A pay cut can sometimes be the better move for your career

Most millennials expect their salary to increase constantly.

Sometimes, however, a shift to a new industry may result in a lower salary offer.

Or there may be great potential for personal  development or more fulfilling work should you take up a lower pay.

So even though a pay cut may seem unattractive at first, it can be positive in the longer term. 

WHY WORKERS SETTLE FOR LESS PAY

While the common wisdom used to be that taking a pay cut would be a move backwards, the reality now can be different.

People may take decide to take a pay cut when they join a start-up, change to a new industry, work shorter hours, or align their work with their values. 

Reflecting that trend, a recent survey by Fast Company found that three-quarters of millennial workers at large American companies would be willing to accept a smaller salary to work for a company that is environmentally responsible.

And a survey of Canadian millennials by software company ServiceNow found that 47 per cent would give up a pay raise for more meaningful work.

Workers who lose their jobs are even more willing to accept a lower salary when they get a new job, even if it is in the same industry and especially if they move to a new field.

Recruitment firm Randstad found in its recent Workmonitor Research, for instance, that 61 per cent of Singapore employees are willing to accept a lower salary to remain employed. 

REASONS TO CONSIDER A LOWER PAY

While a higher pay is more attractive, there can be advantages to accepting a lower salary.

Some jobseekers stumble through tertiary education and come out the other side into a job that is very different from the career they had imagined, recruitment firm Robert Half observed. Employees who have been working longer may find they have a bad job with a good salary that is just too hard to give up and this results in “golden handcuffs”.

Technology platform Qualtric's latest Global Employee Pulse report, which found that only 49 per cent Singapore's employees are satisfied with their current jobs, confirms that many employees here are not happy with their work.

At some point, many employees come to the realisation that they are in the wrong job and need a career change. Taking a pay cut may be worth it because the new opportunity can lead to happiness, job satisfaction, new opportunities and rewards.

“Finding work that resonates with you is rare,” Robert Half noted, “so it’s worth looking past the drop in income and celebrating the gains that may come with a new job.”

There can other reasons for taking a salary cut as well.

One is to work part-time or have flexi-hours.

A banker transitioned to a part-time role as the chief executive officer of a non-profit, for example, and ended up working 3.5 days a week as well as gaining flexibility with her time.

Another could be to get access to an invaluable experience, a mentor or a professional network that will boost your career in the long run.

One recent graduate overseas took a lowly job as an assistant to a renowned film director, for example, to get a chance to work in the movie industry.

Or you might gain new skills that position you well for the future. One technology professional here in his 30s took an entry-level job with an asset management firm, for instance, that taught him new stills and positioned him for a job that would deliver more satisfaction and higher pay in the future.

MAKING THE CHANGE

If you do decide to move to a new position that results in a lower salary, you still need to prepare and set yourself up well to make it a success.

If you are taking the job to position yourself better for the future, look at how much you can make over time in your new role and whether it really is a job where you can get rewarded with bigger pay increases.

If you are taking the job as a lifestyle choice or to align with your values, talk with the company and some of your future colleagues to make sure you will be able to get what you expect.

When you negotiate your salary, consider asking for alternative compensation such as a mobile phone package, parking, education costs, a bonus, or shares in the company so that you can reduce the impact of the salary drop.

Having money saved before you switch can give you peace of mind when you have a lower income.

You can also look at lifestyle changes, such as going to restaurants less often or taking less costly holidays overseas.

And if you are going to use the position to move up to a better role in the future, decide in advance how you will learn new skills, develop a bigger network and gain recognition at the company or in the industry.

As you look at whether to accept a new role with a lower salary, then, carefully consider the short-term cost and longer-run benefits.

If you will get the advantages you want or position yourself well for a better job, it can be well worth taking a lower salary in return for a better future.