As a top-billing headhunter for roles ranging from Chief Executive to Analyst, I’ve seen thousands of people take or reject opportunities which resulted in life-altering results. It’s scary how small decisions and moments of hesitation can truly create an unintended “butterfly” effect that can escalate or stymie progress.
Maybe that’s why as a species, we’ve always been so fascinated by time travel and the idea of fate/destiny. The thought that, had we done something else, our world would be entirely different. This is the BASIC concept of Opportunity Cost.
I first encountered this game-changing concept in highschool during my AP Economics classes. As someone who is anti-establishment and skeptical of the value of traditional education, I cannot deny how valuable those Micro/Macro Economic classes were in shaping my worldview and mentality at such an impressionable age. Our teacher presented the concept of there being: NO FREE LUNCH and how Opportunity Costs dominate our lives pervasively.
As daughter of an immigrant family who used a free lunch voucher throughout grade school, I thought, that’s impossible, I used to always get free lunch and that was good thing, right? My teacher explained, opportunity cost is a lot more than what you see on the surface; the total opportunity cost is actually a lot more costly than just the immediate cash expenditure or “savings”.
As my family entered the middle class, I lost the benefit of free lunch, and rightfully so. Ironically, although the financial cost of lunch went up by $2 per meal, the opportunity cost decreased because we were realizing a higher standard of living. We were narrowing our gap as we accumulated wealth and took business opportunities to increase our net worth, mainly by sacrificing short term expenditures like fancy clothes, cars, and vacations.
Conversely, the opportunity cost of free lunch forever and ever, like many people who live on welfare their entire lives, is much higher than the actual amount of money they’re “saving”. Although financially and on paper, they’re paying less taxes, less rent, less overall, they’re also dependent on a system in which they can never fully live life to the fullest and break free from the cycle. Their opportunity cost is infinite because they are not building wealth to narrow the gap – the gap is ever increasing in their world and MORE SO as time goes on. See below:
Like the previous example of how people can be tethered to welfare systems, the same could be said of the dependency on the traditional 9-5 job.
9-5’s lull people into a false sense of stability, hence creating a mentality of complacency and reliance. Mortgages are tethered to the 9-5 and therefore many households are always on the brink of collapse because their jobs are not guaranteed and the debt to equity ratio is not reflective of true market valuation (most houses are over-priced). Especially in this day and age of automation and outsourcing, jobs have become less secure than ever! Complacency breeds laziness and laziness = lots of missed opportunities.
How many candidates have I called who don’t think they need to start looking for a job or can’t be bothered to network? If I had a dollar… The ones who get the biggest jumps in salary and the best negotiating terms are the candidates who DON’T need to look. They’re smart enough to always be in the power-position. Yet ironically, TOO MANY candidates wait until something bad happens, and then reactively look for a job. Well, guess what? That’s when the rest of the world is also reacting to the same event. Your ex-colleagues will be your new competition, and employers know that a bunch of you and your colleagues have now nowhere to go and no job. So offer values naturally will fall – basic rules of supply and demand.
Here is why complacency in your job will lead to significant opportunity costs:
#1. First of all, the financial opportunity cost in terms of higher wages, better salary/benefits, not to mention immense potential of equity packages, can truly compound over time. I recruited people for a company that stock price went from $50 to $600 in 2 years. For every person who said “no” to the role, they literally missed out on a lottery windfall (and early retirement) as the company gave 5k-20k worth of shares to each employee! You bet I wish I worked there in hindsight too!
#2. Second, the longer you wait to be promoted to the next level in terms of title, the harder it will be to become the head of a department or to be promoted at a faster pace. If you get comfortable getting incremental salary increases and stay complacent with titles, then you’ll be taking the turtle route rather than the bunny hop up the corporate ladder. The opportunity cost of staying at a lower level means you’re delaying progression.
#3. Fear compounds; the opportunity cost of delaying your dreams is that you’re digging yourself deeper into a lifestyle and thinking pattern, that will stop you from pushing yourself. What you’re used to becomes more ingrained; as your family expenses grow and the dependency on certain amenities increase, it will be harder to cut the cord to do something else or take a chance. Fear of loss and maintaining the status quo becomes the motivating factor.
In short, the 20th Century idolization of “stability” and the attitude of “leave me alone” is the same as cutting off your life support and your connection to the real world! It is the MOST DANGEROUS mentality to possess. In today’s world, to live under a safe and dark rock is equivalent to extinction. Your world will be rocked. I’ve seen it happen many a time to candidates who’ve said “no” too many times. As they say, the early birds ALWAYS get the worm.
The ones who look sooner, better yet, when they don’t need to look, are always in a better position!
The question for us all to answer is: What areas of your life are you being complacent? What are the opportunity costs of remaining in your existing mentality?
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