In that story, she shared that when she was thinking about committing to her career change journey, a niggling doubt kept showing up for her…
“I’ve invested so much in my career – can I really throw it all away?”
Charlotte isn’t alone in having this worry. In fact, in my work with career changers, this big sneaky villain crops up ALL THE TIME.
Is it rearing its head for you too?
Let’s shine a light on this whopper of a career change obstacle so that you can see what you’re really dealing with.
What is this worry all about?
Turns out there’s an actual term for this way of thinking.
It’s called the ‘Sunk Cost Fallacy’.
Have you ever started reading a book, only to realise, 60 pages in, that it’s pants and you’re bored? But you plough on anyway, because you don’t want to give up on it?
That’s the sunk cost fallacy at work.
To give up the book now would mean that the time and attention you’d given to those 60 pages had been wasted.
You’re also experiencing ‘plan continuation bias’, aka ‘follow-through-itis’. This means you feel like you have to finish, because you’ve started. It becomes a box you NEED to tick.
Plus, there’s a part of you that HATES to admit that you were wrong in thinking that you’d like this book, isn’t there?
So even though the whole purpose of you reading books is for entertainment, relaxation and possibly to learn something, you keep reading a book you don’t enjoy, don’t find relaxing, and aren’t going to learn very much from.
And when it comes to your career, you do the same thing. Except now the stakes are higher.
We’re talking about years of time and costs that you’ve ploughed into getting you to where you are now.
Thousands of pounds spent on getting qualifications. Years working your way up from the bottom rung of the ladder.
Not to mention the sense of identity you’ve attached to the work you do, and all the hopes and dreams of your younger self that this would be the career for you.
And it’s not just your own resources that are in the mix now either, is it? Other people have also invested in you too. Your parents, your loved ones, your teachers, your mentors…
Giving up on a book might be mildly irritating, but it doesn’t really matter.
Thinking about doing the same with your career, on the other hand, is enough to give you palpitations and keep you up at night.
So what can you do about it? How on earth are you supposed to move forwards?
Is a really a case of sticking it out in work that makes you miserable, or throwing everything away?
The Sunk Cost Fallacy comes from economic and business theory. So, let’s take a look at what else that world can offer to help you reframe the problem and make decisions for yourself, and your career, that are based on sound principles.
Sunk Costs focus only on the past
There’s a reason that the term ‘Sunk Cost Fallacy’ uses the word ‘fallacy’.
Fallacy. Noun. : a mistaken belief, especially one based on unsound arguments.
Yes, you’ve invested time, money, and energy getting to where you are.
But that is in the PAST.
The problem with basing your choice in this moment on preserving your past investment, is that you take no account of the FUTURE costs of staying where you are.
What’s it going to COST you, to stay in your career as it is right now?
I don’t just mean financially, but also emotionally, physically, and in terms of your personal relationships?
>> How is work that doesn’t fit affecting your physical and mental well-being?
>> What’s the emotional impact?
>> How is it affecting your closest relationships?
When Charlotte became aware of the Sunk Cost Fallacy in her thinking, she was able to take action and choose new behaviour…
“I realised that I was far more scared of staying where I was. I could see this career path unfolding in front of me, and where I’d be if I didn’t make a change in the next five or ten years.”
Imagine it’s ten years down the line, and you’re still unhappy at work. Are you willing to pay ten years’ worth of happiness, in order to avoid losing your initial investment?
Sunk costs are irrelevant
Bear with me on this.
I’m not suggesting that your life’s work so far has been irrelevant. And I’m not suggesting that the investment you’ve made is somehow not important.
But in the context of rational decision making, any costs incurred prior to making the decision are gone no matter what decision is made.
It’s known as the Bygones Principle.
Those sunk costs have already been spent, whatever course of action you take now. So, given that this is the case, what more relevant factors can you base your decision making on?
Let’s imagine you’ve gone to the cinema to see a film. You’ve paid £10 for your ticket and you’re in the cinema now, with your popcorn, watching the movie.
Except it’s terrible.
You know this within 20 minutes.
You feel frustrated because you’ve paid good money for your ticket. And you were quite looking forward to watching this movie.
You now have two choices. You can either 1) stick it out, or 2) leave.
The Bygones Principle is grounded in decision theory, particularly the Expected Utility Hypothesis, which relies on something called the Cancellation property…
“It is rational in decision-making to disregard any state of the world that yields the same outcome regardless of one’s choice.”
In other words, since neither option will give you your money back (because sunk costs aren’t recoverable), that would be an unsound factor to consider here and we can disregard it for the purpose of making a decision.
The prospective costs of continuing to watch the movie are that you want to claw your eyes out from boredom for approximately two hours.
Right now, that prospective cost is avoidable, because option 2 WOULD allow you to do something else with the time.
Something potentially far more rewarding.
Economic theory tells us that the only factor that makes any sense to base your decision on is what you want to do with the (approximately) 2 hours of your life that’s immediately ahead of you right now.
You can either waste your ticket money AND two hours of your life, or just the ticket money.
Which would you prefer?
Why do people allow the Sunk Cost Fallacy to affect their decision-making?
It’s easy to see why we shouldn’t allow sunk costs to affect our future decisions, but in practice it’s widely know that they do.
Why is that?
Psychologists aren’t sure, but there are some theories…
The lure of turning around past failures
Michael Roberto, writing in the Ivey Business Journal, puts one such theory like this…
“If an individual makes a prior investment decision which yields poor results, they often view subsequent decisions as opportunities to turn around past failures. Meanwhile, individuals see the decision to invest no further as a sure loss.
When individuals consider aborting a particular activity, they view past investments as wasted resources. This aversion to wasting money leads individuals to continue investing in a particular activity in hopes of utilizing, rather than wasting, their prior investments.
Therefore, individuals may pursue risky investment opportunities, perhaps ‘throwing good money after bad’.”
In career change, this might look like staying put, hoping that you’ll be able, somehow, to turn things around and validate your original investment, even though you know the chances for that are slim to none.
If this is you, consider this: What if staying put is the riskier gamble?
The sense of responsibility we feel to the choices we’ve made, even when they’re not working for us anymore
Having a particular career is highly visible evidence of having committed to a path.
And this has powerful psychological effects as well…
“Individuals infer a strong sense of responsibility from the consideration and observation of their past actions. As a result, they become reluctant to change their position.”
Do you worry about what it says about you if you decide to move on?
If this is you, consider this: what if admitting something is no longer working is a sign of strength?
The fact our culture puts perseverance on a pedestal
How often do you come across stories about plucky underdogs who keep going until they finally succeed?
How often have you heard the phrase, “If at first you don’t succeed, try, try, try again”, or ‘No one likes a quitter’?
As a society, we place great cultural value on grit, determination, perspiration.
So it’s hard to reconcile the idea of changing course with the drive to keep going in the hope that things finally come good.
It’s easy to perceive a need to change course as a failure. And, as a result, many people choose to stay in careers that are no longer working for them, and probably never will.
If this is you, consider this: Adapting course, according to new information, is a sign of strong leadership. What if changing a career that’s no longer working for you isn’t ‘quitting’, but leading?
Focusing on investments made in the past doesn’t acknowledge this extremely WEIRD feature of career change
“Last night as I was sleeping,
I dreamt—marvelous error!—
that I had a beehive
here inside my heart.
And the golden bees
were making white combs
and sweet honey
from my old failures.”
I’ve actually made several career changes of sorts.
But there were also smaller ones.
After university, I’d thought I would go into Marketing and PR. It felt sparkly and bright, alluring. I wanted in.
But when I tried it out, it felt all wrong.
I then came across the career of Academic Librarianship. It felt like a ‘serious’ career and I set out to do a traineeship year, then a Master’s degree in it.
And then I sort of fell, by accident, into a role which didn’t really use that training in a traditional way, the way I’d learned. As the years went by in that role, I moved further and further away from that information-based skill set and more into a content-related one.
I was painfully aware of feeling like I was wasting my investment. The sunk cost of my career choices weighed heavily on me.
Until I noticed something strange start to happen.
In the role I’d gradually side stepped into, I began writing, a lot. All of a sudden I realised I was making use of my original English degree.
Then, as I developed more and more content in that role, I had to start organising it, cataloguing it, maintaining it, reviewing it. I realised I WAS using my information / librarianship training.
Later, as I made my career change and continued to work on a career that felt meaningful to me, I realised that more of these old skill sets kept circling back into view, as facets of my experience that I could bring to the table.
My web development skills, my writing skills, my love of helping people develop, wanted to have my own business (I had my first business when I was 7, by the way. It made the ENORMOUS sum of £80)…
At the time each of these experiences felt like it was ‘done’ and I’d moved on.
But every single one has circled back into view, multiple times, as assets, strengths, and crucial skill sets that have become incorporated into my work.
While choosing a change of direction can feel like a black / white, either / or decision, it doesn’t mean that your experiences will be wasted. In fact, changing course can provide exciting new ways for them to become newly relevant.
So while the sunk costs of your career might feel like they’d be irrecoverable if you changed course, I’d bet good money that they’d provide, as they continue to do for me AND the clients I work with, indirect, unexpected and valuable returns.
Are you paralysed in your career change by the thought of your sunk cost?
If so, you’re not alone.
But if you want to make a decision that’s based in sound theory, you have to acknowledge that actually your sunk cost is irrelevant compared to the cost of staying where you are.
If you can square up to and measure THAT cost in all it’s forms, you have the decisive means to work out whether to stay put or make a change.
Anything else is merely a case of having the courage to make the first step.
And when you’re ready, you know where I am.
Ready to create your new career future? I currently have spaces open on my Elite Squad 1:1 VIP coaching programme. Find out more and book your free discovery call to learn if it could be a good fit for you HERE.