Managing Personal Career Risk

Several conversations I’ve had in the last week made me want to capture some thoughts on how I think about risk in your career decisions. So many decisions come down to some version of “what’s the upside” versus “what’s the downside”? I’ll run through a few concepts I try to impart and then use an example or two to illustrate how differently things can play out from the same situation. This post builds on a few ideas I laid out in an earlier one entitled “Career Choices”.

How do you perceive risk?

One lesson from my grad school experience (Yes – I actually learned something!) was a simple psychological one. Our professor challenged us to think about the question “how comfortable are you with different types and amounts of risk?”

He then loosely categorized personalities as:

  • “risk averse” (ie: any loss is painful. Will settle for more certain outcomes)
  • “risk neutral” (ie: ambivalent about risk and thus able to weigh both upside and downside and go with best choice.
  • “risk seeking” (ie: willing to bear tremendous losses in search of big gains.)

Personally, I’m risk neutral. I’ve been willing to take some creative fliers in my career and make big changes, but always felt they were calculated risks with limited downside. Or least bearable downside. I’ll discuss one example later.

So, how comfortable are you with risk in your career and what works for you? A few questions that I ask people (and myself) when faced with significant decisions include:

(Note: Major assumption for this is that you have gone through some thinking about what you want. I have written about this in prior posts and will try not to repeat myself here. )

  • What can you/can’t you live with? Some things may have great aspects, but some of the tradeoffs simply won’t work. Simple examples could be “great job, but pays half of what we need to be viable” or “Perfect position, but I can’t re-locate right now.”
  • How bad is the worst case? If you completely blow it, how bad is it really? There’s a big difference between “I move back into Mom & Dad’s basement for a few months” and “I lose the house and can’t cover the kids’ private school tuition.”
  • How big/exciting is the best case? If everything works out, how cool is the upside? If the upside is your life-long dream, it may trump all other considerations.
  • What’s you’re most likely outcome? In a probabilistic world we all know you can’t count on a specific outcome, but given what you know what do you think is likely?
  • How many of the outcomes are attractive (or at least acceptable)? Again getting at probabilities.

So let me pose two examples that I see quite often. The first is a student coming out of school with several choices available to them and the second is a mid-career professional (in this case me) debating a move.

Soon to be graduate

This candidate has a good job offer at a stable, respected company. They are also pursuing several very competitive and prestigious positions. They have an “exploding offer” from their summer employer, meaning that they will have to decide on the “bird in hand” before they have any input on the prestigious “birds in the bush”.

So what do you do?

Well, it depends. I’ll paint two different scenarios that I think are entirely reasonable based on your risk profile.

Scenario 1: The good offer I have now is OK, but I just can’t see myself doing that for the next 2-3 years. The work is too easy for me and as a result I think I will stagnate.  I’m going to roll the dice and see how the more exciting path works out.

In this case, my push back includes:  “Do you really understand the position?”, “Can you make the position more than it is on paper?” “Are you OK if other alternatives don’t play out as you hope?”

Scenario 2: The good offer I have is OK, but not my dream job. There are other roles I am more excited about, but I can see myself in this job.

Here my pushback is focused on probabilities and comfort level with getting to the end of recruiting and having no offer. I’ll also ask whether they have explored the position and can they make it more than it is.

After I grill people and make them play out the scenarios they have to make a choice. In the last several years I have seen people go both ways and think that they are usually making a good choice for themselves. It comes back to how good or bad will you feel based on where you land on the payout matrix. If you are comfortable taking the risk and the offer in hand makes you depressed then turn it down in good conscience. But if you can’t bear the thought of not having something, then take the offer and focus on being excellent at it and making it more than it is by going beyond the role.

The point is to be thoughtful about your own sense of self and career. Own the decision and then move on and make the most out of whatever path you take. My point to students coming out of school is that they are so early in their careers that almost any choice they make that authentically reflects their values will work out. They have nearly infinite time to adjust.

Mid career

So now you have more mileage and have accumulated commitments; family, house, expectations…

I’ll give an example from my own experience. In a prior life at 3M I had an opportunity to leave a stable, prestigious position that I enjoyed for a different position within 3M that I felt was more entrepreneurial. It also was treated within the HR system as a “project” which meant it wasn’t tied to an existing product P&L. That means if the project doesn’t go well, you’re on the “unassigned list” and on your way out the door unless something unusual happens.

My prospective boss was someone I knew and respected and he’s still a good friend today. I was frank and said I knew the risks, but was really interested in the autonomy and the specific industry so I was committed to making the move even if it didn’t work out in the end. He told me something to the effect of,” don’t worry. If this doesn’t work out we’ll find something for you. “ I told him I appreciated the sentiment, but we both knew full well that neither of us could control the outcome if things didn’t go well.

At the time I had two kids and a mortgage. I weighed my personal goals, career aspirations etc. against the downside risk fairly carefully. I decided that the risk of NOT taking it was larger. You only get so many good pitches to swing at and this seemed like a great one. I felt fairly confident I could find another job in the Minneapolis market in 3-6 months and had a sufficient cash cushion for longer than that.

In the end it went well for me, but had it not I was OK with the downside. And for me personally staying where I was had more risk because I get complacent if I’m not stretching myself. I also got to move to China briefly, travel globally and learn a ton. So the potential payouts were well in my favor and the downside risk seemed acceptable.

As evidence that it can go wrong, a similar venture started at the same time in the same business didn’t go as well and a number of people were “unassigned”. Many found internal positions, but many didn’t. It can go either way. Often for reasons entirely beyond your control.

Closing Thoughts…

Let me offer a few platitudes that are mostly true in my experience.

If you can’t take simple risks, like being daring in a class assignment in school, how will you ever take them when you leave? I would challenge you to be more daring, but we are who we are. It’s OK to be OK with what you have. As a student of mine pointed out just today, not everyone wants to be a leader or run everything. That’s an important realization. Just don’t expect the benefits of running everything if you’ve made choices to settle for less.

A bird in the hand is worth two in the bush. Having a tangible opportunity is very valuable. It gives you a platform to perform on and earn invitations to bigger things. No one will know how good you are if no one sees you work. I think people become too enamored with “the hardest thing to get” and prestige. There are lots of ways to achieve your goals, don’t get too locked into only one path. I also think people fail to adequately explore or understand the “cool” things they want assuming the coolness will overcome the difficulties and hardships. As a friend of mine once put it, “The grass is always greener, but all lawns have to be mowed!”

Don’t worry too much about individual choices. Most things will work themselves out in the long run if you are patient and diligent. Much success comes from “mistakes”.

Don’t have regrets. I don’t know many people who regret things they did. But I know A LOT of people who regret things they didn’t do. The Marines call this making “errors of commission” (ie: proactively learning). These are usually good mistakes. You learn. “Errors of omission” are things you didn’t bother to do or take action on. Bad. Passivity leads to victimhood. Also, sometimes the risk is not taking a risk.  This can cut both ways though.

Calibrate the consequences. Losing the house is different than losing 6 months early in your career. Scale of potential mistake is a big deal. I don’t mean to minimize it. This is why its so important to understand your own comfort with risks.

Timing is everything. When can you afford to take risks?

So think through what matters to you and come to terms with your comfort level with career risks.

Related posts:

On making career choices: https://philscareerblog.wordpress.com/2009/06/06/career-choices/

Starting transitions: https://philscareerblog.wordpress.com/2008/10/04/exploring-interests/

It’s your career: https://philscareerblog.wordpress.com/2007/03/19/its-your-career/

Dreams: https://philscareerblog.wordpress.com/2007/03/11/dreams/

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2 Responses to Managing Personal Career Risk

  1. Nick Myers says:

    Hi Phil,

    Nice post. I just went through an exercise like this myself and it’s good to read your perspective. I’d put myself in the middle risk category. I think of people in the aggressive risk category as born entrepreneurs. I wish I was there sometimes as the risks can pay off but I’m not sure it fits my comfort level. And I feel it becomes harder for me to take greater risks as I get further along in my career and life.

    If you’re good enough at your job and trust in your abilities it’s easier to take greater risks as the downsides aren’t as extreme as for others. Your experience is a perfect example. I have no doubt that if your 3M project had gone downhill that multiple opportunities would have presented themselves to you. Why? Because, you’re exceptionally good at what you do but also because you minimized your risks by maintaining strong relationships with your network.

    One last thought – managing risk isn’t just about assessing risk. It’s about setting yourself up on each play.

  2. Nick – I totally agree on the “setting yourself up”. I tend to think of it in terms of exit strategies. Kind of how venture capital guys do on a deal. (If it all goes south, can I dump it and remain relatively whole?) I also think your point about the power of your network is an important one. I’ve written on guanxi before. It’s a hugely important career (and life) reality. The more people that think positively about you, the more opportunities will come your way.

    You’re smart to stay true to yourself as a “moderate” risk taker. If you can’t stand the downside, then don’t get in the game. Who knows though. It may be when you’re 50 that a really cool opportunity presents itself to do your own thing or join a start-up. It’s not only a young persons game. You just have to have ideas and/or stay engaged with a community that spawns new ventures. I’m having fun because the U of MN and a number of my students spin out ideas all the time.

    Thanks for the comments. I will look you up next time I’m in the bay area. I’ve been meaning to get out there for the last few years and haven’t gotten it done yet. I really miss our old teams from the Chevron days. I got a huge kick out of working w/ you and Peter, Sophie etc.

    Hope all is well.
    P

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