Why it's Easier to Get a Payrise by Switching Jobs

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It’s an empirical fact that it’s easier to get a payrise if you’re negotiating a new job than if you’re negotiating within your current job. When I look back over my own career, every time I’ve worked somewhere longer term (over a year), payrises have been a hard struggle. Whenever I’ve switched jobs, my new pay has made all payrises at the previous job irrelevant. These days I make job switching upfront and official: I run my own business and most of my money comes from short contracts. Getting rewarded for new skills or extra work is nowhere near as difficult as before.

I know I’m not the only one to notice this effect, but I’ve never heard anyone explain why things might be this way.

The Catch-22 of Risk-Averse Organisations

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Markets are supposed to make corporations efficient, so if you do consulting, you have to wonder why so many organisations (both private and government) are so absurdly dysfunctional. The way I see it, there’s no real paradox: organisations are pushed by both forces of efficiency (like market forces) and forces of dysfunction (like political drama). Corporations are only efficient if the forces of efficiency are stronger.

There are many forces of dysfunction that can affect an organisation, but there’s one that’s particularly important for risk-averse organisations (like banks and large government departments). Whenever I see people in an organisation doing something that doesn’t make any sense, I always ask if this catch-22 can explain it:

Every risk-averse organisation needs someone to take the initiative to eliminate risks. But in a risk-averse organisation, that’s exactly what no one does.

Busywork

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My first small business wasn’t actually in the software industry. Back when I was a student, I did contract office jobs in the summer holidays to pay for things while I was studying. I got a feeling that I’d be happier self-employed than someone else’s employee, so after graduation I experimented with registering an Australian Business Number (ABN) and using it to do maths and sciences tuition. I went back to working for other companies eventually, but I learned a lot from the experience, and that know-how was extremely valuable later when I quit my full-time job to start my own little consulting business.

I might write more about that experience some other time, but for now I want to write about what’s been hardest for me to get used to: when you’re self-employed, no one cares how much work you do.