Is job hopping a good thing?

Many people wonder if job hopping is a good thing, especially when you hear that your parents and grandparents only worked for one employer their whole life.

The pandemic gave rise to many job phenomena worldwide, including the ‘great resignation’ and the rise of the ‘contingent worker’, but if you consider changing jobs you must consider the opportunity cost, as staying with a company might be more financially beneficial eventually.

“Traditionally, people’s career moves were motivated by salary gains but now, 70% of people change jobs to pursue better work-life balance, flexibility, a positive work environment and professional growth. However, you must keep the financial pros and cons in mind and approach the decision with a long-term mindset,” says Farzana Botha, segment marketing manager.

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Psychology behind job hopping

Joanne Barrett of Joanne Barrett Consulting – a specialist recruitment agency in South Africa – says she has seen significant job hopping, particularly in pursuit of better mental health.  “Millennials tend to job hunt to accelerate growth, while Gen Z’ers prioritise flexibility, remote work opportunities and work/life balance. They ‘hop’ if these needs are not met.”

She believes employers still see frequent job moves as a cause for concern in a prospective candidate’s CV. “Less than 18 months on your resume sends a red flag to future employers that you may not commit to a company for long. I advise staying for at least two years. Four years demonstrates consistency, dedication and commitment.”

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Salary package

When considering the package offered by your company or potential employer, there are key things to look out for that could make a significant financial difference down the line, Botha says.

“The opportunity to work remotely or in a hybrid model is a significant one as this reduces the time and money spent travelling to the office, resulting in a higher net income every month. Travel allowances and cell phone/data allowances also have benefits such as tax deductibility, but a record must be kept, so you get the full benefit during your tax return.”

Group benefits such as group life cover, income disability, pension and provident funds are also important. These are deducted before tax, improving your net income while covering you for important things such as retirement or loss of income.

Botha says if you do change jobs, be sure to preserve your retirement savings. “Cashing out a lump sum means losing out on the magic of compound interest. You may never catch up to the total you could have accrued.”

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Financial pros and cons of job hopping

A job hop often comes with a salary increase too and this is an obvious incentive, but at what cost? Staying in one role may have benefits you cannot immediately quantify in terms of monetary gain but could be better for your finances overall.

These include:

• Becoming an expert: When you stay in a role with one company, you position yourself as an expert in your field. You become increasingly valuable as a result and can ask for more money for the same job because of the skills and efficiencies you bring to the role. It is essential to speak up to make your value known.
• Pep up your rep: It also gives you time to establish a good rapport and reputation. The trust you earned and your commitment to the company could make you eligible for more senior roles. Promotions usually come with immediate remuneration and the opportunity to learn new skills, which greatly increases your market value.
• Mentorship matters: Organisations tend to invest in talented people who show potential and commitment. This may mean executive development and mentorship opportunities, which coupled with prolonged experience in a role, could significantly improve earning potential.
• Loyalty is loved: Many organisations reward loyalty and performance excellence with share incentives and therefore the long-term value you get from an organisation could outweigh the incremental salary increase you get from changing employers.

Botha says while job hopping might offer short-term financial gains, staying in a role long-term may mean significant long-term financial benefits.

“When considering a job offer, it is essential to look beyond the immediate salary and consider other benefits, such as remote work opportunities, group benefits and other allowances that can make a significant difference in your net income down the line.”