Fire (or keep) the Workaholics

Jason Calacanis has an interesting list of things to save money in a startup. One of his points was to fire people who aren’t workaholics. David from 37 Signals responded with a post saying that you should fire the people who are workaholics.

Both of these posts are worth reading–even if you have no intention of starting a business yourself. Behind the work you do is a problem that needs solved. Your work solves this problem. Your paycheck reflects that somewhere in the value chain, someone is willing to pay for your ability to solve that problem.

In the two articles I linked to above, both companies are dealing with very different problems. Jason’s company Mahalo basically collects the best links on a given subject and posts them to a web page. They pay editors $30 to $35k per year (from what I understand) to do this. Their goal is to create a “human powered” search engine. Obviously the bar isn’t very high for this type of work. I’m not saying that the people working there aren’t talented, but the majority of their work isn’t difficult intellectually. They are solving the type of problem that can be solved by throwing lots of time at it.

37 Signals is a bit different. Most of the types of problems they solve are a bit more involved. They have come up with some highly creative solutions in the web application space. I’m not saying that they are full of PhD level employees, but there is a level of creativity that goes well beyond trying to collect a bunch of links on a particular subject. The type of problem they are solving can’t be done just by throwing a lot of time at it.

I’m not trying to say that people at Mahalo aren’t bright or that the people at 37 Signals don’t work hard. I’m trying to point out that there is a significant difference between what is required to solve their particular problem. Mahalo prefers workaholics because they add value through their time. 37 Signals prefers non-workaholics because they are solving problems through creativity.

When you look at your own career it can be very helpful to reflect on what you are being paid for. Are you just selling your time to your employer or are you selling your creativity? Obviously there is some overlap, but in general your ability to sell your creativity instead of your time will give you better work life balance.

Best Time to Look for a Job

The best time to look for a job is when you don’t need one. That probably sounds counter intuitive, but let me explain. When you need a job, you are in the worst bargaining position possible. Anytime you put yourself in a position where you can’t walk away from a deal–or where it is hard to walk away–you lose your advantage in negotiating.

I found out about a job opportunity that would have been the perfect fit for a friend of mine. I told him about it, but he didn’t want to apply because he was happy with his current job. This is they way most people think. If I like my job, why should I go to the trouble of getting my resume ready and talking to someone else? What most people (including my friend) don’t realize is that being happily employed may make you a much more attractive employee to the company looking to hire. (If you were hiring would you rather hire a qualified candidate that someone else decided they didn’t want, or one that another employer wants to keep.) It also puts you in a position where you can turn down anything except for a truly great opportunity.

Another advantage is gaining negotiating experience. You are much better off honing your negotiating skills when failure doesn’t mean you’ll miss a mortgage payment. If you don’t have any income coming it, it probably isn’t a good time to be experimenting.

How to Jump Start an Economy?

Right now the US is trying to figure out how to jump start the economy. Most of the proposals involve sending people money from the government or temporarily lowering taxes. The idea on sending everyone a “rebate” goes like this:

When people have extra money they spend more, when people spend more businesses have to hire more workers. When more people have jobs, the earn money and in turn have more money to spend. So the idea is to “prime the pump” and get the cycle started.

The idea of lowering taxes follows the same thinking, but there has been some talk of lowering corporate taxes. The idea here is that if businesses are charged a lower tax rate, investors will be more willing to put their money at risk starting new businesses because they have a greater potential return on their investment. More businesses hire more workers and give them more money … and so on.

My question to you is this: How would you jump start the economy of a nation? Here are a few random ideas of my own for starters:

1. Make it easier to hire people off unemployment. For example, the government could give an employer a 90 day tax break on all the taxes they pay for employees that are coming off unemployment. This would help encourage businesses to hire people who are currently costing the government money and could drastically reduce the expenses of hiring someone until the company knows if they are a good fit or not.

2. Teach people how to start their own business. For example, if you are on unemployment, you have to spend at least 10 hours per week in classes designed to show you how to take your existing skills and find work as a sole proprietor.

3. Create a tax free for-profit business entity. The idea here would be to allow people to run a business without paying taxes on the profits if it is setup to employ people who are out of work. This would help attract investors because of the potential for a higher rate of return. The payouts to investors could still be taxed, but the corporation itself wouldn’t pay taxes on any retained earnings. The logic would be that retained earnings are there to help the corporation continue to hire people in the future.

So there are three slightly random ideas. What would you do?

Advice for a New Professional

Congratulations to Legal Andrew on completing the bar exam. In this post he asks about advice for a new professional. Below are my thoughts. If you have any further suggestions for Andrew, please add them to the comments here or on his original post.

1. Live Beneath Your Means

Your first year as a wage earner will really set the tone for how you spend money. Making a conscious decision to live below your means establishes a habit that will give you flexibility in the future. If you can afford a $1200 apartment, look for ones in the $800 range. When I started out after college, I tried to live on 20% of my income. Later on this gave me a great deal of flexibility that allowed me to make certain choices that my peers just couldn’t make. Ultimately these choices resulted in even better pay.

2. Look at the learning potential of each job.

Especially when you are just starting out, the money you make is less valuable than the experience. Getting a solid base of experience will be far more valuable in the long run than taking the highest paying job right out of college. For example, you might be able to get management experience at a smaller organization that wouldn’t be possible at a large company–even if the pay is lower. Pay attention to your Work Zone so you know when it is time to start looking for a different job.

3. Take advantage of retirement and other savings options

This goes along with living beneath your means. It is much easier to put money away when you are starting out, than when you have a mortgage and family to support. Most employers offer some sort of matched savings plan, so at the very minimum you should put enough into retirement to get the maximum employer contribution. Also some retirement programs allow you to save money tax free and then use the money to buy your first home. Other programs will allow you to borrow from yourself at a very low interest rate.

Even if your employer doesn’t offer any type of retirement program, the government will still give you tax breaks for putting money aside for retirement. Take the time to understand the difference between a regular IRA and a Roth.  Do some calculations to understand how each type can benefit you based on your career plans.

A Health Savings Account is another great investment tool. It allows you to save money pre-tax that can be used for medical expenses. The account stays with you even if you change jobs. By spending a few years fully funding this account, you can build up a nice cash reserve for medical expenses. In the future, this cash reserve can give you some flexibility to choose opportunities that may be very lucrative, but have little or no insurance benefits, e.g, starting your own business.

4. Take advantage of educational programs

I once worked at an organization where I was paid a fair amount based on what other employees were making, but where everyone was making much less than equivalent positions at other organizations. When I took the position, I had asked about educational benefits. They had a policy of paying for pretty much any additional schooling, but very few people took advantage of this. As a result, I had access to a budget to take as many classes as I could handle. The value to me worked out to more than $10,000 per year. More important than the monetary figure was the way the organization handled flexibility with school schedules.

To be best prepared for every future opportunity, you are going to have to be constantly learning new things. The average person finishes college and (other than on the job experience) stops learning anything new. By continually educating yourself, you hedge against outsourcing and other shifts in the market to assure yourself of always being in high demand.

5. Work for yourself

Even when you are working for someone else, you need to see yourself running your career like it is a business that you own. Your employer doesn’t owe you anything. Be the best worker possible, but don’t forget that you can work somewhere for 20 years and the company can still go out of business because of decisions that were completely out of your control.

Always maintain practices that will let you quit your job if you need to. Just having the option will keep your mindset in a much more positive state. For example, if you know you have enough savings to live for a year, it is much easier to be true to yourself and your convictions than if you are living paycheck to paycheck and just barely getting by. I’m not saying you should go around threatening to quit, but just knowing that you have the option does a lot to improve your self confidence and keeps you from getting stuck in a “master/slave” type relationship with your employer.

If you want to actually own your business someday, do your homework and learn all you can as an employee. By being prepared, you’ll be in the best possible position to launch your business when it will be the easiest on you and your family.

6. Learn to network

Start by making it a point to keep in contact with your college friends. Even just sending a Christmas card every year keeps you in some measure of contact. Most of the big opportunities in life are going to come from people you know, so increase your chances of success by not letting friendships grow stale.

When you leave one job for another, be sure you have a list of contacts to take with you of all your co-workers. You may have their email addresses and last names memorized now, but 7 years down the road simply remembering a guy named “Scott” isn’t going to help you much.

(Make sure you keep this contact list backed up. It isn’t a bad idea to print it off every few years and keep the printout somewhere safe. )

Be on the constant lookout for new people to meet. Don’t forget that you are looking to form two-way relationships. Finding people who need your help is a great way to make new friends.

7. Take vacations

Highly motivated people often overlook the need to take vacations. Don’t forget to consider vacation time when you are selecting a job. Sometimes if you can’t negotiate salary, you can negotiate an extra week of vacation.

Taking a vacation is not a sign of weakness. You need to take a break from work in order to be able to operate at your full efficiency.

8. Practice good habits

As you start your career, take the time to establish good habits. A regular exercise program, reading program, disciplined sleep schedule, healthy eating, etc. are all things that are easier to establish at the beginning of your career than trying to retrain yourself later on.

9. Make sure you enjoy what you are doing

Don’t just give up on your job just because it is hard, but you should be honest with yourself about your happiness. Don’t waste your life doing something you hate. There a plenty of opportunities for hard workers and it is possible to even change careers if you find something you like better.

Your Employer Owes You Nothing

I see many people working a normal job with the idea that if they work hard they will be rewarded for their good service. That isn’t the way it works. Your employer owes you nothing. It doesn’t matter how long you’ve worked at the job or how loyal you’ve been. In the end your years of service aren’t going to turn into some valuable investment that you can cash in.

Just the other day, a friend of mine was let go (along with all the other employees) at a business where he had been working for the past several years. The sad part is that, he had several offers over the past few months for jobs that he really wanted to take, but he decided to stay out of loyalty to his current company. His commitment to his employer turned out to be detrimental.

I have seen people invest their best work years at a company that suddenly decided to shut down. I’ve seen others invest 10 years helping a non-profit grow through very tough times while taking a very low salary only to be ousted by management once their 10 years of hard work were starting to pay off.

My point is this. You need to invest in something that you control if you want to benefit from the cumulative benefit of your years of work. Many people think that starting their own business is risky. It is true that many businesses fail. However, working for someone else’s business as an employee isn’t any safer. It just means you have less control over your future.

What Is Your Current Work Zone?

If you are really focused on expanding your capabilities, your salary is probably a secondary motivation when it comes to employment. Your major motivation is going to be your learning opportunities. The graph below shows how learning opportunities change over time.

At the beginning of any job, you will have many opportunities to learn. This section is marked by the green zone. Every day will involve new experiences and learning new things. As time goes on this tends to level out as shown by the yellow zone. Sometimes the yellow zone is only temporary and you will be given new responsibilities that will have new learning opportunities and you’ll basically start the cycle over again.

However, if this doesn’t happen and you remain at a reduced learning rate for a period of time, you’ll move into the red zone. The red zone is particularly dangerous because it means you are becoming accustomed to a lack of personal growth and a lack of challenges. If you stay in this zone for too long, you will actually reduce your capabilities to take on challenging assignments.

So when should you look for a new job? While you are in the green zone, you will be facing a lot of challenges. Some of these will be difficult and sometimes you might even fail. This is not an indication that you should move on. It means you are still growing. One mistake I see people make is leaving jobs where they are still learning just because it isn’t easy.

When you get into the yellow zone, it is time to start re-evaluate things. You need to honestly access the chances of you getting different responsibilities that would move you back into the green zone. You also must consider your potential for salary growth. If you are at the high end of the pay scale, continued growth may not translated into growth in pay. When you get to the yellow zone, you may need to sit down with your employer and talk about your future at the company to get a feel for what opportunities might become available if you stick around.

At a previous employer, I had been in the yellow zone for about a year. I finally sat down with my boss and asked. “What are the new challenges I’m going to get to experience in the next 6 months?” He told me that there wasn’t really anything they wanted me to do other than just keep things running they way they were. A few days later I submitted my resignation. For me the challenge was getting things to the point where my department was running smoothly. Simply maintaining the status quo would have been easy. The organization was pretty flexible with work schedules as long as things were getting done, so simply maintaining things would have translated into a lot of free time for me. The idea of not having new challenges scared me because I looked around and saw a number of other employees who were basically on cruise control. They had nice non-stressful jobs, but it had been years since they had ever attempted anything challenging. My fear was that I would become like that.

I took a job with another company where I figured I had about a 60% chance of being able to be successful and a 40% chance of failing. The first few months were extremely difficult, but I learned a tremendous amount. More importantly I raised the bar on what I was capable of doing. This experience has served me well. There are many small and large successes I’ve had in life that I can directly trace back to the decision to leave the easy job and take on that would challenge me.

4 Day Workweek 3 Day Weekend

On April Fools day, I made a post about working all 40 hours of your work week at once and then having the rest of the week off. In the post where we discussed working from home, I mentioned that one way to reduce your commute is to work a shorter work week.

Before I go any further, let me address all the people who are poised to send me vicious hate mail saying things like “What type of world do you live in?!” or “My boss would never let me do this!” Please recognize that this won’t work for everyone–I know that. However, it is a good thing to keep in mind through out your career because there may be a point where it would work for you.

Ok now that that is out of the way …

When I was a teenager, the school I attended was on a 4 day per week schedule. The state requirements for school specified a certain number of hours each year and the school administrators found that by having longer days they could meet the requirements and free up Fridays. As a student it was very beneficial because I was working as a waiter at the time and could pickup a day shift on Friday which worked out very nicely. The extra hour or two that we spent each of the four days was well worth having a big block of time off (Friday).

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