if anything, even more eager than other workers to hit the road. In a July 2003 poll conducted by CareerJournal.com and the Society for Human Resource Management, 64 percent of users surveyed by the site said they were ready to make a jump. And 73 percent of executives polled last fall by executive search firm Korn/Ferry reported that they would be "more likely" to change companies once the economy recovers.

All this worker angst has an upside for job seekers in the future. Once workers stop holding on to jobs they hate just so they'll have paychecks, workforce churn could open up even more positions. In other words, when the job market finally cracks, there will be a flood of opportunity. Says Futurestep's Zagelmeyer, "We're going to see a sudden vacuum of skilled workers."

So how should you get ready for that moment? Recruiters and other career experts say that now is a time for planning and preparation. Decide where you want your career to take you and get in position to follow that pathway. Above all, figure out how to improve your value to the people you'll be working for (and with) along the way. "If you expand your value," Smith says, "sooner or later, the market will pay for you."

For now, that prep work is probably best done at your current employer, even if you are eager to move on. "Generally you're in a stronger position looking for new work when you're already employed," says Elliot Gordon, a senior client partner at Korn/Ferry. "Usually a company will offer you an increase to come onboard. If you're unemployed, they may say, 'Let's just offer what he or she was making before.'"

And of course, you don't have to leave your current employer to get a raise. "The reality is, compensation is a trailing indicator of success," Smith says. "You don't get paid for what you're doing. You get paid for what you've already done." No one understands what you've accomplished better than your boss does--and that should give you leverage in a salary negotiation once the job market turns.

The problem with staying at one company is that it's easy to get pigeonholed. Citrin and Smith, authors of The 5 Patterns of Extraordinary Careers, call it the "permission paradox": You can't get a more responsible job until you have experience doing it, but you can't get the experience until you have the job.

The solution, at least at first, is to excel at the job you've been hired to do. "Once someone has proven their ability to be a top performer in their domain area, they are considered a best athlete," says Eric Joseph, a senior partner in Heidrick & Struggles's Tysons Corner, Va., office. "And when business needs change, companies will believe that best athletes can do it all over again."

Take the example of Dave McCormick, the 38-year-old president and CEO of FreeMarkets. He came to the supply-management company in 1999 as vice president for the public sector business, a position several layers below C-level. But he proved his value by excelling at that post, which led to chances to showcase his talents in a variety of jobs that brought him into contact with salespeople as well as account managers. He was soon promoted to executive VP for worldwide operations, then president.

That gave the FreeMarkets board confidence that McCormick was indeed a multidimensional athlete. "In one hour Dave might be articulating company strategy to the board, in the next he might be helping a sales executive close a deal, and in the next he might be at a customer's site helping to solve a problem," Joseph says. In 2003, McCormick got one of the most multidimensional jobs he could think of: CEO. Once FreeMarkets's pending merger with Ariba comes through, he'll be president of the combined company.

Often the hardest person to convince that you can handle tasks outside your area of expertise is yourself. A press secretary for Hillary Rodham Clinton during Bill Clinton's 1992 presidential campaign and first term, Lisa Caputo was nervous when Citigroup invited her in 2000 to launch Women & Co., its new financial services division for female investors. Caputo, now 40, had never even worked at a financial services firm, much less served as CEO of one. But she realized she had skills that applied quite easily to the role. In government she'd developed the ability to juggle several tasks and solve problems on the fly. Later, serving as VP for corporate communications at CBS and then managing communications and marketing at Disney Publishing Worldwide, she'd studied how big companies operate and how to think about larger corporate goals. Finally, she convinced herself that her own life experiences gave her the knowledge she needed to serve as CEO of the new business. "My response was, I could use a service like Women & Co.," she says. "I could combine my love of public service--helping other people--with a private-sector job." Three years later, Citigroup gave Caputo another chance to prove herself: In addition to her CEO role, she now serves as managing director of business operations and planning for the company's global consumer division.

Of course, it's all well and good to say that starring in your current job will eventually bring you higher pay and wider responsibilities. But what if the job you're excelling at could also be done by someone offshore at a third of your pay?

Recruiters agree that the way to maintain your value in a globally competitive workforce is to add breadth to your repertoire of talents. Citrin and Smith recommend getting new credentials and asking for new opportunities. Gordon suggests looking for ways to "add skills that your employer can't get for $5 an hour." Develop a rare specialty. Become an expert in managing offshore labor. Find a way to work more closely with customers.

What won't work, however, is to bank on finding a job that will be forever immune from change--whether from new technologies or new sources of competition. Such a job doesn't exist. "Admit to yourself that everything will probably be obsolete eventually," Smith says. "So try to anticipate the changes that are going to take place and turn each phase of your career into a building block for the next one."

For the better part of 30 years, Moiz Beguwala, 58, has made a habit of doing just that. Trained as an electrical engineer, he joined Rockwell International in 1973, designing semiconductors for military applications. But by 1982, he noticed chip manufacturing increasingly moving to the Far East and decided it was time to make a change. "My sense was I'd have more opportunities if I switched focus," he says.

Taking advantage of Rockwell's willingness to pay for career training, Beguwala enrolled in UCLA's executive MBA program and came out ready to join his company's semiconductor business development group, which was then shifting more attention toward civilian customers. Beguwala's engineering background equipped him to help Rockwell work with new consumer technology partners. After five years, the company changed its focus to communications, and Beguwala used his business-development contacts to try his hand at sales, building up sales teams in Asia and Europe. That led to management positions, including one in the wireless division of Rockwell's communications spinoff, Conexant.

Now retired from Conexant, Beguwala serves on three corporate boards; ironically, one of his jobs is figuring out how to deploy engineering talent from India and China. Beguwala says he's derived far more from his career than his friends who stuck to designing chips. "The key is to stay flexible and not get boxed in," he says.

Being flexible doesn't mean, however, that you should simply react to events. To really maximize your worth when the economy turns, you're going to need a road map. "You've first got to figure out what you're trying to accomplish," Smith advises. "What experiences do you want? Where do you want to get to in five years? Let that dictate the decisions you make in the short term."

Apply these kinds of milestones to your career map and you might be surprised. It may be that your best choice when the job market turns is not, in fact, to aim for maximum salary. Workers at different stages of life value different kinds of compensation. For younger workers, opportunity is often the most important currency. For older workers, it's pay and benefits, while those just starting families might place emphasis on a better work-life balance. In other words, while getting paid what you're worth is a good shorthand for job satisfaction, you may find that more money isn't really what you're after. "What we're seeing," says Futurestep's Zagelmeyer, "is that the prime reason people change employers is to improve their career path and enrich their jobs."

In Jim Heaney's case, it was the search for more fulfilling work that inspired him to make a move. Fed up during his terrible Christmas, he found a headhunter, lined up a series of interviews (one as late as 9 p.m. because his workdays were so long), and within two months started a new job as an accounting manager with Rinker Materials, a West Palm Beach construction materials manufacturer. "I'm learning new things and I'm being challenged," Heaney says. "And it's happening at a place where I can see myself building a future." He's no longer working the insane hours he did at the Big Four firm, which is a reward in itself.

And yes, he snagged a pay increase too. Whether you count money, opportunity, or working conditions, Heaney believes that for the first time in a long time, he's finally being paid what he's worth.

Eryn Brown is a Los Angeles-based freelancer and a former senior writer at Fortune.