Ranjeet Mudholkar, a leading EB1A expert and CEO of Next League Executive Board LLC, introduces an innovative framework called the Mudholkar Critical Role Ratio that can assist in assessing an employee’s current and future value to an organization. This framework includes key components such as annual salary growth rate, discount rate, remaining working years, current annual salary, and the Lev & Schwartz model for valuing human capital.
The present value, which is expected to be 20 times the employee’s salary paid by the employer, is based on Mudholkar’s professional experience in recruiting and managing performance management systems. Research by McKinsey and the World Economic Forum emphasizes the value of human capital and investments in training and development to drive productivity gains. The salary-to-PV ratio of high achievers typically falls within the range of 5% to 7.5%, indicating the financial impact they bring to a company based on their expected future earnings.
Different ratios signify criticality to a company, with extremely high ratio indicating trendsetters and high ratio suggesting substantial contributions. Moderate ratio indicates meeting basic expectations, while a low ratio may denote contributions below expectations. An illustration using a hypothetical senior software engineer demonstrates the calculation process for determining the ratio, which is essential for evaluating an employee’s worth and negotiating compensation.
The practical applications of this framework extend to employees evaluating their worth, employers making talent management decisions, and HR professionals enhancing retention strategies. The framework can also be utilized in immigration contexts such as EB1A applications to demonstrate an individual’s abilities and value. By gathering data, calculating the ratio using the Lev & Schwartz model, and analyzing the results, organizations can make informed decisions on compensation, talent development, and resource allocation.
Despite its limitations in capturing the value of roles in rapidly evolving industries and predicting career trajectories, the salary-to-PV ratio can help assess an employee’s criticality to a company and ensure fair compensation. Understanding an employee’s current value and their role in the company’s future success is crucial in creating equitable compensation structures and fostering employee satisfaction and retention. Forbes Business Council recognizes the importance of such frameworks in enabling business growth and networking opportunities for business owners and leaders.
