No matter what the job market or the economy is like, IT managers are always keeping their ears and eyes open for new opportunities—whether they want to move out of a stressful work environment or take on a more challenging and exciting role.
In the best scenario, that new career opportunity pays more money. However, sometimes the inviting new opportunity can actually pay less than your current salary, and the decision to take a pay cut is never an easy one.
When I began my IT career, I did not go with the company that offered me the highest salary; I went with the job that best fit my interests. And when I joined my second company, I took a pay cut from that first job for similar reasons. When I left to work for my third employer, I also took a pay cut. In each case, I made a difficult choice as I was taking both a lifestyle and career gamble—that I would be better off as far as my career was concerned in the long term.
What to consider
Whenever you look at a new opportunity, you have to look at the complete compensation picture—not just the starting salary. Comparing the current income with the future income means looking at an apple-to-apple comparison that takes into account the following issues:
Cost of living
If you are moving between cities, you need to know the differences in their costs of living. For example, if you are thinking of leaving a job in San Francisco for a job based in Atlanta, the compensation package will likely be less, because Atlanta has a lower cost of living than San Francisco. But while the compensation may drop, the actual living standard can be better or the same.
State and local taxes can make a difference in the compensation you are willing to accept. If you are moving from a high tax region to a low tax region, say from New York to New Hampshire, you can afford to take less money because more will remain in your net paycheck.
In addition, compare the differences between bonus and incentive offerings. Some companies may pay a lower salary, but they provide a higher performance incentive rate. In this case, you need to consider the impact if you don’t get the incentives during the first year, just so you know the potential consequences.
The career issues to review
Once you are comparing apples to apples in terms of your new salary, you then need to look at the new job’s smaller paycheck in light of the new career role it offers. To do this, you need to consider four specific issues:
- Long-term career opportunities
In my experience, I obviously determined that the long-term opportunities at the new company were better than at my previous company. In fact, I felt like I would have the opportunity to excel in the new company, and that I would end up much better off financially over time. To me, this is one of the prime motivators for people to move to another job for less money. When I left a consulting firm to work for a big soda company, for example, I took less money and a lesser position. However, I felt that I could excel and move up rapidly at the new company. For me, the decision worked out well, as I moved from an analyst position to a development director position in four years. That wouldn’t have happened at my previous job.
- Gaining new skills
I have seen many people look at a new job as a way to pick up valuable skills that they may not have had an opportunity to acquire at their previous companies. For instance, you know that network security skills will prove valuable down the road. While there was no opportunity to develop those skills at your previous job, they are available through your new company. Just having a new set of skills in your personal toolkit may well be more valuable than the compensation you lost in taking the lesser paying job.
In changing jobs, many people would, and do, trade compensation for what they consider to be a better life style. For instance, some people would take less money if they could live in their desired area, whether it’s because of family or because they want to live near the mountains. This is often a more important factor for professionals who are looking to settle down in one particular area and who are willing to take a pay cut for that particular payoff.
- Job security
Many people leave jobs that they perceive are not secure and, in many cases, they take less money just to get greater security. Of course, no company is 100 percent secure anymore. However, if your current company is losing money or outsourcing a lot of work, a new job at a growing company might have a brighter future, even if the starting salary is lower. Most people would probably agree that it is better to be working for less money than unemployed.
Don’t rush to a decision
It would be nice if there were some rule that every time you took a new job, you always made more money. But with today’s economy, it’s not as common as it used to be and more IT managers than ever are having to decide whether to take a new role that pays less.
To make the right decision, you need to consider all of the tangible and intangible aspects of making less money and the non-monetary benefits a new job boasts. As I’ve learned, taking the lesser paying job can be the right career decision to make