Which is a Better Career Strategy: Staying with One Company Your Entire Career or Switching Companies Regularly?

I've often said that your career is your most valuable financial asset, offering you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime.

Given this, here's an interesting question:

Which is a better career strategy: staying with one company your entire career or switching companies regularly?

In other words, which do you think maximizes the potential of your career:

• Finding a great company (or maybe a few over a 40-year career) and working for them during the course of your career -- getting promoted through the ranks?

• Switching companies frequently (though not too frequently to cause concern for potential employers) to move up the ladder and get more pay?

I've had discussions with friends that have tried it both ways, and they each have their merits. I'll save my thoughts on what I think those merits are as well as what my personal preference is of these two choices until after each of you has had the chance to weigh in on the issue.

So which is it? Which is the better choice?

Comments

[broknowrchlatr]

In many cases, I can see why switching can be better. You can use it to get more money, different job description, better scenery, etc.

After you get well in to your career, I think it is more likely that you will be financially better off staying with the same company. For me, it is an easy decision. I get long term incentive cash that vests over 4 years. If I leave, I loose it. Even if every company I go to had the same, there would be a few years to build it up. I also get restricted stock on the same schedule. In addition, I get stock options that vest over 4 years and expire in 10 years. If I leave, not only do I lose what hasn't vested, but I have like 30 days to excercise the options that I have earned.

If I stay on till I am 59.5 and retire sometime after that, my preferred stock and options will immediately vest and I will still have the full 10 years to excercise the options.

Because of this; the longer I stay, the more the company motivates me to stay. For me to leave, I would have to be offered the same salary and bonuses plus about $25k to leave my current job, since that is about what I am sacrificing.

[rdub]

For those who are the immediate gratification types, job hopping can pay off in the short term by getting more money with each new job change. However, if you are looking to retire and live well in that retirement, it could be a problem. Many companies have a minimum amount of time that you must work before you are eligible for their 401k program. Then after you work that minimum amount of time and get into the program, it takes even more time to become fully vested. For my company, that took 5 years (minimum 1 year before eligibility, then 4 years to fully vest). This pays off more for the person who stays a long time at the same company. If you job hop it will take much longer to get that retirement nest egg (potential loss of 1 year of savings opportunities with each job change). And we all know that most people don't save as much as they need to for retirement as it is, so do you think that they would save that extra income they get from job hopping? Probably not.

[Lord]

I would generally recommend staying until blocked and then changing. With many companies it is up or out, so if you aren't moving up, it is time to move on. It is easiest to change when young and hardest when old, but there is often not a lot to gain when young but much to gain when old if you can do so successfully.

[Derek]

One thing to keep in mind is quality of life. If you are changing jobs often, you will build up vacation. Vacation can become a significant amount of your pay package after a large number of years, once you start to have 4-6 weeks off a year.

[Lord]

(One problem is you may be happy in your job, but if you work for one of these companies you have to move on anyway, preferably before they decide to move you on.)

Moving judiciously will almost always give better monetary results. There's a reason it is called the job "market." The market will respond positively to those who arbitrage their job into a different position. The point is to only change when the cost of staying outweighs the cost of leaving. Most decent sized companies feel the same way about your job. They won't hesitate to move it elsewhere, stop giving raises, or eliminate it altogether.

Of course, there's a social cost to all this which also needs to be factored. And there may be external costs (eg moving, your partner's job).

[The Happy Rock]

I don't have the experience to speak from experience, but I know it is frustrating when you compare what you could be making if I switched jobs to what you are making the current position.

Logistically, right out of college, you really aren't in a position to choose the best company for a career position.

- The Happy Rock

@Derek: 4-6 weeks off a year - Do you work in europe somewhere? :) In my career area, the norm is 3 weeks max, starting at 1 to 2. 4 to 6 is a relic of a bygone era if your job can be moved to India or China.

[Jay Monroe]

Its unfortunate that so many cling to the idea that some company will actually keep you around till you are of retirement age. The long term corporate loyalty syndrome died in the 80's during that era's deep recession. In a world economy where jobs are threatend by offshore services, it is foolish to cling to false job security.

Move around as it best advances yourself, or even better yet, cast of the embelical cord of employee status, accept some risk, and start your own business and enjoy the fruits of your labor.

[Suze]

Jay, What recession of the 80s? Those were the Reagan years, the go-go years in many people's minds. I lived through them, relic that I am, and I don't recall a deep recession.

Corporate loyality did start to wane in that era, mostly due to the number of leveraged buyouts, layoffs and the slow dying off of traditional defined benefit pension plans.

If it makes financial and emotional sense to switch jobs, than I would do so. I do think you can gain a bit financially by judiciously switching companies. A lot needs to be factored in -- benefit vesting, costs of moving family, long term job growth -- when making the decision.

[PT]

Moving on to "greener" pastures is the way to go. It's helped my bottom line to stay flexible and on constant lookout throughout my career. I never thought I'd be making what I'm making now two or three years ago. I'm in a profession that's taking off, but I truly believe it's been my ability to move on to the next gig that has made the difference.

I remember two recessions in the 80s. Early and late. The first was really a continuation of the 70s oil-crisis recession. I was too young to remember much about it though. The second started with the housing decline of the late 80s and continued until 92 or so.

The leading part of the late 80s recession may have been regional, but it was nation wide by 1990.

As bad as those days were for job hunting, I pine for them myself. Blue collar jobs were hard to get then, but I had just educated myself out of them and into the (now somewhat endangered but then more plentiful) white collar jobs.

> accept some risk, and start your own business

Careful here. Until you have mouths to feed that risk is negligible. But the safety net in the US hasn't been strong for a couple decades. If you can't buy health insurance on the private market for a sick kid, the reward for that risk will not seem so enticing anymore.

[Anitra]

Other commenters have already stated the benefits of staying with one company - increasing benefits, vesting, and security. You'll also get to know your company's business inside and out, and become even more valuable (if you're smart about it). However, all of that assumes that it's an option for you to stay.

[Mike]

I think it's completely dependent on your situation. For one person the moves might be a no brainer. Once I was offered a better position, with better prospects for advancement, at a better company, and a 40% raise. Who wouldn't choose that? Someone else might be in a great company where they're recognized as a top performer and they're being given fast track advancement and great experience by staying long term. Who wouldn't choose that?

Everyone has different priorities too--for some the paycheck is the only thing, for others benefits, workload, or commute time might be just as important. Some may want to move up that ladder overnight, but others might be quite happy staying out of the management ranks.

If I had to pick a general answer, I'd pick moving. I think you can get bigger raises faster that way, and since raises are cumulative, all else being equal you end up ahead. I also think you get better overall experience by having multiple companies in your background.

But that answer is undoubtedly colored by my own experience--someone in my "starting class" at my first company who stayed all these years and got promoted fast would probably give the opposite answer (even though probably 95%+ of that starting class is gone by now). In any case, I'd recommend staying prepared for a move, and at least periodically checking the market to see what's out there.

[Big Cheese]

I have to agree with 'Lord.' Always keep your options open and look around and then only leave if you get an offer you can't refuse. You also need to think about your career 'story' over time that you can explain as to why you made the moves you have... hopefully it's not only about making more money rather personal reasons, personal growth, bigger opportunities, industry trends, etc.

For those who have vested money or better vacation this only increases your negotiating power in a new job. I just moved into a new company and kept 5 weeks of vacation by negotiation. You can also get great sign on bonuses or stock in the new company if you can negotiate well and are patient. Exceptions are made all the time if the new company thinks you are worth it. And if they don't - stay with your current company!

You have more power than you think if you are in a good current job and happy. This is the time to find the better job, not when your back is against the wall- you will almost always be in a compromised position from a negotiation perspective.

Good luck!

-Big Cheese