Tuesday, December 13, 2011

Self Employed, Salaried or Hourly?

It might seem like an odd question given the difficulty many people are having landing a job these days, but I suppose that also makes it a great time to be thinking about it.  Should you shoot for a salaried position, an hourly pay scale, or go self employed and reap what you may?  I've done all three and I hope my experiences and reflection on what it has been like are helpful to the reader.


Self Employment

I've started three businesses in my life.  One still remains.  Owning your own business is an interesting, and at times, terrifying experience.  You get out of it what you put into it.  If you fail, it's no one's fault but your own.  If you succeed, you have tomorrow to contend with and striving yet again for success.  You're responsible for your own taxes, your own medical plan (if you chose one), insurance (if required) and so forth.  You have to be part salesman, part accountant, part customer service manager, and all CEO, laborer and gopher (unless you've got kids).  If you are good at what you do, you may be lucky enough to be able to hire some employees to help out... and then you have to worry about their taxes, their benefits (if you decide to offer them) and managing their time as well as your own.

Being self employed, once upon a time, was a very simple thing.  It's what most people did - learn a trade or skill or specialty, open up shop in your kitchen, barn or front room and set about making a name for yourself.  These days, regulations and laws intended to keep large companies in line make it so difficult to run a small business it's practically punitive and certainly provides much discouragement trying to make a go of it.  But, if you can keep yourself straight with the tax man and keep your customers happy, a little careful planning can take the one-man shop a long ways.

As a self employed individual, I was also contracting hourly.  I prefer hourly wages as it more accurately rewards my efforts and investment of time.  If I need more money for some big expense, I can drum up a bit more work to cover me.  If I am doing fine and don't need to kill myself, I can take every other Friday off.  Money exchanged for value on a scaled basis is very equitable, especially if you take the view that you negotiate what you need and reject that which is too low.  You're in charge.  Proceed with three parts confidence and one part fear and you'll do just fine.  You'll probably like the boss, too.  If you can't get a job due to a past criminal record or bad credit or just a lack of experience and resume, starting your own business can be a great way to establish yourself and build your own success.


Hourly Wage Earner

Working hourly for someone else, however, is another matter.  Especially where you're restricted to a set number of hours or expected to put in the minimum while observing unpaid vacation days.  Self employed, all vacation days are "unpaid", but you build that into the rate you charge. Being employed by someone else on an hourly basis takes a bit more negotiating, a willingness to walk away from the job if they're not meeting your expectations or needs, and a willingness to bend to their schedule rather than one you set.  You still have the equitable value for money paradigm, but you're likely viewed as just hourly labor that can be replaced easily.  It takes special care to build and maintain a good relationship with your employer so that you are the preferred choice for hourly work.  So, even if you're employed as an hourly worker, treat your employer like a customer and they will treat you like a preferred vendor.  Unless of course they're just exploiting you... in which case, walk.  No skin off your nose.  Don't be a chump.


Salaried Employee

Working salaried is a different mind set.  You're paid the same amount whether you work 8 hours or 12 hours a day.  Overtime is likely not paid (you're probably listed as exempt) unless you specifically negotiate it in your hiring package to be paid for OT.  Being salaried, the value for money exchange isn't as direct, but it's there.  You have to have a much longer view and should definitely be talking about performance bonuses and the like.  Working harder, earning more for the company should be rewarded.  Ask for it.  As a salaried individual, you have to advocate for your career more than yourself as a service provider but the relationship should still be viewed as a customer relations effort on your part.  Never fall into the trap of assuming you are indispensable just because you're a salaried employee (or associate as many companies call them these days), or the trap of assuming you are owed something you are not or that you are above certain work. 


Attitude
 
In all cases, be humble but be honest - if you think the pay isn't fair or the work isn't your thing, say so, but be willing to try your best working at new things.  It always pains me when I hear someone say "I don't do that" or "it's not my core competence, so no thanks" when offered a chance to do something different.  I prefer to say "it's not my forte but I would really enjoy working on that with you.  Can you give me a (few hours / days / a week) to come up to speed on that (system / technology / process)?"  Opportunity knocks.  Don't send it away.  Realize though that not being the expert puts you at a disadvantage.  You'll need to have built a strong relationship with your customer to get the nod in a situation like this.


Where are you?

So, which is best?  It's up to you.  How do you work best?  Are you more motivated by the security you have with a steady paycheck in a salaried job, the reward for your every effort of an hourly wage or the many exciting things you get to challenge yourself with being self employed?  Knowing the answer to that will prepare you to find, or better yet - create, the perfect job for you.  Good luck, God speed!

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