Careers have ups and downs. We value the ups more than we appreciate the downs. But both might have value. So here are some insights in the psychology of career loss.

Your boss tells you …

Imagine you have gone through a successful career. You have made it to a senior leadership position. You made a lot of sacrifices in your personal life to get there. But now you are at that level and you are widely appreciated. You enjoy the view. And suddenly your boss tells you to take a step back. How would you experience that?
You might say it depends on the reason for this demand. Reasons for the question might be:

• an organisational change, leading to a reduction in number of leadership positions.
• a political decision to concentrate power, and you’re not a part of the dominant coalition.
• an observation by your boss who has noticed you’re draining yourself.
• a feedback that you appear to be less qualified for the job.

The third option is an act of kindness. But the other three will be perceived as an act of violence.

and offers you …

Imagine there is more information
You’re boss tells you to step down, but offers you another job. The job entails certain appealing characteristics like: less stress, fascinating content, working in a good team. But you lose all the perks of being a senior leader, including salary, bonus, and access to the board. Basically your career (progress) is over.
Here’s a choice.
You are certain to lose the status and salary, and you might gain a certain quality of life. What would you choose?
Again you might calculate. The loss is certain, the gains are not. And you might compare what you gain to what you lose. Are the gains enough to compensate for the loss? And here comes prospect theory.

The Psychology of Career Loss

Prospect Theory has been developed by Kahneman & Tvsersky. They kind of discovered that people do not calculate in a linear  and probabilistic way when deciding under risk. Imagine that you find a 20 Euro bill on the street. You will feel lucky. You might tell some friends about that (who will force you into buying them a drink). In any case, there will be some joy.
But imagine that you open your wallet and you notice that you have lost 20 Euros. You will feel bad. You might even retrace your day to know where you’ve lost it. It will bother you. And the value of the loss of 20 Euros will be higher than the value of the gain. In other words, you dislike the loss more than you like the gain. And you’d prefer to avoid the loss more, even if that would mean you’d have to settle for less or even no gain.
The same is valid for career decisions, especially when there is a career loss. Once people get to a position, they do not want to give it up. The psychological value of the loss is too big. And if they get an offer for another job in exchange, this job is worth less. People want to hold on to what they have and want a higher compensation if they have to give it up for something else.
There’s a big difference if you’re told to accept the other job than when you can choose to do so. But even then …

Unhealthy Jobs

People hang on to their job (level and status) and compensation package. They do not want to lose. And so they take decisions that are against their best interest. A very simple example illustrates this:
We’re in the restaurant business. There are four functions: serving the customer, cooking the meals, cleaning and doing the dishes. In big restaurants there is an industrial scale to all of that. The dishes are pushed through a washing street. There are actually people working in those washing streets. The work is not healthy: it’s humid and noisy. But when management proposed a rotation scheme, people working in the dishwashing area refused. Why? Because they receive a premium to compensate for the unhealthy work. And when offered to work in the cleaning function, they’d lose the money. But the money dos not compensate for the health hazard and if it did, people would need to save the extra allowance for the days they’d need to pay for the medical care. They did not.
So even if an employer has the best interest in mind, people might not bite. In this case accepting the offer it would mean to take a certain loss now, and accept an uncertain gain on the long run.

Ageing and Career Loss

He was complaining about the work load he had at his age. The man was commuting every day, working long hours. He was tired, he said. But there’s no alternative.
So I asked if there weren’t any offices closer to his home.
Indeed there were. So why did he not work there? Impossible, he said. My boss is in this location and I should be here. There’s no way I will work remotely.
So I asked if there weren’t any jobs in that other location so that he did not have to be close to the boss.
Yes, he said. But that would mean that I step down. And I have worked to hard to get where I am. I cannot defend a career loss. My neighbours will think I have been degraded. I would lose my company car.

People stay in the wrong jobs for the wrong reasons.

We all have to work longer than the generation before us. Life expectancy goes up and so does the cost of pension schemes. So it is not possible to enjoy retirement for 35 years. But we also know that a career cannot be only about progression, upward movements. If we have to work longer, taking a step down, or taking a less paying job will be one of the options. And this should not be only at the end of the career, but also throughout the career.

Sustainable Career Design

Let’s get rid of the idea of career progression, upward motion, and remaining as long as possible at the top. If we want to make a career sustainable, we must decrease that sense of loss every time we take a step down or take another job. Multidirectional careers should be the norm. But the psychology of career loss tells us that it will be very difficult to get there.
We often talk about career planning. I would rather talk about career design. Or career crafting. And to design sustainable careers, we will need to apply what we learn from prospect theory, behavioural economics, nudging. We have to make sure people do not stay in the wrong jobs for the wrong reasons. Maybe that will be the topic of a future blog.