Adaptability – Our Prime Directive
SELLING VALUE
–A Thirteen-Part Series–
Part Ten
The Value Proposition
AEW = Approximate Employee Worth
by
Bob Marshall
October 28th, 2025
PART TEN
AEW = Approximate Employee Worth
Why the “Multiple of Compensation Method” Can Change How You Sell Your Service
When it comes to hiring top talent, most companies focus only on the salary they’ll pay—what it costs to fill a position. But smart hiring isn’t about cost; it’s about value. That’s where AEW, or Approximate Employee Worth, comes in.
There are three common ways to estimate an employee’s worth to their company:
- The Multiple of Compensation Method
- The Contribution to Profits Method
- The Cost of Replacement Method
Today, we’ll focus on the Multiple of Compensation Method, which is straightforward, widely recognized, and often used by top business schools and insurance companies (for things like Key Person Insurance).
Here’s how to frame it with your clients:
“Studies consistently show that a key employee’s value to a company is often set at five times their salary. So, if this role calls for a $100K salary, the employee should ideally bring in—or be worth—$500K per year in value. My fee, on the other hand, is only 30% of their first-year earnings, which in this example is $30K. Put another way, my fee is just 6% of the position’s value to your company—and that’s only for the first year! You continue to benefit from the employee’s $500K value year after year, while my fee is one-time. When you see it in this light, our service isn’t just reasonable—it’s a bargain.”
You can make it even more tangible with a time-based breakdown:
“Let’s put it another way: A $500K position, with 2,080 work hours in a year, costs you roughly $240 in lost value per hour when left unfilled. That’s about $2,000 per day or $10,000 per week. Three weeks of vacancy—and you’ve already given away nearly my entire fee, while still facing the open position’s cost!”
Mini Story:
Last year, I worked with a mid-sized tech company struggling to fill a key engineering role. The position had been open for six weeks, and the hiring manager kept thinking about my fee—hesitant to commit. I asked him to do the AEW calculation with me. When he saw that the vacant position was “costing” the company nearly $60K in lost productivity, he laughed and said, “Bob, you mean I’ve been paying myself to wait?” We closed the deal that day—and three months later, that hire had already delivered projects worth more than double my fee. Numbers don’t lie, and value always wins.
The power of this method isn’t in perfect math—it’s in shifting the conversation from “how much does this cost?” to “how much value are we gaining?” That mental shift is crucial for hiring managers and executives who often see recruiters’ fees as expenses rather than investments.
Coming Up:
Next week in Part Eleven, we’ll dive into the second part of the equation: Internal Employee Costs Saved (IECS)—how to calculate it with hiring managers and strengthen your value proposition even further.
My Best,
Bob
Bob Marshall began his recruiting career over 45 years ago at MR in Reno, NV. In 1986 he established The Bob Marshall Group, International, where he has trained recruiters throughout the United States and also in the United Kingdom, Malta and Cyprus. With a dedication to executive recruiting, he continues to offer his proven training systems to individuals, firms, and private corporations both domestic and in select international territories. To learn more about his activities and descriptions of his products and services, contact him directly @770-898-5550/470-456-0386(cell); bob@themarshallplan.org; or visit his website @ www.TheMarshallPlan.org.
Bob Marshall
President
TBMG, International
247 Bryans Drive, Suite 100
McDonough, GA 30252-2513
770-898-5550