VOL. 130 | NO. 163 | Friday, August 21, 2015
Know When To Cut Your Losses at Work
By Angela Copeland
Typically, we think of sunk cost in terms of investing or economics. It’s the concept that money or some other cost you have already lost can’t be recovered. In business, the idea of sunk cost might come in to play when a project has failed. Management eventually decides that no amount of additional work will save the project. It’s best to cut their losses and walk away while they can.
The same idea can also apply to your own career. Consider this example – you’re midway through a master’s degree program you aren’t interested in and know you’ll never use. You continue on with the program because you’re already halfway through.
Another example is the length of time you stay at a company. If you’ve been at the same job for 10 years, you may want to stay longer even when things are bad. This is due to the feeling that you’ve been there so long and invested so much that you shouldn’t leave.
When we focus our attention on the sunk cost, we often make a poor decision. We stay at a bad job for too long, or end up paying money for an advanced degree we’ll never use.
The one exception to this is undergraduate school. Very often, the specific subject you study is less important than finishing. Just ask your colleagues what they studied. You’ll be surprised to find how many people you work with have degrees unrelated to what you work on.
When making a decision about your current job, it’s important to think about the present situation rather than the past. Try not to hang onto thoughts about the good times, all you learned by working at the company, or the risk the company took on you. Remember that you contributed too; working is a two-way street. If things have gone south, no amount of positive memories can make up for that.
Focus your attention on the value you will gain in the future. This value could include the new things you will learn at your new job, more money, added benefits such as vacation, or a healthier work environment.
When it comes to graduate school, the decision can be tough. On one hand, you’ve already paid for half of the program. On the other, if you leave now, you’ll save money by not having to pay for the other half too.
Create a list of the things you have to gain and compare them to the cost of staying. Think about whether or not you’re happy, and if there is any more room for you to grow in your current situation. Ask yourself whether or not you’re staying where you are because it’s the right thing to do or because it’s the comfortable thing to do. Do you want to stay the course because you’re afraid of failing?
At the end of the day, the right decision isn’t always the easiest. But, it’s often the one that will allow you to look back without regrets.
Angela Copeland is CEO and founder of Copeland Coaching and can be reached at CopelandCoaching.com.