Career Liquidity

I recently stumbled upon an intriguing concept that got me thinking about our career paths—it’s called “career liquidity.” Imagine you’re at a crossroads, deciding between a well-trodden path and an uncharted trail. This idea of liquidity in careers can shed some light on that choice.

What Is Career Liquidity?

In finance, liquidity refers to how quickly an asset can be converted into cash without affecting its price. Applying this to careers, a “liquid” career path is one where your skills and experiences are easily recognised and valued by employers, making transitions smoother. Conversely, an “illiquid” career path involves unique or less conventional experiences that might be harder for employers to assess, potentially making job moves more challenging.

Liquid Career Paths: The Familiar Route

Take, for example, someone who spends four years as a management consultant at a renowned firm like McKinsey. Employers have a clear understanding of what this experience entails—strong analytical skills, client management, and a certain level of polish. This clarity makes it easier for such professionals to move between roles or industries, as their value is well-understood in the job market.

Illiquid Career Paths: The Road Less Traveled

Now, consider someone who has a more eclectic background—perhaps a mix of travel, nonprofit work, side projects, and a stint at a startup. While this journey might have equipped them with diverse skills and perspectives, employers might find it challenging to assess their fit for a specific role due to the unconventional path. This ambiguity can make transitions less straightforward.

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Factors Influencing Career Liquidity

Several elements can affect how “liquid” your career is:

• Industry Growth: Skills in high-growth industries tend to be more liquid due to increased demand.

• Skill Specificity: Highly specific and well-defined skills, like carpentry, are easier for employers to evaluate, enhancing liquidity.

• Testability: Skills that can be easily assessed, such as coding through technical tests, increase career liquidity.

• Institutional Brand: Experience with well-known organizations can boost your career’s liquidity, as these brands often serve as proxies for certain competencies.

Balancing Act: Liquid vs. Illiquid

Choosing between a liquid and illiquid career path depends on your personal goals and risk tolerance. Liquid paths offer psychological comfort and optionality, providing clearer expectations for progression and compensation. However, they can be more competitive and may not fully capture your unique value.

On the flip side, illiquid paths, while riskier and less certain, can lead to unique opportunities and potentially greater rewards. They allow for personalisation and can set you apart in ways that standardised paths might not.

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Reflecting on Your Path

As you navigate your career, consider where you fall on the liquidity spectrum. Are you drawn to the stability and clarity of a liquid path, or does the allure of forging your own unique journey appeal to you more? There’s no right or wrong answer—it’s about aligning your career strategy with your personal values, goals, and appetite for risk.

To be honest - my own career is far more illiquid but I’ve found many benefits to that. However - it’s really up to you how you should proceed. I think it’s useful to understand at least if you’re building an illiquid or liquid carer and if you’re okay with it.

Until next time,

Ajay