This is the most common story of every professional’s working life.
At 27, it comes as a recruiter's call offering a 40% hike. At 35, it is a bigger title at a rival firm. At 50, it is an enviable final role that pays well, comes with a designation bump-up, leverages past experience and network connections, and often demands a lot more of the same. Each time, people only compare the number on the offer letter. And invariably, most often, they ignore an important factor, objectively assessing the offer against how well it can help them grow in the future.
Your career has two numbers.
Picture your career as a line on a graph.
Where the line starts represents your salary in a new job. This is your first number. How steeply this line rises depends on how fast your capability grows each year in that job and, with it, your pay. This is the second number, and I call it the ‘learning slope’.
In a Stanford University lecture, well-known Stanford Computer Science Professor John Ousterhout told his students that "a little bit of slope makes up for a lot of Y-intercept.” What Professor John Ousterhout meant was that how fast you learn matters more than how much you know to begin with. Even if someone else starts with a massive head start, if they fail to take jobs, offers, or roles that help them learn and improve relentlessly, they can be left behind. The reason is that those with a head start put the brakes on their learning and growth. Also, if those behind them learn to do it better, they will quickly catch up and overtake them. This is why a new job or offer needs a deeper analysis and an understanding of the kind of ‘learning slope’ that role can enable.
What happens when the ‘learning slope’ is steep?
Here is a rough illustration. Someone who starts at, say, ₹21 lakh and whose pay grows at 5% a year is overtaken, in about fifteen years, by someone who starts at, say, ₹8 lakh and grows at 12%. It takes approximately about 24 years for the total earnings to catch up. The numbers are illustrative, and this largely depends on the gradient of the ‘learning slope’ in that job.
Therefore, I recommend applying this understanding to any offer or a new role in front of you - learning to figure out the ‘learning slope.’
The slope is also where most of the money is made.
Are pay and learning related?
At the start of a job, they're almost unrelated. But over time, they're not unrelated. Research findings show that ‘learning slope’ plays an important role in your pay growth over time!
Yale Economist Jaime Arellano-Bover and McGill University’s Fernando Saltiel studied young workers across hundreds of thousands of firms in Brazil's Rio de Janeiro and Italy's Veneto region. They measured how much each firm taught and how fast the pay of the people who stayed there grew.
A year at a top-learning firm was worth two to three times the usual return to a year of experience, and the skills they learnt travelled with people when they left.
In another study, workers in Rio who spent their early years only in top-learning firms reached about the 78th percentile of early-career wage growth. Those who spent them in only the weakest firms reached only the 16th percentile.
This clearly shows that the gradient of the ‘learning slope’ in top-learning firms is a lot steeper than in firms with the weakest learning environment. This has the biggest impact on your salary growth!
Another important question the research addressed was whether learning firms actually paid more. The answer was ‘barely’. They found a very low correlation between a firm's salary premium and how much it taught. So a salary premium doesn't necessarily indicate more learning in a company. So, it is wise to avoid getting swayed by an irresistible offer. It can affect your long-term salary growth if the organisation lacks a learning culture or doesn't offer enough opportunities to learn.
What makes a job’s ‘learning slope’ steep?
Whatever your age or experience, research points to the same factors that improve ‘learning slope’ inside any firm, irrespective of industry, size and scale.
Research done by Kyle Herkenhoff, Professor of economics at the University of Minnesota, found that learning from coworkers accounted for about two-thirds of the skills people built on the job, and that learning flows from those who know more. They also found that preferring to move to stronger teams, or moving with their team, over solo moves for money had a significantly better impact. You must choose roles that consolidate most of what you do well and regularly add one significant new skill or capability.
Edward Lazear and Kathryn Shaw, professors at the Stanford School of Business, and Christopher Stanton, professor at Harvard Business School, found that ‘a bottom-10% boss to a top-10% boss raised output by more than 10%’. They concluded that the difference in output between the best bosses and worst bosses is significant. The boss you work with strongly affects your ‘learning slope.’ But people rarely do a background check to confirm the ‘value of a boss’ before taking an offer.
Understanding the kind of work you will be doing also affects the ‘learning slope.’ If the job involves purely routine work, the ‘learning slope’ is flat. Non-routine work demands judgement skills like diagnosing, designing, persuading, and deciding. It can feel much more unstructured, stressful, and volatile, but that's where maximum learning happens. This hypothesis is further corroborated by research done by David Deming, Dean of Harvard College, who found that wages in the ‘least routine occupations’ rose more than 20% after fifteen years in the job, while in the ‘most routine ones’ barely grew after four years.
Finally, high-quality constructive feedback also plays an important role in improving the ‘learning slope’ in any job. The assignment you take on can be challenging and can test your limits, but without constructive feedback, your technical and leadership skills can suffer diminishing returns. Research done by Scott DeRue, former dean of the Stephen M. Ross School of Business, and Ned Wellman, professor at Arizona State University, reinforces this hypothesis: ‘regular access to feedback and a strong learning orientation offset these diminishing returns.’
Therefore, not all job offers and pay are equal. The gradient of the ‘learning slope’ differentiates the best from the worst. It is vital to assess this dispassionately before accepting a new job or offers that come your way, over the course of your career.