Suzy Welch: This formula will reveal how valuable you are to your company
Regardless of how safe you think your job is, bestselling management author and CNBC contributor Suzy Welch says that it's important to regularly take stock of where you stand professionally.
"If I can claim one super power," she tells CNBC Make It, "it's the ability to predict when someone is about to be fired."
Welch says that after witnessing a huge layoff at her first job she "discovered a formula that very accurately predicted who was going to stay and who was going to go."
"I dubbed it 'personal ROI,' and it's so simple, you can — and you should — calculate it for yourself right now," she says.
To determine how secure you are, Welch says you need to "divide your salary and benefits — basically, your cost to the company — into the revenues you generate."
"The higher the number, the safer your job," she says. "That's it. Two is OK. Five is much better. Anything over 10 — you're golden."
Here's an example. Say you make $150,000 a year. If the annual net income for the product you're in charge of is about $5 million, then your personal ROI will be about 33. "Barring some kind of major cultural misstep," she says, "you won't be clearing out your desk anytime soon."
On the other hand, she says, if you make $250,000 a year and you land just one small client worth about $150,000, then your personal ROI is only about 0.5. "Nervous about your future? You should be."
Welch says it's always possible to do this calculation, no matter what type of job you have — even if you work in HR or a support position. "Here's the truth: Somewhere in your organization someone is calculating your personal ROI."
"Business is business," she says. "In bad times and good, non-producing assets — well, they're the targets for elimination."
Welch says she learned this after watching good people experience shock when they were fired. The reason they were blindsided? "They didn't do the very simple calculation of personal ROI."
"The result may not always be exact," she warns, "but even an estimate is helpful. And the good news is you don't really need a super power to calculate it."
Suzy Welch is the co-founder of the Jack Welch Management Institute and a noted business journalist, TV commentator and public speaker. Think you need Suzy to fix your career? Email her at firstname.lastname@example.org.
Video by Beatriz Bajuelos Castillo
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