Don't Sell Yourself Short

Some superb advice from Gary North (garynorth.com)

"Sometimes a word of encouragement sounds like nagging to the recipient. It depends on the tone of voice, the immediate circumstances, and the comfort zone of the recipient.

My advice: don't sell yourself short. I have learned over the years that most people sell themselves short. The first time I can recall hearing this phrase was at a dinner meeting as a teenager. Two teachers took me and a couple of other students out to dinner. I had just finished running the annual conference of the regional scholarship society, where 1,000 students attended. That was my first seminar project. It remains the largest one I ever organized. The teachers had been faculty advisors.

One teacher warned me repeatedly not to sell myself short. I got the drift of his meaning, but I did not know the origin of the phrase. I did not know that you could make money by shorting a market, but only if you have shorted an overpriced asset whose price then falls. The common meaning of "don't sell yourself short" is the opposite: you will lose money by shorting a market if the asset is not underpriced. Its price goes up, so the short- seller loses the bet. A person who sells himself short has failed to see the underlying value of the asset -- in this case, himself.

It is a common mistake for people to sell themselves short. They do not recognize their own value to some production process.

This is why employers hire such people. The seller of labor services does not believe that he could sell directly to the customer. He may or may not understand that the employer is paying him a fraction of what his services are worth to the customer.

But doesn't the free market lead to pricing of every asset according to its value in the production process? Yes, but only on the assumption that every asset has been accurately priced by all participants.

If workers knew how to market their services, they would earn more money. Employers do not knowingly hire anyone at a loss. The employers' knowledge of the market for specific types of labor services is greater than the knowledge possessed by a worker.

The worker's knowledge of his own abilities is greater than the employer's knowledge. But he tends to ask less than he could earn if he were to bring all of his abilities to meet demand in a specific market where his ability sells at a premium. Why? Because of ignorance and fear.

If workers took time to accumulate information about each of the markets in which their abilities are purchased by employers, they could use this information to advance their careers. They could quit and take a better job. But they rarely do this kind of detailed research. They are too busy watching reality TV shows.

Another thing that holds down the price of labor is the laborers' fear of an unknown future. They rely on their employers to seek out the highest price for the final output of the production process in which they are a part. The price of labor is depressed by the hordes of laborers who do not want to take the responsibility of becoming direct sellers of labor.

Laborers therefore sell themselves short. They do not perceive that their services are worth more than they are being paid. They price their services too low. They pass on to their employer the difference between what they receive as salaries and what the employer generates from the employees' contribution to the production process.

THE DEPRESSING EFFECT OF FEAR

It is not just individual psychologies that get depressed. So does income.

Most people are afraid of the future. They prefer the steady paycheck to the uncertainty of entrepreneurship. They want that steady income. So do their wives. To buy this steady income, they accept a wage that is below what they could earn as independent contractors.

This strategy paid off for as long as corporations were not ready to cut back on employment. But today, the competition from Asia is so great that companies are laying off people, refusing to grant wage increases, and even closing their doors. Consumers give them no choice. Consumers are self-interested. The shop for low prices. Chinese imports offer low prices.

Workers who possess specialized information, as most workers do, trade this information for a salary. But most workers have knowledge beyond the rote performance of their daily services. They understand the industry they are in, the local plant, and the condition of the office. This information sits there. The possessors don't convert it into additional income. This lets their employers capitalize on this information, which makes the workers more efficient, but for which the employer need not pay.

Why not? Because workers either do not know how to capitalize this information or else are afraid to. Their employers do know how to capitalize it and are not afraid to. So, there is a wage-depressing combination of (1) a lack of employees' knowledge of the market for information and (2) the fear of those possessing it to sell it to other corporate buyers or to customers directly.

THE EARLY YEARS

I tell high school students to get a part-time job in a non-franchised business that has been around for five years or longer. The owner is a survivor. I tell a student to keep his eyes open. Watch how every phase of the business operates. This is a paid educational experience. The boss pays him to learn the business. That is not the boss's intention, but it is the result with those who take my advice. Probably not many do.

A student could do this in a fast-food restaurant, but there is less to learn. The system is an assembly line process. The owner is a physician or someone else with money to invest. The manager is a wage-earner. This is not the kind of business that makes a young person a millionaire by the time he is 45.

In high school, I had one Jewish friend. Larry was the only Jew I knew at my high school, or at least remember now. I knew nothing about Judaism. He was not a brilliant student. I never had a class with him. I was on the college track. He wasn't. But we were friends from junior high.

He was in the Junior Achievement program. He was the only person I knew who was. Junior Achievement is a very fine program. It teaches high school students how to start a little business. He tried to get me into it. I declined.

His father was in the restaurant business. That is a tough business: open entry makes competition fierce. His father taught him the business. Before I graduated from college, he ran a small diner of his own. He used to get up at 3 a.m. to drive to the Los Angeles farmer's market by 4:30 a.m. He would negotiate fresh produce. Then he would drive back to Manhattan Beach. He worked long hours. He mastered the details of that cottage industry.

By the time we were 30, he owned a nice upscale restaurant. He had the best gimmick I ever saw in a restaurant. After your meal, a waiter would come with a tray filled with uncooked meat and fish; steak, swordfish, etc. You could buy tomorrow night's main course for a dollar. That was in 1974.

How did he make a profit? My guess: (1) liquor sales by the drink; (2) repeat business. Was the place crowded? Yes. Did people buy a drink while they waited? Yes. Did they come back? Yes.

He did not learn marketing in school. He learned it as a teenager by watching his father. He learned it in his own diner.

He was my first introduction to the business mentality. I have much greater respect for this mentality today than I did in 1959. But that's because I have spent over 30 years as a businessman. I dabble in footnotes as an avocation. That was not my intention in 1959 or 1969.

In 1974, I was making $1,000 a month, with no benefits. He was probably making five times that. Or, more likely, he was plowing it back into his business. I began REMNANT REVIEW in 1974. Larry had a 15-year head start on me.

KEEP YOUR EYES OPEN

It is never too late to learn how to observe what is going on around you at work. A salaried person is in a position to ask questions, all in the name of becoming a sympathetic listener. People will tell you just about anything if they think you are interested in hearing their story and are sympathetic to their latest disaster. I would not suggest taking notes . . . until you get into your car in the parking lot.

Every business has basic operational characteristics. These are hidden in plain sight. But most employees pay no attention. Because they regard their careers as either fixed or on a very narrow track, they regard as peripheral almost everything going on outside their narrow zone of responsibility. This is like living next to a gutter in which $100 bills are floating by. Nobody looks down. Michael Masterson says that 1,000 hours of study will make anyone competent in most jobs. If you have ever seen "Catch Me If You Can," you know it's true. But a lack of interest plus fear keep most people from ever pursuing business-related information beyond that which is required to earn a salary.

This opens up avenues for profit for anyone who keeps his eyes open.

Start with a used DUMMIES book. These books are amazingly good. They introduce you to the basics of any topic. They break down the parts into bite-size steps. If people would act on what they read, there would be a lot of competition. But DUMMIES books are like diet books. They do not change most people's behavior patterns for longer than a week.

If you decide to take my advice, don't talk about it. Just start looking. Ask a few questions that are appropriate for someone in your position who is trying to become a better worker, or, better yet, a helpful colleague. Then go home, buy a used DUMMIES book on-line, read it, follow its recommended reading list, discover relevant websites, and start putting together a notebook of print-outs.

CONCLUSION

Your goal should be mastery of the division above you if you're in a layered system of management. How do the people above you profit from your work? If you can discover this, you can get a major promotion, either in the company or from a competitor.

Second, learn the basics of the division below you. This will be useful if you ever make it into senior management.

See if there are aspects of your division that could be performed by an outsourced firm. If you like what you do, but the highest you could go in your company is Vice President in Charge of Your Division, consider becoming a third-party provider of these services. There, you can become president.

If you cut TV to one hour a day, and if you used that saved time to master the basics of your business, how long would it take you to accumulate 1,000 hours?

You may be too afraid to launch a new career. My suggestion: see what your level of fear is after accumulating those 1,000 hours."