These last few years have taught us all how much the world we know can be turned on its head. We simply can’t predict what the future holds, and I guess some might argue that we should live life and reap whatever rewards we can. Tomorrow never comes so enjoy today. Whilst we should all of course live life; the hardest part about our job at CTC is working with people who have not fulfilled their potential or who have made decisions that have adversely affected their job security and potential long-term earnings and happiness. I feel that now more than ever we should be self-aware and in control of the decisions we make. Now is a great time to stop and reflect on what our net worth is and how much job security we have. We can then make personal decisions understanding and accepting the possible repercussions.
In my mind job security has two elements: Firstly, how likely are we to be laid off by our employer and secondly how easily could we find a new job. This second point can be considered our net worth in the market or in other words the demand for our skills in the market we operate in. Our net worth is very different from our salary because a very specialised niche employer may be able to pay a huge amount but if that company pulled out of the market and we had limited transferable skills our salary is clearly not in keeping with our net worth. Our net worth is determined by the demand for our skills and therefore if our salary is relatively high for the job, we do then the demand for our services will be lower. All too often when we consider job security, we just think about how likely we are to be made redundant; I would argue that considering our employability or net worth in the market is a better way to manage our longer term and ongoing career stability.
So, what are the factors that affect our job security?
Employers are unfortunately notoriously bad in communicating how they really feel regarding employment. This article summarises hours and hours of in-depth conversations with company leaders over the last 25 years.
The employability equation
Your net worth & potential
output & efficiency, billability, positive impact internally & externally, future potential, business development, leadership, technical specialist – difficult to replace.
Your net cost & risk
salary, cost of training & recruitment, time away from work, negative impact internally & externally, others time expended, technical errors, leaving organisation & associated costs.
We first discussed this equation in the GFC. Employees approached us to ask how they could minimise their chances of redundancy. It started the discussion about who (in the private sector) is made redundant first. Whilst employers rarely admit this, it is invariably those whose total costs are greater than their total worth. Irrespective of any potential redundancy it is well worth reflecting where we sit in the equation? The most common pitfalls we see are:
Moving into management:
When we leave the profession that we trained for and move from being a fee earner “doer” into an overhead role we join a discipline where we may be competing against people from all backgrounds. Not only are we now less unique but we also shift our equation from production to overhead. Of course, the theory is that through our great leadership we increase the production of our team, but this can be hard to quantify, and we therefore lose control of our employability equation. Employers may rightly or wrongly believe we can be replaced with a “better value” alternative.
Salary too high:
We all tend to be very pleased with ourselves for negotiating a higher salary but what are the implications? Employers are often happy to pay an inflated salary because at the time they desperately need us or can’t afford to lose us. Often inflated salaries are project or market based but what happens when things return to normal? In other words, in a normal market how sustainable is our increased salary? Most of us expect a year-on-year salary increase without reflecting on whether our extra experience is improving our output. Of course, sometimes greater experience justifies a greater charge out rate and total revenue from our work but what if we are effectively doing the same role but for no more revenue? If we want a pay rise based on our experience, we must be adding more value, taking on additional responsibilities, deriving greater revenue, influencing, training, inspiring more; otherwise, our equation is tipping the wrong way! Similarly, we can’t have it both ways: we can’t negotiate a higher salary but also expect more training, more flexibility, less pressure.
Staying client side too long:
The money (in resources) and security (in Govt) can be great, but the danger is that you are effectively managing assets and contracts and potentially closing off design careers and project management careers in contracting. This is fine if you see your career remaining client side, but we should be wary of closing doors when we consider job security. A common trap now is the incredible salaries on offer with resources clients. Some argue that they will take the money whilst young and “settle” down later, on a more realistic salary. The problem here is that whilst you might be happy to take a pay drop most employers prefer to employ people stepping up in salary not coming down. It is human nature; we love nurturing, helping, and having a fully engaged and excited team who are appreciative of their employment conditions.
All too often we hear that employers are “ageist” in who they retain and employ. This isn’t because they have a personal vendetta against more mature people but rather, they see a better investment in people who have a potential greater “upside” almost akin to buying shares low as opposed to at their peak. It is a sad reality of our world but the more we can understand why decisions are made the better we are able to overcome them. From experience employers tend to overstate the risk of employing mature employees, this is because employers are inherently optimistic and believe they can employ and train 20-year-olds to develop through their business for their entire career. The statistics would indicate that they would get greater longevity from a more experienced employee. Irrespective, as we mature and gain more experience it is likely our salary may have become higher, and our “future benefit” element is reducing or non-existent; we therefore need to be acutely aware of how else we can balance the employability equation in our favour.
Project and market changes:
If our expertise is in just one sector and just one discipline, we can be vulnerable to market shifts. Employers prefer employees able to be utilised in multiple areas. Do you have another string to your bow?
Geographical move too late in your career:
It is great to live and work interstate or overseas but don’t leave it too late to return home. As our careers develop our net worth will increasingly be based on our local network and knowledge. This takes time to develop.
Impact on team culture / work ethics / attitude:
Finally, don’t underestimate the positive / negative impact we have on office culture. We all know of examples where the bright bubbly, hardworking, positive employee is maintained over the negative, cynical, often absent employee who may well be technically superior. Companies with great “culture” find it easier to recruit, retain and gain greater performance from their staff; if we are the one supporting this positive culture then our team contribution is significant. We should all think about the impact we have on those around us.
Increasing our net worth:
I would imagine that most of us would love employers to be fighting for our services, this is in my mind the definition of job security. How can we therefore develop our experience to increase our net worth?
- Stay technical and “billable” for as long as possible.
- Diversify sector and possibly discipline experience so that you can contribute to more than one area.
- Develop a specialist skillset (provided the market will always need it) which makes you invaluable and hard to replace.
- Sacrifice earnings early in your career; it is crazy how we are happy to pay for university but expect the highest possible salary when we start work even though the training and impact on our net worth from employment experience is arguably greater than our studies. Engineers can learn from other professions: Doctors, Lawyers, Accountants who all experience a period post-graduation of minimal earnings and immense workload. This builds their future career.
- Ideally stay at each company at least 3-7 years, yes you might learn more from moving regularly but we must remember two things; firstly, it’s not just about what we can do but the perception of what we can do and secondly the demand for our services also considers our impact on others and our perceived longevity of employment. Moving regularly is usually perceived to mean you didn’t fit in, enjoy, or excel in the role or you wanted more training, benefits, development, and opportunities. Either way this doesn’t shout out that you are a collaborative team player, willing to support others through good and bad times, even if in fact you are. Staying too long at one company can also adversely affect your net worth for two reasons; firstly your loyalty has probably been rewarded with modest salary rises compared to peers “poached” from a competitor, secondly the market perceives you may have become set in your ways, reluctant to adapt and change and your client contacts, project and professional development is less diverse.
- Winning work and building client relationships is the best way to elevate your earnings and increase the demand for your services.
- Have a positive attitude, always inspiring those around you. Most of us invest time with our managers and immediate team but what about the colleague, 10 years our junior, in a different team on the other side of the office? We never know who will be asked about whether we should be engaged in a new firm.
Of course, we all have our own path to follow. Some are prepared to travel, work long hours, and provide financial security for their family, others measure their success by how much time they spend with their family. We need to ultimately work out what life we want, what our values are and how we are personally measuring success? Regrettably most of us move for short term reasons, in an ideal world we should only move if it helps us get to the role that best suits what we want from life. We should regularly be re-appraising what position we are working towards and whether that position will give us the security, fulfilment, and lifestyle we crave.
Pay rises and promotions aren’t always the best option.
The higher up the pyramid we go the less job opportunities are available to us.
I have recently been asked to approach a highly talented individual by several companies. Upon meeting her I discover that she deliberately turned down promotions because she wanted to build her career on her terms and stay technical for as long as possible. She also sacrificed earnings earlier in her career to gain experience across multiple sectors to further broaden the base to her employment pyramid. The demand for her services and therefore her job security could not be higher. She has a very bright future ahead of her and can choose where she works based on her values and life aspirations.
To discuss this article and how best to build your net worth please feel free to reach out to Chris Tan on: 0404605551