The Pros and Cons of Job Hopping
Traditionally, job hopping—leaving a job every couple of years for a new opportunity—has been thought of as unstable, and has therefore been discouraged. However, that may be changing.
“It’s common for professionals to explore different positions and companies when they are young professionals,” says Kristen Robinson, SVP Women & Young Investors at Fidelity. “So we think the commonly assumed myth that Millennials are job hopping more frequently is more related to the stage in their career than their generation.”
It’s not uncommon for young professionals to keep their opportunities open. And, as Robinson points out, job hopping isn’t necessarily anything new. “The U.S. Department of Labor reports the median years of tenure for employees with their current employer has consistently been around three years for those ages 25-34 years old from 1983 to 2014.”
However, the stigma behind job hopping is evolving in an interesting way. It’s important for professionals of all ages to understand how this trend is unfolding.
HOW THE JOB MARKET IS CHANGING
In its 2016 Evaluate a Job Offer Study, Fidelity found that 49 percent of Millennials “are either actively looking or always open to new employment opportunities.” Again, it’s common to think three steps ahead when you’re young, but many experts say this attitude has a lot to do with the way the job market has changed in recent years.
“This trend is changing quickly due to the 'free agent’ economy,” says Eileen Timmins, Ph.D., Global CHRO (Chief Human Resources Officer). “In the past there were benefits that kept employees longer, like a pension or a matching 401(k) after X years.”
Of course, many companies still offer these perks, but as Timmins points out, the gig economy forces workers to focus on their individual upward mobility, rather than their tenure with a specific company. “Many times in a job change, the new employer pays more to attract you," she says. "If you can show a promotional opportunity in the job change, that will assist in your career a lot.”
HOW IT VARIES BY INDUSTRY
“Companies in traditional industries like pharmaceuticals, banking, and auditing view frequent movement as a negative ... these kinds of companies are skeptical of candidates who hop from one firm to another and see that as a problem,” says Roy Cohen, career coach and author of The Wall Street Professional's Survival Guide. “Movement implies dissatisfaction and that message has the potential to damage even the most pristine company reputation.”
However, in other industries—e-commerce, digital advertising, startups—it’s quite the opposite, Cohen says. “Lack of movement raises a red flag. Without the battle scars and exposure to different strategies that are a byproduct of hopping, candidates lose credibility. There is benefit to sharing war stories and lessons learned.”
THE ADVANTAGES OF JOB HOPPING
Of course, the most obvious benefit of job hopping is potentially higher pay. Depending on your skills and experience, a new company might be willing to pay you quite a bit more than your current one. Beyond that, though, there are a handful of additional benefits.
You potentially gain new skills, for example. Maybe your new job requires you to give the occasional presentation; this means you will learn to put together slideshows and speak in public, both of which can bolster your resume. You also diversify your experiences by switching to a new company. Working in a new environment with new people exposes you to a variety of company cultures and a larger social network.
It seems many young professionals also seek jobs that align with their values. In Fidelity’s study, respondents were willing to take, on average, a $7600 pay cut for an improved work life.
“What makes an offer more attractive is of course unique to each person,” says Robinson. “However, for many Millennials, perhaps the new position offered better career development opportunities, or more purposeful work. In fact, when asked which is more important when evaluating an offer—financial benefits or improved quality of work life – 58 percent chose the latter. So if a professional can achieve a better quality of life at work, that’s a clear benefit.”
THE DRAWBACKS OF JOB HOPPING
Despite the changing market, not everyone has come to terms with the job hopping trend. “Whether it is fair or not, job hopping is still viewed as a liability by many hiring managers,” says Cohen. “I have spent countless hours advising clients on how to explain a spotty employment record.”
While it will again vary by industry, some companies may factor your loyalty into periodic raises or promotions. Of course, if you’re leaving for a job that pays significantly more, this issue may not matter. On the other hand, a short tenure may cause you to miss out on certain benefits.
“You may lose what your employer contributed to your 401(k), stock options, or other stock compensation if you weren’t at the job long enough to be vested,” Robinson says. “For example, that $10,000 your company contributed to your 401(k) plan may vest at 20 percent per year over five years. So if you leave after the end of the first year, you could keep only $2000 of the contribution. After two years, you could keep 40 percent, etc.”
To weigh the financial advantage of one job over another, Fidelity developed a Job Offer Calculator that factors in those benefits.
BEWARE STAYING TOO LONG
On the flip side of the coin, staying with a company for too long can have a negative impact, too. “If it’s been 10 plus years, they may view the applicant as being change-averse,” says Timmins. “Especially if they were in the same [position].”
Even if you’re not actively searching, Timmins recommends keeping your job options open. “Always listen for opportunities,” she says. “Listening is much different than interviewing and applying. Listening creates networks and new connections, so when you make your decision to look or search for new work, you have a wider network to connect with.”