In today's economy, the labor market remains extremely tight. According to the U.S. Bureau of Labor, the unemployment rate for October was 3.7% and there are an estimated 1.9x job openings for every unemployed worker. While we may see layoffs in some sectors of the economy in coming months, companies remain under pressure to compete for talent especially at the higher levels and in leadership. As CFP's, we have helped many of our clients evaluate and navigate job offers as well as pursuing promotions within their own companies. As a result, we would like to share our 5 things to consider in evaluating an offer from an outside company verses your current role.
1. Evaluate company vs. company
The first step in evaluating an outside job offer is to evaluate the new company versus your current employer. If the new company is public, you have access to their financial statements and analysis of their stock trend to get an idea of the overall outlook. Brands matter. Which company should you align yourself with? It is almost always easier to stay where you are, but does the new company offer a much brighter future and direction? Having your CFP® help evaluate the financials of each company (by reading the company annual and quarterly reports) can be very helpful as well as getting a feel for the industry and economic trends.
2. Evaluate division vs. division
After getting a feel for the overall company vs. company, take a look at how the division of the company that you are considering is faring compared to your current employment. Is the new division an area of great opportunity going forward? How vulnerable is the division to layoffs if the economy were to go into a recession? There is an old accounting expression that can apply to HR, that is, "last in, first out". This means that if you were the last person hired by a company, you may be the first to be let go in a downturn- unless you are viewed as invaluable. This happens because employees with longer tenures may get more consideration to stay in tougher times. Make sure to look before your leap and be sure the new opportunity is stable for at least 12-24 months out.
3. Evaluate the culture and people
The top reasons for employees leaving their job are typically: 1. Conflict or dislike for their boss 2. They are grossly underpaid 3. They have a poor working environment or 4. The company does not align with their values. When you evaluate a new opportunity, look at the culture, the people, the work environment and the location. All of these things add up to how much you will ultimately enjoy working there. Jobs that offer flexibility, opportunity for growth, reasonable compensation, and a sense that you will be appreciated typically provide the greatest amount of satisfaction. While compensation is important, maintaining a high quality of life is also equally important. After all, most employees working spend as much time or more with their coworkers than they do with their families.
4. Evaluate compensation and benefits
This is usually the easiest part in evaluating an offer. How is the pay structured? It is important to understand if pay is based on salary, bonus or commissions and how reliable that income source will be. Of course, evaluating stock options, RSU/stock benefits, as well as retirement benefits, health benefits and insurance benefits are all important. Be sure to look at the total compensation and weigh this against the challenges of the new opportunity. Pew Research reported recently that the average compensation gain for a job switch was 10+% on average, but most executives we talk to are looking for more than a 20% increase in overall pay to switch. Obviously, this can be highly variable with the right opportunity.
5. Evaluate the upward potential
Sometimes, we get focused on the "here and now" while we can lose sight of the future. What does the growth track look like in 2-5 years for the new opportunity verses where you are? Take a look at the current corporate organizational chart and see if you can chart a course for your career path. Will the new opportunity be a producer role or will you have management responsibilities? Is the job considered to be a lateral move or an upward move? Make sure to consider what your career track is if you don't leave your company in the next 2-5 years.
The Bottom Line
While change can be very rewarding, it is also disruptive to your personal life as you have to learn new people, systems, culture and technology. Make sure that a job change is truly "worth it" by doing a thorough review of the opportunity. Many times, an outside offer can be a great catalyst that you can leverage with your current employer to address improvement with some facet of your role. In our discussions with our clients, we have seen several clients take on new roles and responsibilities which have been very rewarding. However, in the majority of situations, clients report that they wound up staying with their current employer but achieved some material improvement in compensation or job satisfaction after an offer was presented.
If you need assistance evaluating your career and financial options, please don't hesitate to reach out to discover how we can help.
The commentary is informational in nature and not intended to imply a specific strategy or course of action. Investment advice and recommendations are only provided according to each individual’s personal circumstances. Chancellor Wealth Management is an investment advisor firm registered pursuant to the laws of the state of Georgia. The firm is also registered to conduct business in the states of South Carolina and Texas. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright © 2022 Chancellor Wealth Management, All rights reserved.