Are You Risk Biased or Reward Biased?

Every day I speak to C-suite execs, business owners, investors, FDs, FCs and qualified accountants.

All day. Every day. For the past 20 years.

And over time, particularly if you’re a proper nerd like me, you start to notice and track patterns.

• The same themes reappear.
• The same concerns surface.
• The same behaviours repeat themselves in different market cycles.

You begin to see trends in how people think when uncertainty arrives.

Right now, there’s a very clear divide in the market:

• Some people are fundamentally risk biased.
• Others are reward biased.

And that mindset is driving almost every major business and career decision I’m seeing.

The backdrop has been relentless.

Pandemic. Brexit. Trade conflicts, wars and geopolitical instability. New government. Inflation. Cost-of-living pressures. Tax increases. Interest rate changes.  A hiring boom followed by a sharp slowdown.

It’s been exhausting and lots of candidates and business owners have been understandably fatigued.

But despite all of that chaos, people still tend to fall into one of two camps.

• Camp One: “How do we minimise risk and protect ourselves right now?”
• Camp Two: “Where is the opportunity in this market, and how do we position ourselves to optimise our benefit from it?”

You can see it clearly in the candidate market.

I might speak to two Financial Controllers with almost identical backgrounds.

One:

“Moving jobs right now feels mega risky.”

The other:

“There’s always risk. The risk of sitting tight might be just as big as the risk of moving. If the role is right, the upside outweighs the downside.”

Same market. Same economy. Completely different lens.

There’s similar contrast in client conversations.

Last week I met the MD of an ecommerce business.  She said business was good but they could see chance to get motoring and so she described investing heavily into a new tech stack, leadership hires and exciting acquisition targeting…

The week before, I sat with the COO of a manufacturing business in South Yorkshire. The business is doing well and pipeline is sound.  But the focus remains on conserving cash, reducing exposure and waiting for “stability” before making any major decisions.  Capex has been canned. Everything is on pause.

Both businesses trading well. Forecasts looking solid.

Neither approach is necessarily wrong.  Both make sense.  And fundamentally it’s none of my bloody business!!!

But historically, the businesses and individuals that come out strongest after difficult periods are rarely the ones who freeze completely.

The market right now really reminds me of 2010 / 2011.

Post financial crash finance recruitment was odd.  Confidence was battered. People were cautious. Hiring had slowed. Businesses were nervous about committing capital.  Candidates were nervy after the madness of 2008/2009.

But underneath the surface, momentum was quietly rebuilding.  You could feel it in client meetings.  People were starting to whisper that business was up, they were suddenly ahead of budgets or YoY were better than they forecast.

The companies that invested early, in highly skilled people, infrastructure, acquisitions and growth, were often the ones that accelerated hardest over the following five years.

And the same was true for individuals.

Some professionals sat tight and waited for certainty.

Others stepped into bigger roles, took calculated risks, backed themselves and massively accelerated their careers as the market recovered.  People fast tracked.

That’s the thing about uncertainty:

By the time things feel completely “safe” again, most of the opportunity has usually already gone.  That’s kinda how the stock market works.

I’m not suggesting reckless decision-making is the way forward.  Good businesses should always manage downside risk carefully.

But there’s a big difference between calculated caution and complete paralysis.  Because there is massive risk to doing nothing (whether in business or in terms of your own career development).

Because while some businesses are waiting for confidence to return, others are quietly building market share, hiring stronger talent, improving systems and positioning themselves for the next cycle.

And while some candidates are sitting tight waiting for the “perfect time” to move, others are stepping into opportunities that could define the next decade of their career (in terms of their development, earning potential or quite simply their happiness and sense of enjoyment).

Markets move in cycles.

They always do, always will. As a 40 year old recruiter who has some ginger hairs turning grey I’ve seen it play out first hand.

The interesting thing is that the biggest opportunities are usually created precisely when uncertainty is highest. And right now I reckon we are out of the eye of the storm and just about coming into the sunshine.

So the real question is:

Are you currently making decisions through a lens of risk…

Or through a lens of reward? Might be a decent topic of conversation at your next board review or while you’re having your third G&T in the bank holiday sunshine.

Thanks as always for reading.