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Compensation – When Does It Make Sense To Take a Step Backward?

March 8, 2016

Can you think of a situation in which you would consider taking a step back in compensation? Can it ever be a long-term, strategic career move?  Most people in Talent Acquisition will probably say that it is never a good idea, but I take another view.  In certain circumstances, it can actually be the best possible move you can make.  If you are the type of individual that considers your career as an investment and practices frequent reflection, it can be clear when taking a step back is prudent and when holding out for top dollar is the best approach. However, if you are not one of these individuals and are thinking about your next move, complete with a lower compensation, ask yourself the following:

  1. Will you learn something new and expand your tool belt? Many organizations have completely scrapped training and educational support during the current downturn.  As such, more than ever before you need to take your career into your own hands and that means you might have to move out to move up.  Consider how much it might cost you to learn that new skill through advanced education classes.  The step back you take in compensation might be worth the gain you will receive in your development.
  2. Will you be aligned with talented leadership? Unfortunately or fortunately, your personal brand is heavily affiliated with the quality and calibre of the people you work with.  Have you ever heard that birds of a feather flock together? If in your current role you are a part of a disliked or weak team, it might be worth taking a new opportunity that aligns you with a more talented group. Even though you may be getting paid slightly less, the experience of working with a stronger team can pay greater dividends over time. I liken this to buying a mid-sized house in a phenomenal neighborhood – your house appreciates in value because of what is in the proximity not because of the price you paid.
  3. Will you be moving from a B/C industry to an A industry? The majority of people are better off aligning themselves with an industry that is innovative, forward thinking and expanding, rather than one that is contracting and stale.  Again, using the investment philosophy, if you were to invest in a company, would you pick the company in a B/C industry that wasn’t embracing innovation or strategic growth?  Or, would you invest in a company that is operating in a sector with tremendous growth potential? To be part of the action in industry A, you may have to take some risk and earn a little less income, but it will be worth it in your bigger career picture.

In most circumstances taking a step back in compensation will not make sense for you. However, there are some situations where not only does it make sense, but where you should jump in without hesitation! When considering your next career move, keep an open mind. Sometimes the best long-term plan is to take a short-term cut in compensation to reap a lasting career gain.

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Category: Compensation

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