Decades ago, many people stayed with one company their entire lives. The company would give them annual raises and provided for them in retirement through pensions or other retirement plans. Long gone are those days. In today’s world, it is common for large companies to lay off thousands of employees at a time. It is common for companies to downsize or outsource parts of their workforce. In addition, it is common for companies to give small or no raises at all, which is essentially a salary decrease after inflation. Nowadays, it is much more acceptable and common for people to move from one company to another every few years. In fact, Forbes published an article that claimed that employees who stay in companies longer than two years get paid 50% less over their careers assuming a ten year career. If your career is longer than ten years, you risk being paid even less than 50% of your potential.
The Risk of Staying Too Long at a Company
Sure, it is easy to stay at a company for an extended time because it is comfortable. You don’t have to put up with nerve wracking interviews, awkward absences from the office, and potential rejections. It is easy to keep on showing up to work every day and getting that incremental annual raise. It is easy re-using and re-applying the same skills and using the same technologies day in and day out. However, there are many benefits to moving around and changing jobs every few years.
A recruiter told me once that there are diminishing returns to your compensation when staying at the same company for too long. Corporate policies generally limit the raises that you receive. Your raises will be dependent upon factors such as your individual performance, company performance, and how your salary ranks among your peers. Companies are also incentivized to keep the raises at a minimum to keep costs down. On the other hand, when you consider a move to another company, the new company generally needs to give you an added incentive for you to move over. After all, you are leaving the comfort of your current position and taking a risk.
When I first started my career, I made a couple moves in the first three or four years. Each move resulted in a 10%+ bump in my salary even though the economy wasn’t great. Even recently, I increased my salary by more than 5% staying within the same company but going to a new role. One benefit of changing companies is that it gives you a chance to reset your salary to a market competitive level. At many large companies, the annual raise doesn’t even match inflation, let alone the market value of your skills and contributions.
Learn New Skill Sets
Another benefit to changing roles is that it allows you to learn more skills, and thereby increase the value you are able to contribute to an employer. If you are doing the same thing every day, how can you learn new skills on the job? Even if you learn new skills in the classroom or online, you won’t be applying them if your job doesn’t require them. By moving to a new position, you are forced to leverage your existing skills while learning new ones. In fact, moving to a new position can be the spark you need to accelerate your career.
Learn New Technologies
Every company uses their own software and technology. Some companies are built around large, archaic database systems while other companies are completely cloud-based. Some companies use Excel to handle all their data while other companies use fancy software to create impressive visualizations. By exposing yourself to new technologies and software, you are adding to your repertoire and expanding your abilities.
Expand Your Network
Every time you move to a new corporate environment, you meet a new group of workers. Some of these workers you may dislike, others you feel neutral about, and some turn out to be friends or mentors. You essentially expand your professional network, which will pay dividends down the line.
Risks to Moving
There are definitely risks to switching jobs too often. If you are changing companies every year, future employers may see that you are a flight risk. If they can’t trust that you’ll stay at a company for more than a couple of years, then they don’t want to risk hiring and training you. After all, they are spending significant resources to train you so they want to make sure you will stay. In most cases, I recommend staying at a company for at least two years before making a move. Of course there are exceptions, but in general, I recommend putting in a couple years before moving.
When you do have an opportunity to make a move, I recommend doing so strategically. Don’t just move because another company gives you a slightly higher salary or you are bored at your current company. I recommend that you think about the move in the grand scheme of your career. Think about what new skills you will be learning and how it fits into your overall career goals. Think about the progression of your career from the beginning up until that move. Does this move seem logical? From an outside perspective, is this a positive move for your career?
When to Stay
Sometimes it makes sense to stay at a company even if you have been there for a few years. Perhaps you feel that you are next in line for a promotion to a higher level that will take you years to achieve anywhere else. Make sure to discuss with your manager to determine your potential for promotion. Or if you feel that your company offers amazing benefits and flexibility that you can’t get anywhere else, such as the ability to work remotely anytime. It is important to look at the big picture and consider all the pros and cons when making the decision of whether or not to move.
Have you ever made a big move that dramatically changed your career?
Professional Development and Personal Finance Blog