This question is one that stimulates varying opinions from prospective employees, hiring managers, recruiters, and wise counsel.
But the final decision to take a salary cut will be made by the one considering the job. It’s understandable that you’ve worked hard for that salary, climbed the corporate ladder, negotiated that raise and now you’re faced with the prospect of a new job with a lower salary.
Should you take a salary cut for that next job?
I must add that if you’re in a desperate financial situation and you need a job to feed your family, then that’s another scenario and discussion altogether. Let’s assume you have choices when making this decision. I'll tell you how I made my decision to take a more than $15,000 yearly pay cut by asking myself these 5 questions:
1. Am I taking a pay cut to change careers?
I actually went into an interview for a Business Development position but was offered an executive recruiter role. I was not looking to change careers when I went in for my initial job interview but when the opportunity arose I was actually thrilled at the prospect of embarking on a new career path with an established, well-respected, company willing to take a chance on me.
The job piqued my interest, which grew into excitement. The only caveat was that I’d be taking a salary cut of more than $15K my normal yearly pay, but with the potential to earn more in commissions. There was no guarantee.
I’d be starting my career over, taking a pay cut for a better job, and going back to the basics in a new industry. I had been in my current company and industry for 12 years. I could have easily gone to a competitor and got $15K to $20K more in pay. So, taking a salary cut was a real risk I had to think over.
2. Does the new role bring more fulfillment?
I would say a resounding, “Yes” in my scenario, especially the more I vacillated over this decision of taking a pay cut to change careers. I read a Gallup Poll that said only 33 percent of American workers were engaged in their work, which Forbes defines as “the emotional commitment the employee has to the organization and its goals”.
This emotional commitment means engaged employees actually care about their work and their company. I had been in my previous role for so long with no productive change happening in my work area during the last few years. So, I was losing the passion I once had for the work that I was doing, which is important for me in my career.
The thought of having a job where I interacted with people I’m trying to genuinely help in their future job endeavors was something I craved. I knew of people in my inner circle that were looking for jobs. Just think of the hundreds of others I’d be trying to help. At least, that’s where my rational mind took me.
3. Will taking a pay cut for a better job help in my future endeavors?
Like many people, I have a lot going on in my life. In addition to working outside of the house full-time, spending regular quality time with my husband, and staying actively involved in my kids' endeavors, I run my own blog.
When I was presented with the prospect of becoming a recruiter I was not only delighted but looked beyond the job and into the future. One of the responsibilities I’d be tasked with would be to interview a minimum of ten candidates per week, in-person.
I saw this as a way to improve my communication skills and refine my interviewing abilities since I regularly interview people for my blog. For me, there was the prospect of taking a salary cut, but I’d be growing in the process.
4. Will I have more work-life balance?
According to a recent CNBC report, a survey by the Bureau of Labor Statistics showed the average American works 44 hours per week or 8.8 hours per day. A 2014 national Gallup Poll put the average number at 47 hours per week, or 9.4 hours per day, with many saying they work 50 hours per week.
I was presented with the prospect of a great work-life balance with this new opportunity and it sounded appealing. Since I have young kids it was something I was striving for.
I had put in more than my share of late nights at my previous company, so I definitely needed more balance and if that came with taking a pay cut for a better job I was willing to consider it.
5. Can my household afford the salary cut?
Consider all the bills, debts, family needs, etc., you regularly pay out. I live in a 2-income household so matters of money are something that must be discussed. My husband and I weighed the pros and cons together and found that we could afford the salary cut.
And it might even be worth it for the reward of a new career that brought more passion, more balance, and more overall fulfillment. And besides, if I couldn’t afford the salary cut then the above points wouldn’t matter to my decision.
All in all, taking the leap of faith in a new job, with less pay, was the best move for me. Keep in mind, there are other reasons people consider a salary cut like a shorter commute, move to a new city, you’re unemployed, you’re transitioning to non-profit, and many other reasons.
Every scenario is different
Is the prospect of taking a salary cut a risk? Yes, it is, so weigh the pros and cons.
You just might find that in your scenario that taking a pay cut for a better job is a risk worth the reward.