Professionals are no longer staying in the same career for a decade or more. In the 2001 book Careers: an organisational perspective AMG Schreuder and Melinde Coetzee say the average person will change careers five to seven times during their working life, and 30% of the workforce will change jobs every 12 months.
As the world becomes more tech-savvy, it’s expected that professionals will look to gain new skills and explore new interests while adjusting to the career trends of the future. At least a third of the activities of 60% of occupations could be automated, meaning that globally up to 375million people might need to change jobs or learn new skills. This is according to a McKinsey report “Jobs lost, jobs gained: workforce transitions in a time of automation”.
Before you change your job, it is important to think about the reason you are doing it. Is it to gain more exposure, a salary increase, for a more senior position, or better benefits? Whatever the reason, you need to consider the financial impact on your life.
In South Africa, the unemployment rate among graduate professionals is at 7.3% of the unemployment numbers, according to Statistics SA. The importance of making calculated decisions must be weighed carefully in the context of financial health. Resigning without employment other in place can negatively affect a professional’s career and their family, as finding new employment has some spending months in the job market without success.
Most professionals consider a change to improve their financial prospects and long-term stability - this means that things such as company benefits and incentives become important. According to a survey by Randstad US, 66% of professionals agree that a strong benefits and perks package is the largest determining factor when considering job offers, and 61% would be willing to accept a lower salary if a company offered great benefits.
There has been a growing number of companies offering wellness or mental benefits and other employee benefits in the hope of boosting productivity, health and well-being, as well as attracting and retaining top talent.
Before finalising the decision to move, scrutinise the employee group benefits. Compare your potential new employer’s benefits with those of your current employer, and the amount of life or disability cover provided. If the group benefits are lower, check whether the salary increase is higher and how this could impact on the amount of money required to attain the same level of cover.
In order to make employee benefits possible, employment costs contributed 15% of total expenditure in the business sector, which includes salaries and wages, bonuses, medical scheme, life insurance benefits, pension benefits, and other employee-related costs/benefits, according to Stats SA. It vital to weigh up all the options, from the salary to company benefits, and other obstacles or hidden gems.
Consider the impact on your financial plan and your journey to attaining your financial goals. Ask yourself:
* Does the new employer offer pension savings, a medical scheme and group life cover benefits? How do the benefits differ from my current benefits?
* Are the protection levels similar to the ones I enjoy?
* If there are differences, how will this impact my disposable income and budget?
* Have I factored in how my group benefits affect my financial planning and supplement my overall cover?
* What are the best options for my accumulated retirement savings: transfer them into the new company’s pension or provident schemes; open a preservation fund; or transfer the capital into a retirement annuity?
While a new career and a change in scenery might bring about new-found passion and excitement, it’s a step that shouldn’t be taken lightly. It requires a significant amount of thought, consideration, time and investment to make the change smoothly - think about your long-term goal and, most importantly, plan for it financially.
Fadlah Hendricks is the head of Experience, PPS Financial Advisory.