Resist the two-year itch

A study postulates what one has long suspected — job-hoppers don't fly.

The IT and BPO gold rush in India has led to plentiful job opportunities for young Indian professionals in the past decade.

At the same time, the lucre of moving jobs at short intervals has brought near-term, almost instant, financial rewards to young professionals.

However, if one takes a step back and looks at the effect of this churn on the individual’s long-term career prospects, very telling data emerges, suggesting that job-hopping is neither the wisest career strategy nor the best approach to acquiring long-term wealth.

Evalueserve, a global research and analytics firm, recently conducted 70 interviews with vice presidents, senior vice presidents and human resource executives in prestigious Indian and multi-national companies in India from a representative set of industries.

The results showed the impact that job-hopping can have on the careers of young professionals in India. The findings could be relevant not only for young professionals, but also for companies recruiting and developing professionals in order to fuel their growth.

Seventy-three per cent of the respondents interviewed stated that spending more time with the same organisation provides better exposure to various functions within the company and, therefore, provides better overall learning and career momentum. This percentage was remarkably high (83 per cent) among the business unit leaders reporting directly to the CEO.

Among the business unit heads, 63 per cent stated that staying with the same company increases the company’s trust in its loyal employees’ capabilities and, therefore, is willing to invest in and send them on global assignments.

This can increase the employees’ chances of a success since geographic mobility and experience is an important ingredient for successful careers in the present global business environment, which was not necessarily the case a decade ago.

For employees looking for diverse experience, moving within a company appears a better option. A big number of business unit heads — 71 per cent — said that multiple career steps within the same company accelerates a professional’s career more than many horizontal moves across companies, as each time the person moves to a new company, he or she spends significant time learning about the new organisation and building a reputation within the new environment.

Likewise, 74 per cent of respondents said that in-depth knowledge is more important than working in different industries. It, however, is important to have experience in a variety of functional areas across the company in order to reach senior management positions.

What employers want
Established, large (and slow-growth) organisations may provide a sense of job security, but it is at young, fast-growth companies where employees can get learning and career momentum, said 73 per cent of the respondents.

A majority of respondents (64 per cent) of the survey directly reported to CEOs and were considered to have successful careers. The remaining respondents (36 per cent) were selected for the survey as they had experienced a rapid growth in their career.

Interestingly, it was noticed that 49 per cent of respondents were successful managers who had worked with a single company during the first five years of their careers, though at various positions and another 43 per cent had worked with only two companies.

The results of this study are consistent and highlight the fact that job-hopping every 6-24 months can severely damage long-term career momentum and even wealth creation.

Most of these choices are made for the wrong reasons, such as prioritising money over learning, succumbing to peer pressure or naively believing everything they are promised regarding the new position.

It is seen that often people are driven by money and do not consider important issues, such as the future employer’s organisational culture, the new job profile, opportunities for learning and career development, and the experience of future seniors and colleagues.

On the other hand, employers strongly value loyalty at previous positions and evaluate candidates accordingly. Loyal employees also receive better exposure to geographic and functional man-agerial opportunities, which accelerate their careers when compared with “job-hoppers”.

Multinational companies also support this view. Kerry M DiSalvo of Deutsche Bank says, “The financial service firms, using either third-party or captive options for support, tend towards hiring loyal, dedicated individuals with sustained professional experience. These hires will have worked for each firm for a minimum of 3-5 years, progressing through the ranks. It is here a firm finds employees with whom their IP [intellectual property] can be most trusted.”

Foreign companies also place a lot of value on continuity and loyalty of their vendors’ employees. Of course, increased growth immediately translates into better career opportunities for employees.

Martin Holliss, MD of Research Insight based in London states, “The maxim that ‘people buy people’ is hugely relevant. We are much more likely to place long-term repeat business with suppliers who deliver a consistent experienced team. Such stability leads to more business, more profit, more responsibility and more satisfaction. Everybody wins.”

Assuming compensation is reasonable, senior leaders also suggest that learning and career growth should be the main criteria for choosing an employer.

An analysis of successful professionals in the US, Canada and continental Europe, shows that high-quality learning and career growth during the first 5-10 years are the most important predictors for success and wealth generation, especially, as the largest share of wealth is accumulated by a majority of people during the second half of their careers.

However, in India, two years seems like an eternity to up-coming professionals, who make wrong career decisions and change companies merely for near-term, higher salaries. Employers state that this loss in career momentum outweighs the positive effect of higher salaries.

A typical example depicting India’s present situation are young professionals working in the business process outsourcing (BPO), information technology outsourcing (ITO) and knowledge process outsourcing (KPO) industries.

A majority of these professionals get the “two-year itch” and change jobs every 6-24 months, sometimes moving from high-growth companies to slow-growth captive back-office operations of large and medium-sized multi-national organisations.

Loyalists make it
A remarkable 85 per cent of the business heads surveyed considered loyalty in previous positions as one of the most important evaluation criteria for hiring and career advancement and 87 per cent of respondents feel that young professionals should not work in more than three companies during the first 10 years of their careers.

In fact, résumés from job-hopping professionals are substantially discounted, as future employers believe that if the person has not been loyal to the previous company, he or she is not likely to be loyal to them either.

In an overheated labour market such as India, where employers are forced to hire staff, these detrimental effects are not visible in the short term. However, as evidenced by the recent crisis in the financial services industry, where captive operations of investment banks have been forced to lay off employees or freeze hiring, the environment can change very quickly in India as well.

As a matter of fact, some financial services employers in India are now refusing to hire job-hopping professionals and with a slow down in the global economy, this trend is also expected in other industries.

In fact, 84 per cent of the surveyed business leaders stated that merely focusing on compensation (rather than learning and career momentum) and job-hopping every 6-24 months significantly damages the credibility and careers of young, ambitious professionals.

About 88 per cent of respondents believed that in the professional services industry factors such as leaving the previous job in bad standing or unrealistic career expectations due to peer pressure are considered to be the most destructive attributes.

Survey respondents stated that many young professionals make naïve career decisions, and do not spend sufficient time on understanding the job profile and the culture of the prospective employer. These career decisions can be driven by peer pressure (that is, one of their peers was promoted and they were not, or their self-perception is inflated, or career expectations are too aggressive given their current experience level).

Moreover, many professionals in India exacerbate the problem by leaving the job without discussing the reasons behind their dissatisfaction with their employer. Some of these job changes might be avoided if such employees were more open in voicing their concerns.

As the young Indian professional is coming of age, he too is grappling with this challenge on a personal level. A majority of young Indian professionals in their mid to late twenties have been raised in an environment where loyalty to a job or an employer was a given and career advancement depended more on tenure than on performance.

For them making this decision is not a cakewalk. They are trying to find a delicate balance between long-term career potential and short-term rewards, and more often do not have an experienced senior to look up to for guidance.

Employers need to take on the role of a mentor and provide an environment that allows employees to voice their concern, invest in enhancing the skills of the team, promote healthy-work-life balance and give them opportunities to grow within. Young professionals, on their part, should resist the temptation of near-term financial gains at the expense of learning and holistic career growth.

Marc Vollenweider, an MBA from INSEAD (France) and a former McKinsey partner, is the co-founder and CEO of Evalueserve. Published with permission from Evalueserve (www.evalueserve.com).