Sunday, June 21, 2015

The Opportunity Cost: Is It Really Worth It?

What are you risking and is it worth it?

So lately there has been a large and very misunderstood discussion on the pay structure for CEO’s of large organizations and other leaders. I have met my CEO, a couple of his direct reports, and many of their direct reports. Now can you imagine how hard it is to get on these leaders calendar, even for 30 minutes?!?! I have had some very personal and developmental discussions with leaders, who are a few levels below the CEO, and these types of positions are not for the faint of heart. At this level we cannot sole evaluate the leader based on their compensation, we also need to look at the opportunity cost

For some reason we believe that these roles are fancy and glorious; jet setting in many ways. But I see the stress and pressure of time, in many of their eyes, and wonder if this is the direction I want to take. It's like looking at an iceberg and seeing only what is above the surface, without taking into consideration what we cannot see or do not know. When people in these positions make the, very real and conscious decision to excel to the next level in their careers, they ruled out other opportunities. Finances do not motivate people at this level of work; this personality type is ruled by opportunity to lead and impact. Once someone has reached that point and makes a decision to be a LEAD HR Manager or a Vice President for a Fortune 500 company they are consciously ruling out other opprotunities and options in life.  This often forgotten economics principle (especially during this argument over CEO compensation), called Opportunity Cost.
"A benefitprofit, or value of something that must be given up to acquire or achieve something else. Since every resource (landmoney, time, etc.) can be put to alternative uses, every actionchoice, or decision has an associated opportunity cost.Opportunity costs are fundamental costs in economics, and are used in computing cost benefit analysis of a project. Such costs, however, are not recorded in the account books but are recognized in decision making by computing the cash outlays and their resulting profit or loss."Read more: Business Dictionary
What are the implications of EVERY choice we make? For these high performing individuals who want to achieve great heights in business there is an opportunity cost in their lives, both personally and professionally. The cost could be missing out on family, either not having kids or missing out on them growing up. The cost could be not being able to do the hobbies that you once so loved. The cost could be the lack of privacy you receive, in the sense that your compensation and personal life is made very public. The cost could be the level of personal scrutiny you receive for professional decisions. Either way whatever the opportunity cost may be, these are all very real and permanent cost, that cannot be re-done.

Many naïve people think of all the money, influence, and glamour… but, do they also consider the opposite side of the metaphorical coin: being on call 24/7, traveling 70% of the time, the stress and sleepless nights, the high levels of pressure to perform on a daily basis, the lack of personal life, the very small circle of trust worthy friends (and ever shrinking), finally and most importantly, is the inability to go home and turn your job off.  

In a nut shell, if you are motivated by anything other than opportunity to change peoples lives at the expense of your own, than you really should strongly wonder, "is this all really worth it to me?"

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