Dec 17, 2016

The Moral Hazard of Salary
Once again, the holidays are almost upon us. The year 2016 brought many new and unexpected things, but countless other things also remained the same. Predictably, there's one part of our lives that never seems to change: a lot of us really don't like our jobs.

This season, I'm only asking one thing from my readers, and it's easy to do. If you enjoyed reading this article, please pass it on to a stressed-out friend or loved one who might also find comfort in these words. Today, I want to share a simple lesson with you that is based on some surprisingly uncommon sense these days.

If you work in a day-to-day job, today's lesson is about your salary: what it means to you, and what it means to the people around you. You might be surprised to learn this, but your salary is actually one of the biggest moral hazards in your life, and it is the source of most (if not all) of the bad stress that you put up with, day after countless day at the office.

Before we go any further, just what exactly is a moral hazard? Surprisingly, this idea can be found everywhere in our lives, even in the most mundane things. If you have ever bought insurance, you might have wondered why your insurance company forces you to pay a fee (aka. deductible) before making a claim and getting your payment.

Well, this is a great example of how insurance companies need to protect themselves against the moral hazard of their customers taking risks they normally would not take, because the insurance company will "pick up the tab" if they get themselves in trouble. That is what we are talking about here today, but now we're going to return to the original topic: your stressful job. Are you picking up the tab for for your coworkers' problems?

Salary: The Perfect Moral Hazard

So, how exactly is your hard-earned salary one of the biggest moral hazards in your life, and the source of most of your stress at work?

The answer is simple, and it might surprise you. Just like you are the ideal customer for your insurance company (because you would never dream of taking advantage of them), you are also the ideal employee, because you believe that your salary must be earned through unending hard work and dedication. But, exactly how much hard work and dedication is required to fully earn that salary of yours?

You see, not all employees are created equal, and I believe that we all make a conscious choice when we get our first job, to either tackle our own challenges head-on, or learn how to delegate our work to others. This is where the moral hazard begins.

As an introvert, I have always worked better on my own and have avoided delegating my work to my colleagues. Earlier on in my career, when I was a salaried employee, I would often fall into the trap of getting roped in to do things for my coworkers and other teams, because they constantly took advantage of the moral hazard of making the same salary for doing more or less work.

These days, I still fall into this trap sometimes, but there is one big difference: I work for myself, and only myself. Because of this, I typically engage with clients on a very short-term basis, and this lessens the risk of there being a moral hazard in the first place. I realize that this is not an option for everybody, but it has worked well for me, as I now enter my fifth year of self-employment.

I hope that this article has been comforting if you are reeling in the stress of a high-pressure job, and I hope that you can look forward to some relaxing times during the holidays. That's all I wanted to share with you today, and please pass this message along if you know somebody who might also want to hear it.

Wishing you all the best for 2017!

Take care,

1 comment:

  1. I read your blog frequently and I just thought I’d say keep up the amazing work! Branda Canton