It's (not) all about the money

"How much do you earn?"

Not a question that most people ask someone within twenty minutes of meeting them that’s for sure, but it’s part and parcel of my job as a recruiter.

There is a real mystique around salaries and how much we all earn isn’t there? A bit like politics and the side you identify with, talking openly about how much we earn is simply not the done thing. It can even be taboo. But why is this?

From meeting thousands of people during the past 15 years of my career, it’s very clear that much of our self-worth and our identity (dare I say, ego?) can be tied to how much we earn. In a capitalist economy survival of the fittest prevails with most of us always striving for more. Earn £40k? I can bet you want to earn £50k. Earn £120k? Then you’ll probably want closer to £150k.

How much we earn is clearly important

During the past 20 years billions of people have moved out of poverty and into a new progressive middle class, not only here in the UK but in countries such as China and India. Increased earnings have allowed people better access to education, healthcare and improved living conditions. Money flowing freely through an economy has a huge knock on effect – the more we can spend, the more others can (sometimes) benefit. The entire system is dependent upon it.

Subconsciously at least we all adhere to the maxim of “if I earn more, then all my problems will be solved”. Our ego, our self-worth, and how we are positioned within the strata of society is closely linked to our salary. Yes, a higher salary can allow us to buy a bigger house, a ‘better’ car, more social activities, and to enjoy foreign holidays. It’s easy to see why we are all so focused on earning more. Throw in the rapid rise of social media usage which creates a deficit need in all of us by telling us that we’re not enough, and its easy to see why we all get caught in the earning trap.

My home city of Aberdeen is a great example.

With average salaries significantly above the national average, Aberdeen has been somewhat of an outlier across the UK – a remote, regional city with an incredibly prosperous economy. Notwithstanding the events of the past year, house prices across the city are consistently above average, and let’s not even get into the cost of a bloody taxi! In summary, Aberdeen is a relatively prosperous city.

But here's a question...

However, if you are someone fortunate enough to earn a very competitive salary, I’d like to pose a question to you:

“Do you ever feel trapped by your salary”?

Let me explain.

Previously, when people have felt trapped by their salaries it was typically because their earnings were so low that they couldn’t afford to make ends meet. They were perhaps living week to week struggling to get enough money together to pay bills and to feed their kids.

However, through my own personal experience and by immersing myself in these conversations on a daily basis over the years, I think there is also a similar, but quite different, phenomenon. Covid-19 has thrown the spotlight on how we all lead our lives. The past 12 months have allowed many of us to pause for thought and to reassess not only how we are leading our lives but crucially what job we do for a living. I’ve lost count of the number of times I’ve talked with a new candidate and they explain that they feel completely trapped. For example, they might earn a great salary (and have the school fees, mortgage and lifestyle that goes with it) but deep down, if they had their chance again, they’d choose a completely different industry or profession.

Hands up if you can relate

For years, if Becca and I had suffered a bad week at work (you know the ones where everything just seems to go wrong) we’d joke “why don’t we just sell up, move abroad, and take any job somewhere in the sun that’s simply enough for us to get by – selling coconuts on a beach for instance!”

Again, hands up if you can relate?

Now, I know that this is an incredibly privileged position to be in, but it’s still important to consider.

Let us also take a look at something known in recruitment circles as a “counter offer”. It typically goes like this. An individual decides that they’ve had enough and it’s time to look for a new job. In my experience, it’s very rare for their salary to be the primary reason to consider moving jobs. More often it’s career progression, a difficult boss, working hours, or the culture at their company. Fast forward to the said individual getting an offer to join another company. The new employer can offer a better work/life balance, a role more to their liking, and a culture better suited to their personality. However, upon resigning their manager dangles a higher salary in front of them, and all of the above goes out of the window and they decide to stay. Their salary wasn’t the primary reason that they were looking to leave, but the phycological effect of the higher salary is enough to tempt them to stay.

And what happens next...?

As the original issues such as culture and working hours are still the same, within six months said individual has to go through the rigmarole of searching for a new job once again as their new salary didn’t solve all of the other negatives. Sometimes, they’ve even priced themselves out of the market and have to reset their salary to move into a role they truly want. This is very, very common and I think we all need to go through it at least once during our career to really understand it. The counter offer example highlights the pull that an increase in earnings can have on all of us even when logic dictates otherwise.

How much an employer pays a new employee is also quite a strange process when you really think about it. Surely it makes sense to pay someone what the job is worth? Sounds logical, right? However, the system doesn’t tend to work like this. More often than not, the hiring company will take the salary that the candidate is on and simply offer slightly more. This is so normal that it sounds reasonable, but is it really? I’m not sure that there is an ideal solution to this to be fair.

So, should we always be striving for more?

I think it depends on the stage of your career and what you want out of life.

Invariably in our 20’s and perhaps our early 30’s it tends to be about more more more – rapid career progression and increased earnings to get your first foot on the property ladder, to see the world, and to have a busy social life. For some, kids will then come along and it’s at this time where lots of people I work with start to question their choices. More money normally means more responsibility and therefore longer working hours. Many of us also start to realise that the prestige of a big job title and high earnings isn’t quite what it was marketed as, with decreasing levels of both job and life satisfaction.

Through our late 30’s and into our 40’s it’s very common for more meaning and purpose, and a better work/life balance to become more important to many of us. Not all I must add and for many people the goal of becoming a CFO or an FD is still of primary importance. As we move into our 50’s and even 60’s things can change again as mortgages have been paid off allowing many of us more freedom to pick and choose what we want to do.

From my privileged position of speaking to people about his very subject on a day to day basis as part of my job, some things are crystal clear to me.

Yes, how much we earn is clearly important as it dictates to some extent what our lives look like and what opportunities we have for our own and for our kids lives. However, above a certain point (and research states this is a tiny amount above the national average salary) an increase in earnings does not increase our happiness score. In fact, it can easily become an inverse relationship if work takes precedence over your non-work life.

In summary, the data tells us that after a certain point, increasing our salaries will not improve our overall life satisfaction.

However, can we quieten our ego’s enough to listen, that’s the real question…?