Employment Quandry: Risk vs. Reward

[brewer12345]

Unlike some posters, I have never been a gummint employee and I tend to hop around every few years. I am coming up on another inflection point (in maybe another 6 months), and I will have a decision to make. Historically, I have chosen to go for the more stable organizations and trade off some upside in return for a fairly clearly defined job with an organization that was likely to be around for years to ccome. However, I am beginning to think that this is something of a chump's game, considering how companies can pretty easily change your job description, go bankrupt, sell out to a buyer, etc. Now that I am ~10 years into my career, I have built up sufficient savings to weather a rough patch and am beginning to be at the point where I could feasibly land a job where the upside could be very substantial.

What is holding me back from taking a risker, potentially more rewarding job are two things:

- intertia, because it is hard to make these major changes.

- Family. We have a 3 1/2 month old daughter, and many of the "upside" jobs require lots of hours.

I am not all that sure what I will do when the time comes, but it is increasingly clear that my current gig isn't cutting it any more. I have some "silver handcuffs" that will open up in about 6 months, so I have time to mull it over, but I will need to decide what I want.

Any thoughts here? I realize this is pretty general, but have at it if you are so inclined.

 

[wabmester]

OK, you asked for it, here's the "right" way to live life:

1) Take risks when you are young and unmarried.
2) Get rich.
3) Get married.
4) Retire.
5) Have kids.
6) Enjoy!



Seriously, I would recommend that everybody take a Big Risk at least once in life, and it is much easier to do before you have a family. Unless you think you can make a quick exit from the risky/long-hours gig, I would stick with stability and family time.

 

[soupcxan]

I think this is an interesting topic...I had never thought about the risk/reward tradeoff when choosing a job until my banking professor pointed this out in class last year. His belief was that the people who made obscene salaries in Silicon Valley start-ups with little experience shouldn't have been whining about losing their jobs because the risk of losing the job was priced into their salaries - just like a junk bond offers higher returns than T-bills. In his mind, the market for labor is not much different than the market for securities. So in your example, is the risk premium that a potential employer worth the added risk that you assume?

However, I don't think that risk should be the primary factor in making the decision to change employers (unless you're going to work for a start-up or other high-risk venture). It sounds like you have the assets to be able to weather a potential problem so you can essentially "self-insure" - if you were living paycheck to paycheck with a family to support then obviously it wouldn't make sense to take on this added risk.

So in evaluating your job options, you have to come up with the "price" of your time, and a number of factors influence this. The risk of losing the job, the hours that you would have to work, the stress of the environment, the potential for career advancement, the quality of the people you would be working with, etc. If you wanted to be super-nerdy, you could create a matrix with the relative importance of each factor and then evaluate potential jobs on these factors to arrive at a weighted overall score.

 

[wabmester]

I don't know about obscene salaries at start-ups, but the equity participation is typically pretty high. So, you're not getting a high return for taking job-loss risk, but you're more typically trading salary-based comp for some chance of obscene equity growth.

I wonder if anybody has published the odds of that bet paying off. I know it's got to be much better than playing the lottery, but it's far from a sure bet.

I know quite a few silicon valley guys who go from start-up to start-up hoping for a big payoff. It's got to be tough when you chose the wrong start-up and see your peers strike gold.

I personally turned down offers from MSFT in 1987 and AOL in 1996. I kicked myself till my butt was sore.

 

[yakers]

I like that you are thinking about various issues particularly time with family. This is so valuable to me. Priceless. There are other trade offs. I have a (very) small house near my work in Southern California rather than a larger one many miles out. This saves communing time and helps with more family time. I have turned down promotions that would require relocation. Now if I were offored such a large promotion that my wife could stay at home I might consider relocating or taking a riskier job. But most offors have been 10% more and some promises, not enough to leave a job I like and disturb the comfort of my family.

 

[wabmester]

And don't forget to weigh the health effects. I did the "high risk/reward" thing for a few years, worked 80 hours/week, put on 20 lbs from living on junk food, and probably accumulated a huge sleep deficit. I'm sure that knocked a few years off my lifespan. Someday, my kid and wife may want those years back.

Take a kick-back government job with a kick-ass pension!

 

[Piffle1]

My wife and I just recently moved to Seattle. She ended up getting a job with a very stable company with awesome benefits, so I was able to take a "high risk" job as an independent consultant. I've tried the stable, safe route for the last 8 years or so and it didn't do much for me. In my particular line of work (database programming) I can make about twice as much on a contract per hour as I do as an employee. The downsides, since my wife has awesome benefits that cover both of us, are minimal. When my contract runs out in 6 to 9 months (if I don't get extended), I will have to find another contract, and I might have some downtime (a.k.a. vacation . This could be looked at as a plus since I'll get to move on to a new environment and learn new things and meet new people. I'm sure some would complain about the stability, but do you really think you're corporate job is that stable these days?

We thought about this quite a bit before we moved. I really think this will be good for our savings plan. We should be able to save a very, very large chunk of money. I should be able to work the savings up to the magic 1 million in 7-8 years, and we're only at about 150k right now. That's assuming we don't have to trade our first three children for a house here in Seattle (but that's another thread).

I would definitely recommend you other young folks out there consider doing something like this.

 

[Nords]

Family or career?  That's no question.

Brewer, I think you're keying on a conflict that turned our world upside down. Kids change everything, including your priorities. And that's even if you're not chronically sleep-deprived by midwatch feedings...

Let's see, the upside is that you'd take a risk by working 80-hour weeks like a dog and striking it rich, at which point you'd ER and spend the rest of your life watching your kid grow up. Hopefully your kid isn't in high school by the time that happens.

The downside would be that you'd take that risk, work those same hours, and watch your company go down the tubes with no "strike it rich" ending.

I can't tell you the right decision, but the fact that you're mentioning family tells me that the downside risk may not be worth the potential upside.

Consider another option... you take a "safe" job, max out the time you can spend with your kid, and maybe strike it rich. If you don't, you may work more years but you still max out the time you spend with your kid. The only downside to this one is that you work more years, and frankly it's worth it for the kid time.

Not that your kid will appreciate any of your sacrifice until she has kids of her own...

 

[John Galt]

Re. "Not that your kid will appreciate any of your sacrifice until she has kids of her own"..................
So true!

How much sharper than a serpent's tooth
is an ungrateful child.........................This is the downside of parenting. Usually the upside is worth it.

JOhn Galt

 

[trumpeting_angel]

. . . and risk to your marriage, if you work 80 hours a week and she is hanging out with the 3-month-old.

That's a tough row to hoe for you, your child, AND your wife. I was trying to think of an age where it would be okay (for the kid) and I don't know if there is one.

It's a tough choice, quick financial rewards or keeping grounded and connected in family. I, too, am pleased you are making it an important part of the equation. You'd be so sad if you found yourself marginalized in your own family. It happens, and it even happens to people who are "only going to do this for a few years, and then cut back. . . " It takes a very strong character to live below your means when you are working so hard, and so stressfully. And to cut back any time before you are so sick of it that you HAVE to.

Good luck with this important decision.

Anne

 

[John Galt]

Hello Anne! Man, I go away for 12 hours and this site
is full of great stuff!

I was an "80 hours per week" guy for most of my career.
Did my marraige suffer? I don't know for sure. Probably.
It (my workaholism) did not cause my divorce though.
I know my ex. didn't like it, but she did enjoy the perks
(status and money) it provided. Anyway, I am now
"marginalized" with many of my family members,
because of my divorce and how I handled it.
Ironically, my ER decision was one of my best decisions
ever, and yet it contributed heavily to my divorce and
dysfunction throughout the family. The shockwaves
of divorce never stop spreading it seems. I guess
the question is "Was it worth it?" I would still say
"Yes" , even though I was blindsided by the fallout.

John Galt

 

[brewer12345]

Hey, who said anything about 80 hour weeks? Not me. That is NOT on the table regardless of where I go or what I do. Right now I have a lengthy commute, so even though I don't work very lengthy hours, I am still gone for a good 11 hours a day. If I can find something significantly closer to the house, I could work longer hours with no net increase in time away from home.

 

[John Galt]

When I had my own business, if you add in the time I was thinking about it,
then 80 hours would have been a short week for me

John Galt

 

[ESRBob]

Brewer,
I am going to say something very politically incorrect but it was my experience.
When my kids were just a few months old, I loved them very much but did not have that much to do with them except hold them from time to time.

When they got to be 3 and older, every hour away from them felt like torment.

My point is that you may be able to squeeze a couple intense years in here before your child gets to be 3. The reason I say this is politically incorrect is that I have also heard this is a 'guy thing' and that women don't share this same timetable of feelings, enjoying the infancy just as much as the toddler years and later.

ESRBob

 

[brewer12345]

Brewer,
I am going to say something very politically incorrect but it was my experience.
When my kids were just a few months old, I loved them very much but did not have that much to do with them except hold them from time to time.

When they got to be 3 and older, every hour away from them felt like torment.

My point is that you may be able to squeeze a couple intense years in here before your child gets to be 3.  The reason I say this is politically incorrect is that I have also heard this is a 'guy thing' and that women don't share this same timetable of feelings, enjoying the infancy just as much as the toddler years and later.

ESRBob

Bob, I appreciate the input, but let's just say that my daughter must have been born at age 3 as far as I am concerned.

 

[ESRBob]

I'm glad for you and hope for the sake of the human race that my experience was atypical!

Enjoy being a dad.

One tip that might be able to save you some $: there comes an age (around 2 I think) when they much prefer playing with the packaging and boxes and wrapping paper to the toy itself. In fact they completely ignore the toy! Never could figure out how to capitalize on this, but there seemed like an opportunity to cut costs lurking in there somewhere...

best,
ESRBob

 

[John Galt]

I don't recall that I enjoyed any particular age more
than another with my 3 kids. Of course, I was gone a lot
when they were small. Still, I think I spent the max.
quality time with them considering my heavy schedule.
There is a photo somewhere of me watching the
evening news, drinking a gin and tonic, reading
The Wall Street Journal and giving my daughter her
bottle simultaneously. It's a Type A thing

John Galt

 

[trumpeting_angel]

John, I never believe half the stuff you write about yourself.

Hmm, on the other hand, in one of the first pictures I have of my ex-husband and our daughter, he is asleep on the rocking chair and she is asleep in his lap. Quality time, I suppose.

Brewer, sorry if I invented a ludicrous work week for you! Didn't mean to. Wonder how I manage to work myself these days with my tendency to invent things as I read. . .

I think there's something to the argument that women like/want/need to be with their under-3-year-old children. I personally felt, when I was away from my baby, like the umbilical cord simply didn't stretch that far. Literally, the farther away I was, the more anxious I got, which isn't terribly rational. I think it's a Darwinian thing - keeping mothers close to infants keeps them alive longer, I'd imagine, in cave dwelling societies. Not a bad idea for the 21st century, either.

Anne

 

[johnblake]

I've only worked at small companies and never really considered the risk/reward tradeoff. My experience with larger sized organizations is negative. The smaller the company, the more I enjoyed my position. As my company grew, so did politics and time wasting that made me want to leave.

For me, larger organizations are riskier because there's a much higher chance that I wouldn't enjoy my work.

In my experience, there is very little or no difference in salary, while the upside potential can be dramatically better at a start-up.

If your skills are in demand, you are not taking a risk by going with a small co. If it doesn't work out, you can easily find work elsewhere. Test whether or not your skills are in demand by looking for a job, and seeing how many opportunites you have. (I wouldn't push for offers unless I was serious about accepting.)

Smaller companies have many benefits aside from the upside potential of stock options. For example, your work may be critical for the success of the company. You have direct interaction and contact with the executive team, and even the investors. This can lead to more opportunities down the road.