I am currently working with a client who has been with the same organisation now for the last four years. He is reasonably happy with his role, his salary and the position he has within the company, but out of the blue last week he received a call from a friend he went to college with. Would he be interested in moving to his new start-up company?
We have seen over the past 12 months that as the fragile recovery takes hold that more and more people are now beginning to look at what options are available to them as more opportunities are becoming available in the marketplace.
My client met with his friend – and boy is the offer tempting. Apart from being able to participate in the company’s pension scheme where they will match his contributions up to 10% of his annual salary, paying for his health insurance and so on, they have also offered him a 15% more than what he is currently earning.
The offer is very tempting. He sought out my advice because he knew I was in a similar position a decade or more ago when I left an organisation I was very happy to be part of to join a different company. It was very flattering to be approached and offered a higher salary. But to my regret my decision to move was based purely on – I am afraid to say – money.
And whilst money is a very important factor in making a decision like this, it should not, but it does, cloud your decision-making ability. I was glad he looked for help and advice from me because had I done the same thing 12 or 13 years ago I probably would never have moved. All those promises made to me were very quickly broken – but anyway, you live and learn.
When it comes to a seemingly tempting job offer, the first thing you should think about is after-tax money.
You can be offered a 5% increase in what you are currently getting, but depending on the amount you earn and your tax rate, the real increase could be much less.
For example if you are currently earning €45,000 (€2,706 net per month) and you are offered a new role paying €49,500, some people think they will be getting an extra €4,500 each year, or €375 per month. They begin to spend it already and some mentally commit it to paying down debt – one of the reasons they have for leaving in the first place. But when you factor in taxes the increase is just €180 extra per month – €49,500 after taxes is €2,886 a month.
Is this increase enough to entice to you move to another company after you factor in the stress involved, possibly a longer commute, and more working hours? Maybe it is.
When I started out to write this article earlier this week, I remembered reading something a couple of years ago about how people join people and not firms. And this is so true.
What matters for most are the immediate relationships they have with the people they work with. We sometimes take our work colleagues for granted but the good ones make up at least 50% of our job satisfaction.
Another important factor is the overall benefits “package” which includes things like pension schemes and profit sharing etc. Sometimes people don’t appreciate just how good what they have is – until they leave or it’s taken away from them.
We know that part of the benefit of staying with a firm long-term is what it contribute to your pension fund each year. With some companies the amount they contribute increases in line with service). If you are moving company, every time you do this you may have to wait until your probationary period has been completed before you can join their scheme (if they even have a scheme) so you could have years’ worth of contributions and investment gains gone and several years of compounding as well. It could add up to big money. A further consideration is that if you are involved in share options you could be leaving them behind you if they have not already vested.
Yet another consideration is how would your spouse and children take to your move? Is job security with a decent income right now more valuable than a short-term increase in income? What if you had to move? How would this change impact on your children, who might be settled in school? How would your new job impact the time you get to spend with them?
An article in the Harvard Business Review in December 2006 entitled Extreme Jobs – The Dangerous Allure of the 70- Hour Work Week, found that the fallout from intense jobs hindered people’s relationships with their children. Parents found out that as a consequence of their job their children experienced problems with watching too much TV, with discipline, with bad eating habits along with under-achieving at school.
I think the best advice I could give anyone is to look at the best and worst case scenarios in moving jobs and not just be influenced by the Pavarottis (tenners) only. Your worst-case scenario is that you hate your new job, and dislike those you work with.
But if you are confident in yourself and your own skills, then that’s not so bad because you can move on again if needs be.
What’s the best case? You love your new job, you have more money, the people are great. It could be the best personal and financial move you ever make. But just make sure you consider everything before you make your mind up.
My friend, by the way, decided not move – even though financially it looked like he’d be better off by quite an amount. He that staying put was the best decision for his family in the long run.