Discover your dream Career
For Recruiters

When It's Wise (And Not) to Take the Dreaded Pay Cut

The idea of taking a pay cut is anathema for all working professionals-especially for finance execs used to handsome compensation packages. But many are finding their paychecks and pocketbooks to be much leaner this year. For those impacted by a slash in pay, unlike before, most are choosing to stay put, says Ken Murray, president of Mercury Partners, an executive search practice for front office finance professionals. He says it's just too difficult for finance pros to replace a position.

In an interview with eFinancialCareers, Murray says it's different if you're thinking of looking to a new employer. Then, he says, it's verboten to accept a pay cut, unless there are serious "extenuating circumstances." Most employers will fear that the prospective employee taking a pay cut is simply there for the moment or is in some way not as competent as their peers.

So, what are those "extenuating circumstances" when it's ok to consider a drop in comp:

-After a Layoff-Jumping for the first lowball offer is certainly a bad move, even after a layoff. But the job candidate also needs to assess just how long is too long to stay out of the job market, says Murray. If you've been unemployed for some time and you haven't gotten many offers, then maybe, just maybe, you're shooting too high. "It's like selling a house," he adds. "The longer you wait, the harder it gets. At some point, you'll realize-too late-that you passed on a good offer."

-Changing Locales-If you're moving to another area of the country, do your homework and check into the cost of living in your new city. If you're moving to a location that's much cheaper housing and tax-wise, then a drop in pay may not mean much. In fact, the pay difference may simply be an adjustment to the region.

-Moving into a Different Role or Sector-It's not always expected or wanted, but finance professionals sometimes need to shift gears and move into another role or sector. Sometimes, the writing's on the wall, to quote the old adage, and it's obvious your sector or department is soon to be the next dodo of the financial world. Other times, the once hot product is not so hot anymore, to say the least.

Lars Gloessner, manager of global markets for North America at Huxley Associates, an international recruitment consultancy, says that this is just what happened to those working in the structured credit space a few years back. "They had to take a step back and look for new opportunities," he says. "When you move into a different space, your knowledge simply isn't as valuable as it was before."

author-card-avatar
AUTHORMyra Thomas Insider Comment
  • Ja
    Jay
    25 July 2011

    I wonder when is it too long if you don't have your ideal job. At this point in time, as a fresh MBA graduate and some experience, it is tough to find the career that not only compensates well but also aligns with one's interest. I am currently going through this situation. I want to get into investment management and I have been trying for the past three months, trying also includes networking with high level investment management professionals. At some point school loan deferment is going to expire and then one has to settle with what he or she can get to just keep up with the bills..... any suggestions for fresh graduates?

  • Ja
    Jason
    25 July 2011

    Another example is when PhD-level finance executives leave Wall Street to re-join academia or an industry research lab.

  • fr
    friendly
    25 July 2011

    Non-profit often has more stable finances. If you work for a hospital, university, or big charity, you may get better benefits, retirement, even housing subsidy. If you have useful business skills, you can help rationalize less-businesslike organizations, and you can help society.

  • su
    surfer1
    19 July 2011

    Moving into a Different Role or Sector

    Would also add that if you move from for-profit to non-profit, then you should expect comp to be lower. For example, a risk manager for an endowment can expect to be paid less than doing the same job at an IB or HF. On the other hand, stress level may be much less at the endowment.

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
State Street Corporation
Software Engineer - Payments
State Street Corporation
Quincy, United States
State Street Corporation
JAVA Development Lead, Assistant Vice President, Onsite
State Street Corporation
Quincy, United States
State Street Corporation
Offensive Security External Red Team Lead
State Street Corporation
Quincy, United States
State Street Corporation
Emerging Technologies Governance Lead, MD
State Street Corporation
New York, United States
State Street Corporation
Azure Platform Engineering Lead, VP
State Street Corporation
Quincy, United States
Linux Engineer
Chicago, United States

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.