Financial freedom requires financial stability in your job and business

To achieve financial freedom, we need money... lots and lots of it! As the Pet Shop Boys song "Opportunity" goes:

"I've got the brains, you've got the looks
Let's make lots of money
You've got the brawn, I've got the brains
Let's make lots of -"

Financial freedom requires money
That sounds deceptively simple. The concept is straightforward. Build up capital through savings and invest this in investments that will yield sufficient passive income that supports our lifestyle.

How do most of you earn your money? Many of you are employees, working in organisations, companies and businesses. Some of you are running your own business or are full-time investors.

This post will deal with financial stability with regards to jobs and touches on the topic of performance appraisals being a significant determinant of your financial rewards as an employee.

The performance appraisal drama
Performance appraisals are something to look forward to and something to dread at the same time. It is the time where all your hardwork, sweat and tears or all the shirking, tai-chi and acting busy bears fruits. Your supervisor or boss will determine if the fruits you receive in terms of bonus, increment or even the very security of your job will be juicy, delicious or downright rotten.

Appraisals in my own limited experience has been a mixed lot. The few organisations that I have worked with all have on paper robust performance appraisal systems. However, in reality, the appraisal is to some extent a drama where the supervisor and the staff act out their roles in this performance.

In this drama, the supervisor will hold the "power" to determine the staff's remuneration, especially the variable or performance-based component. Many moons ago, when I started my first job, there was virtually no performance-based component and one's increment and promotion was based largely on seniority and not screwing up your job.

Fast forward to today's management and human resources thinking about linking pay to performance. It is good in theory but often fails in practice. WHY?

Why performance appraisal in practice sometimes SUCKS
Many corporate cultures still fail to instil the need to communicate and feedback performance to staff the whole year round and not only during the drama of the formal performance appraisal session. Many organisations also do not clearly spell out key performance indicators and targets with staff. Hence, the staff meanders his or her way through what he thinks his or her boss wants or desires in terms of work outputs and outcomes.

This is not to say that all organisations suck at performance appraisal but not many do it well.

Love it or hate it, performance appraisals are something we need to do well enough. We need to do well to maintain our financial stability from the cash flows generated from our job that helps to build up our investible savings to generate that passive income that will free us from the slavery to our jobs.

Surviving performance appraisals

1. Know your boss
Performance appraisals are carried out by people. People pretend to be rational but are mostly irrational. So know what your boss likes/dislikes and AVOID PISSING HIM/HER OFF. If you are now thinking but hey, that's not fair, appraisals should be objective and not be about personalities etc. The operative word here is "should". Life "should" be about a lot of things but it is not. DEAL WITH IT.

2. Document your work
Your performance appraisal should list down your achievements and not just activity. Show what you have managed to deliver and achieve as compared to writing the things you do.

Negative example:
E.g. I managed to process xxx number of yyy within the year. [*yawn*.... sounds like you just push paper which is the reality but you can spice it up that much more....]

Postive example
E.g. I process xxx number of yyy within the year achieving 110% of target and enabled the dept/organisation to .....(insert KPI for organisation/dept)... [*wow* sounds more postive and forward looking]

3. Be a team player
Nowadays, it is difficult to find a job where you work exclusively alone. You have to work with people and try to be professional and if possible, friendly with all. Never burn your bridges no matter how much you feel like strangling your colleague or boss.

4. Get some visibility
Promotions and rewards are a zero-sum game generally. Not everyone can be promoted and not everyone can get the variable or performance based rewards. Besides working hard, you need to also show to bosses and bosses' boss that you are working hard. Visibility is the name of the game. At important meetings where big bosses are around, show some initiative and be heard if you can contribute to that issue at hand. Don't be overly fawning and fake as big bosses didn't get where they are by being deficient in emotional quotient. Just try to "shine" a bit and get some traction in their minds that you are at least not the pits or bottom 50%. That will get you ahead of the pack.

5. Don't get overly upset about appraisals
Some of us live and die by bonuses, increments and promotions. One of the things I've learnt in my journey towards financial freedom is that I get less anxious about these sessions because I am not reliant on the bonuses for my day-to-day living. Bonus ARE bonuses, i.e. something extra to spur me on but I make sure I live within my monthly salary. This frees me to be less of a slave to my job and to be able to function with less stress worrying everyday about what my boss thinks of me.

I hope that as 2007 comes to a close, those of you who are due for your appraisals do well and score that increment, promotion or bonus. But ultimately, work towards your financial freedom so that YOU ALONE determine your financial security.

Be well and prosper!