Be sure that a potential new job is actually going to be better for you - professionally and financially - than the old one before you move
JANUARY is a month when we promise ourselves a lot of things. We are going to lose weight, save more, get healthier and, for some, it is a time when they are going to make some career and employment changes.
They are finally going to do what they have been promising themselves they would do all along, and move jobs.
January is considered the month, when most people think about changing jobs, with the 31st being the day, most people are likely to quit their present job.
Research carried out by recruitment and employer review website, Glassdoor, found one in five employees cited January as their most popular month to move jobs; the main reasons for deciding to leave in this particular survey were low salaries, needing a new challenge and being bored in their current role.
There are many other reasons people decide to leave their current employer. A lack of career advancement, work-related stress, difficult co-workers, not getting on with their line-manager, dissatisfaction with the company’s work culture or environment, and lengthy commute being some other examples of triggers to leave.
These grievances become more aggravated over the Christmas period when people have time off work, are more relaxed and reflect and take stock of their situation. With that, they begin to check on possible opportunities with other companies, and what might be available for someone with their skill set.
It shouldn’t come as a surprise though, that January is the most popular month to consider moving jobs, because it’s natural at the beginning of a new year to look to the future, and make a fresh start.
You have to be careful as well, however, because the grass isn’t always greener on the other side. And 23% of people who did move jobs are testament to this, because according to a recent survey carried out, this is the percentage of people, who, when asked, regretted leaving their last job.
It’s natural when you are facing into another year of job-related anxiety, stress, under-appreciation, lack of support or recognition etc. that your instinct might be to leave as fast as you can, and it can be very tempting to do so, because it makes you feel better. Things will be different if you do move, you will make sure they are. But the lessons learned from others who felt the same way as you might be feeling right now, are not to make any rash decisions.
You have got to take emotion out of the decision-making process, because if you don’t, you could find out much to your regret soon afterwards, that things haven’t changed at all.
I came across a gentleman earlier last year who decided to leave his employer for two reasons (a) he felt his promotion prospects were limited and (b) he was offered a higher salary at a new start-up company.
From a financial perspective, the difference in annual salary appeared to be significant at €20,000 and that was the number he was focusing on. He didn’t feel that the new company’s pension contributions being 8% lower than his current employer was a big deal.
And even though he had no annual guaranteed bonus from his new employer other than a verbal promise that if the company did well, and met targets, he would be rewarded with a share of their profits, he was happy with this. His annual bonus with his current employer, by the way, for the past eight years, averaged 10% of his gross salary.
It surprised me that a person in his position was making such a big decision without investigating and comparing the financial pros and cons of moving or staying where he was.
He had no idea what other non-monetary benefits this new company had in place either.
When I asked him about their death in service benefit, their income replacement policy, his probation period, the number of hours he was expected to work, the amount of travel expected of him, he didn’t know the answers.
He was taking a big leap of faith, and it confirmed to me that his decision to leave was being led by his heart rather than his head. Maybe he didn’t want to know the answers because if he did, he would discover they weren’t good, and the bubble of being pursued by another company and the feeling that gave him would be burst. Money isn’t the only factor to review when deciding to leave jobs, of course it isn’t, but it’s a pretty important one to be aware of and consider nonetheless.
I crunched the numbers for him and when you factored in his current base salary which remember was €20,000 less than what the new company was offering him, and added in his current pension contributions (11% of salary) and his annual bonus (10%) his current package was worth c. €7,235 net per month to him.
The new package he was offered, even though his salary was €20,000 higher, when you factored in his new pension contributions (5% of salary) and an as yet undetermined bonus that would be paid sometime in the future, was worth €7,128 net per month to him.
So, rather than thinking he would be better off financially each month, he was in fact going to be €107 worse off. And if you were to add in the extra hours he would have to work and the longer commute time, the difference in real terms was going to be even bigger.
It’s easy to get blindsided when you focus in on only one number e.g. your annual base salary, when comparing your current salary against what you could get elsewhere. The difference at first can seem quite large, when in reality, the number can be much smaller, but you only discover this after you leave.
So, my advice from a financial perspective, if you are in that headspace of moving jobs, is look at all the numbers and all the benefits you are going to be leaving behind.
Get some help from someone who can take that emotion out of the decision for you, especially regarding a decision like this which can greatly affect the course of your life.
The key is not to make a hasty decision simply because you don’t like the person sitting opposite you or because you think there is no future for you in the organisation.
It can be dangerous allowing emotion only to decide for you, so add in some well thought out logic, based on fact into the mix as well.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at firstname.lastname@example.org or www.harmonics.ie