Shots You Don’t Take: The Hidden Opportunity Cost Of Everything You Do
Having spent nearly all of my working life in recruitment, I guess you could say I’m a commentator on most industries, but a master of just one.
To many outside the profession, saying you’re a ‘master of recruitment’ is probably akin to saying you’re really good at tying your shoelaces.
Yep, recruitment’s not rocket science; a cliché to be sure, but one that I’ll grant you probably has a kernel of truth. However, there are a few, very important skills that successful recruiters have in common, and that I believe are fairly unique to the profession.
One is an intense focus on return on time. Unlike most service providers who are paid on an hourly rate for their time, recruiters are usually only paid on success. As a result, good recruiters become exquisitely aware of what opportunities they are spending their time on, and what the true cost is of doing so.
Every accountant will understand the fundamental principle of opportunity cost. As a refresher, Wikipedia defines it thus: “The opportunity cost of a choice is the value of the best forgone alternative.”
Before we veer into economics 101, I’ll get to the point: What has this got to do with you? In everyday life and work there are so many opportunities available to us. Often we get in the habit of making decisions without questioning what we are actually agreeing to – and what we are missing out on as a result.
We’re all in control of the thousands of small individual choices we make on a daily basis, each with an opportunity cost. Often these choices have a very clear opportunity cost: Do I work late on a project deadline, or go home to spend time with the family? The upside and downside to each choice in this situation is pretty clear.
In my experience however, the not-so-obvious choices are the ones that have the biggest influence, and often are the ones we overlook more regularly. For example, on the surface of it, the pain of changing the status quo might seem to outweigh the benefits of trying something new. But if you bring the opportunity cost into the equation, the ‘sticking with the status quo’ option makes less sense.
Let’s say you’re working in a crappy job you don’t enjoy. However, it’s a stable company and the pay’s good. In weighing up whether to stay or go, you might draw up a table like this:
Pros of staying
- Job security
- Good paycheck
- Avoid the hassle of a job search
Cons of staying
- Hate going to work each morning
This tally is missing the opportunity cost of the value of the best forgone alternative: Working in a job you love.
Consider what you’re missing out on here. If you enjoy going to work each day, you’re more likely to expand your skill set, progress your career, and ultimately earn more – effects that will be compounded across your lifetime. So by staying in your job, not only are you passing up the opportunity to enjoy your work in the present, but you’re also missing out on a host of future benefits.
Suddenly the ‘safe’ option doesn’t look so appealing.
I try to make a conscious effort to uncover the opportunity cost of my behaviour every day. Often this means saying no to some opportunities and opening myself up to others. Sometimes things will work out for me and other times not – but I like to remind myself of a favourite quote by the sporting legend Wayne Gretsky: “I missed 100% of the shots I didn’t take”.
Seize the chance to make big choices. In the long run it’s just too costly not to.