In the last article I explained how to save money during what is likely going to be a difficult time. Saving more money by cutting expenses is one thing. Saving money by increasing your income is another.
Now I’m not going to write a list-icle with “6 amazing business to start during a recession”, first, I don’t believe they are viable solutions and second, I’m sure you can already find hundreds of them, either written or recorded. No what I’m going to do is tell you how to use behavioural science to upgrade your job, especially during these times.
There is something unique about the current economic climate, and I’m not talking about the rapid inflation and increasing gas prices. I’m talking about the fact that despite economic growth being negative (recession, remember), production hasn’t actually slowed down. Most sectors are still hiring. Actually, they are understaffed.
This is quite unique, as most recessions are associated with unemployment – a lack of jobs rather than a lack of people to fill them. Now in a very simple economic model we know that when demand outweighs supply that the price for this scarce resource increases as a way to curb demand. And this is where you come in.
It doesn’t matter too much whether you are a very valued employee or not, it really doesn’t. The fact that you are an employee of a company, this specific company, is what matters. It matters to your manager and to the company at large. You are valued as belonging to something else. People value what they own already much higher, because they own it. This is purely psychological. This is also known as the endowment effect.
The endowment effect, however, also works in terms of actual money: it is incredibly expensive to recruit, hire and train people, especially now. There’s a loss of productivity, additional costs and not negligible: a risk that the new hire is a complete and utter fluke. They are much better off keeping you, as you are cheaper (no offense) and much less of a risk.
So what does that leave us with? Well, time to have a chat with your manager, don’t you think? You can emphasize your individual contributions, the state of the market, inflation compensation and this may actually get you somewhere. It may also not. Why not? Because somehow your manager isn’t too convinced of your actual growth. Huh?! It is impossibly difficult to be re-evaluated when you have worked at a company for a while. Despite being cheaper to promote people internally, a lot of bigger companies hire externals for more senior positions. Almost as if somehow, all the years that you’ve worked at that company, the work you put in, the effort, the growth and not to mention the achievement, do not matter one bit. Why is this?
The answer can be found in behavioural science once more: anchoring and a lack of adjustment. You may think: “isn’t anchoring related to numbers?” Yes and no. The anchoring effect originates from people basing numerical judgements (how many people live in India?) on completely irrelevant other numerical information (recall the last two digits of your id). But anchoring as a phenomenon is simply the focusing on one aspect, one piece of information or simply one judgement, and insufficiently deviating from it (not sufficiently updating according to the new info available) to make a correct judgement. And that’s what’s happening with you.
You came into the company wet behind the ears. Bright eyed and bushy tailed. What you didn’t have in skills or corporate know-how you made up for with enthusiasm and your amazing dad jokes. After years of hard (and smart) work, you have gained way more skills, your know-how is excellent and the dad jokes are sublime. Whereas you know where you started and how much blood, sweat and tears went into your journey and development, those who weren’t with you every step of the way couldn’t possibly evaluate it accordingly. They can only update their view of you if you can somehow present them with this growth trajectory, or if you really did something so utterly brilliant, shocking and out of line with their perception of you
Now do I think it’s actually impossible to change your manager’s perception of you? No. Some managers are definitely open to crafting a development and growth plan with their employees and are actively measuring their growth, getting them ready for the next level. Others can definitely be sat down and convinced with a good presentation of your growth as a way to start the conversation on salary increases and promotions. But not all managers are equal and that’s definitely something to keep in mind.
So if both the endowment effect and some serious anchor adjustment fail, then what? Look for a different job! It doesn’t matter if you really don’t want to leave your current company (just don’t tell them that). What you’re looking for isn’t a new job (unless you want one of course). What you’re looking for is a new valuation. You’re looking for a new anchor to go into battle with. If you are struggling to get a promotion because of your manager’s perceptions of you, get a new perspective. Literally. Apply to jobs that are one step above yours. See if other companies are interested in hiring you. Yes, you may be up against internal promotion structures, but as I just outlined, that’s not necessarily an issue, because despite the endowment effect and the lower risk with an internal employee, management will likely undervalue their own employees and give you, the unknown, the benefit of the doubt. Granted that you look good on paper. You now find yourself in an interesting position where you’ll have to reframe most of your growth and achievements. This is something the internal employee cannot do, because management will know (sort of) what their own employees have been up to. You, on the other hand, are a blank slate. What’s surprisingly a negative in your own company could be easily reframed as a positive here. Sell yourself well. Talk in terms of contributions, values and skills applied. Talk them through your journey of development and put some emphasis on your many achievements and lessons learned. You can make it sound impressive, because the person interviewing you simply doesn’t have the background knowledge on you. I’m not saying that you should lie, please don’t. I’m just saying that there’s different ways of framing things (as all good behavioural scientists know).
Now there’s a couple of assumptions in the process so far: the first assumption is that you’ve even made it this far. As in, your managers have no interest in increasing your wage or promoting you. Second, in my world it’s seemingly easy to get an interview and an offer out of the blue. Not true. Not true at all. If you’re well connected this may be easy (well, easier), but for a lot of people this will still be a numbers game. And that does take time. It’s up to you whether you think this is worth the time. That’s not for me to decide.
Okay, bit of a sidetrack, but we’re back on the rails now. With an offer. Now we take this offer back to our managers. This is where another behavioural pillar kicks in: loss aversion. People don’t like losing resources. And you are, in fact, a resource. You present your manager with the offer and ask them to match it. If they can’t, you leave. Now this offer can take many forms: it can be a wage increase, a promotion or a better benefits package. It could be something entirely different for all I care.
The next few moments are important because we’ll need to add all ingredients in at the right time to make the secret sauce work. Your manager needs to have their loss aversion triggered. To do so your other job offer must be perceived as a legitimate threat (so don’t tell people you’d never leave the company…). Second, they’ll need to adjust their valuation of you; they’ll need to re-anchor. Now this process is incredibly counterintuitive, because it’s not their perception of you that needs to change. It's way more meta than that. It’s their perception of others’ perception of you that needs to change. They need to re-evaluate your valuation based on a new valuation which came from an outside source (the job market at large). Those weren’t nice sentences to write or read. Bear with me… The anchor is now being adjusted because a new and quite shocking piece of information has entered the chat. And then the most ironic part: your manager will become more and more likely to accept this new piece of information as they are integrating it into their new evaluation of you, if you were to emphasize your role within the company. Because your valuation is contingent on belonging to said company (endowment), management can justify putting a premium on you, as you are theirs. This higher market valuation is not just you having grown as a person and employee. It’s them having the best people, and cultivating the best people. This is also how it’ll be sold up onto higher management. Don’t you just love the human mind in a complex corporate system?
Again, there were some assumptions here. One, that you got a job offer. Two, that this job offer was better than your current job. Now is this always the case? No. However, the current market is tight and levels of unemployment are low. It’s not a bad idea at all to shoot your shot. Second, there’s the idea that your current workplace will match/outbid the new offer. They might not. There’s several reasons why they might not play ball, such as no budget, no places for more senior roles or much more subjective reasons such as them not liking you, or much worse reasons such as blatant discrimination. In any of those cases I suggest you pack your office plant and run for the hills. Or wherever your new job is located.
All assumptions aside. Whatever ends up happening, whichever stage you end up in; when you decide to upgrade your job, just make sure you base your strategy on endowment, anchoring and loss aversion, and you should be good to go!