5 Good Reasons Why People Accept Less Pay

I only accept less pay for very good reasons. A great boss, good benefits, or a damn nice chicken rice stall in the canteen. And I’m not the only one: All over the country, you’ll find Singaporeans who value their work over a bigger pay cheque. Are they nuts? Masochists? Monks? Some combination of the three? In this article, I look at good reasons to (sometimes) suffer the smaller pay:


holding up a cheque

My pay cheque: A bank teller’s only source of amusement.


Smaller Pay Cheques: The Strangest Investment

When people settle for smaller pay, there’s two main reasons.

One is that they passionately believe in what they’re doing. I won’t discuss this group, because they live more fulfilling lives than I ever will, and interviewing them would trigger a jealous, bitter rage in me. I save those for Mel Gibson impersonations.

The other reason is career investment, when the lower pay is tolerated for high returns. I dare say that artist who got paid in Facebook shares made a better investment than fire-proof underwear at a KISS concert. Like him, some people will temporarily settle for less pay, because of…

  • Early Bird Benefits
  • Ownership
  • Better Benefits
  • The Company’s Reputation
  • The Boss’s Reputation


Person with fake eyes pasted over his eyelids

Agree to less pay for shorter work hours? Why’s that? I never sleep anyway.


1. Promotion Prospects

What’s the best way to join senior management? Be there at the start.

New companies tend to pay less, but have smaller head-counts. Assuming your work is decent, you’ll advance as later hires fill positions below you.

With big companies, the situation is the opposite: a high headcount with bigger starting pay. Advancement is harder; you may be competing with 40+ employees for the same promotion. And as for the political backstabbing that ensues, just imagine ancient Rome with suits instead of togas.


People in an elevator

“You’re new here right? Because this elevator is what the boss meant by moving up.”


Edrian Poh is a materials engineer, who recently quit a $4,500 a month job. He now works in a car parts distributorship, earning $4,200 a month. Why choose the lesser paying job?

At my old workplace there were a few hundred employees, and promotion opportunities were few. Here, I’m one of the early birds; the company only has two dozen people right now, with plans to expand. I’m hoping that’s a chance for me to advance.”


2. Ownership

Some companies compensate for small pay by giving you ownership. A typical example is paying employees with company shares.

This is approach carries risk, but it’s got a high pay-off: If the company turns out to be the next Google, then you’re set for life. But if it flops, your share certificates are effectively toilet paper. People I spoke to were mostly divided on this. Property investor Charlie Sng, for example, warns that:

I would only accept such terms from a well established company. I would hesitate to accept it from a small business; in three years, how do I know how well the business will do?

I would also have to be very clear on the terms, such as whether such shares can be sold.”


Construction work

“Goddamit, drill faster, our stock’s dropping.”


Sound engineer Elise Loy adds:
I love ownership. When I have shares, I get more motivated to get up and go to work. And really, you start to enjoy working because you see the point in what you’re doing. To each her own, but to me that’s worth a slightly smaller pay cheque.”

3. Better Benefits

Insurance can cost thousands every year (premiums vary), and unless you’re a prime candidate for the fourth Stooge it’s seldom used. So it’s great when a company pays your insurance.

Yet this is something a lot of job seekers overlook. A Human Resource consultant, who wants to be known as Christine, raises a warning:

A common mistake is when job seekers overlook benefits. Sometimes a job may pay $200 or $300 less, but the benefits exceed that amount.

If you have to pay your own insurance, how much would it cost you? You should get an estimate before picking a job with fewer benefits but more pay.”

Insurance aside, there are also benefits like telecommuting, free meals, or a company car. Many of these benefits indirectly contribute to your income. By telecommuting, for example, you can save hundreds on monthly transport fares.

For more on saving money, by the way, follow us on Facebook. It’s kind of our thing.


Man with dog and laptop on couch

“Yeah, I hired that meat industry expert. He’s right next to me.”


4. The Company’s Reputation

You’ll find any number of finance graduates willing to work at JP Morgan for a pittance. Just for a while.

It’s common for job hoppers to leverage off a company’s reputation; if I can claim I worked at Microsoft or Google, I probably won’t have a hard time getting an IT job elsewhere…and negotiating better pay once I’m there. But Christine thinks I’m taking a narrow view of this:

To me it’s not so much about collecting names. When you work for an industry leader, you have an inside view on their process and work culture. You are offering that to your new employer, and you can negotiate on the value of that.

I’d be quite happy to take a pay cut and work at entry level for an industry leader. But only if it means proximity to their core business aspects.”


Window washer

I helped to provide clear perspectives at Google.


5. The Boss’s Reputation

This is related to point 4. The difference is, you’d be taking a pay cut to work with some famous figure, instead of an industry leader.

Christine mentions this is common in some industries, particularly arts and F&B (Food and Beverage). She says that:

In culinary arts and music, things are very much based on personality. You can see in kitchens, for example, that the other cooks sometimes behave as if their only boss is the chef; the restaurant owner doesn’t even matter. If the chef leaves then they will all leave with the chef.”


Making dumplings

My head chef makes 200 dumplings an hour. The quota’s 200 an hour. Guess why I work here.


So what, this is some kind of insane cult thing?

Christine insists that:

It makes perfect sense. If Steve Jobs were still alive and he offered you a job, even if the pay was half what you’re making, wouldn’t you jump on it? The value of what you learn, of their personal recommendation, more than makes up for your smaller pay.”

Image Credits:
skrycheBuzz Paradise, uberculture, Irargerich, Plutor, boltron, avlxyz

Would you take a pay cut for any of these reasons? Comment and let us know!

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