As a product manager of my own job search, my pricing policy or desired compensation is a key tool in my employment marketing mix.
When marketing products, a pricing policy can be designed either to sell many units at low prices or to sell fewer units at high prices. By analogy, if a candidate seeks compensation below market, she has a better shot at receiving multiple job offers. On the other hand, by seeking higher compensation a candidate will probably repel, or "skim," several prospective employers out of the consideration set. In my search I am trying to position myself somewhere in between, as I don't want to risk being priced out of potential jobs with firms I am interested in.
Others have advised me to focus my pricing decisions on the total compensation deriving from various benefits along with salary and bonus. However, I find it easier to focus on two variables: monetary compensation level and job content. Job content and the career path opportunities it opens up is the main driver in my decisions. For other individuals, maximizing their price (compensation) in the near term maybe a superior strategy - for example, when a profession has reached a maturity stage.
Look Ahead When Weighing Compensation
At this point in my career, I view certain job opportunities with high immediate payout as potential career traps. This remains one of my biggest concerns as I screen job opportunities. Other jobs with lower current payout may be superior choices from a job content standpoint, because the underlying career path potentially leads to greater future income whose present value would exceed that of a currently higher-paying alternative.
Economists have laid out a theoretical foundation for such decisions, rooted in the human life cycle. If individuals are perfectly rational, they can maximize their happiness function and consumption at any point in time by borrowing against their future income stream. This would lead me to pursue my ideal job regardless of its current monetary compensation. In practice, however, my consumption level and choices are always affected by my employment situation here and now - so I cannot simply ignore a position's current payout when reaching a decision. Also, accepting a lower-paying job that promises far greater income in the future involves taking a risk.
Each individual has a personal, subjective level of risk tolerance. A person's risk tolerance often varies over the course of his or her life cycle. Most people become more risk-averse with the passage of time.
In my case, my personal career vision, risk attitude and my desired employment time horizon are the drivers of my pricing policy decisions. At any point in time, my pricing policy or desired compensation is primarily a function of the risk that I am willing to take on myself and in my career.
James Weldon (a pseudonym) is a portfolio manager. His weekly column delves into his strategy and tactics in searching for a new job after he was let go by the hedge fund group at a bulge bracket investment bank in New York.