Tue, 30 Jul, 2019
Have you finally received that job offer? You know, the one that’s going to dramatically change your career and take you to unprecedented highs? The job offer? Have you looked at the compensation and total rewards yet?
Before you do anything— pause. Take a minute to take a good look at the benefits package. Often, people think that the salary is the only or most important part of this whole. However, that’s not true: the salary adds up to about half.
What else is there in the benefits package, then? Well, every company has a unique approach and will include different elements and proportions.
Keep on reading— we’ll review all the possible components of the benefits package. This will help you decide what matters the most to you and on what areas you are willing to compromise when negotiating the global compensation.
Whether an hourly rate or a fixed amount of money per year, the base salary is the most reliable part of your compensation. Depending on the company, you could receive it every week, fortnightly, or (the most common arrangement) once a month. It’s always there.
However, you probably need to deduct taxes from the total sum of your base salary. Make sure to know what sum or percentage applies to your position.
You should also figure out the answers to other key issues related to your basic salary. For example, ask how often you will receive it and whether it’s calculated hourly or not. Other than that, will you receive overtime compensation separately? And will you have growth opportunities in your base salary in the future? When?
Don’t be shy, ask away!
Don’t forget to figure out what the benefits themselves are. They’re rarely the same in different companies, and the organisation may even have different benefit plans for different employees or tiers.
The most common form of benefits (and the most sought after) comes in the form of health insurance. If health is included in your package, what does it offer you? And does that take away from a different part of your compensation?
Maybe you get full health coverage (plus dental care and vision checks) but your salary or bonuses are lower. Alternatively, maybe the health coverage isn’t complete— you have to pay for some special branches yourself, or you have to pay a percentage of every bill. There are lots of possibilities!
Other crucial elements to consider include a retirement plan, vacations (free, scheduled, accrued paid time off?), possible reimbursement for training or tuition, and whether benefits extend to your family members.
Doesn’t everyone love it? And yet, not all roles are set to receive it. Does yours? If the answer is yes, you might find yourself in one of these scenarios:
Relocation or moving bonus: This may apply if you moved a long distance to get on board. You’re more likely to receive it if your role is on a more senior level.
Joining bonus: Some companies offer you a one-time bonus when you start your new role. This might be done to make the position more attractive (perhaps tempting you to leave your current one?). In that case, make sure there are no hidden clauses like claw-backs, which will have you reimbursing the bonus if you decide to leave the company before a set period of time.
Bonus for performance: Performance bonuses are generally handed out once a year and are determined either by your individual performance (are you meeting those targets yet?!) or the global performance of the company.
Sometimes this type of bonus is a fixed sum. Sometimes, it’s calculated as a percentage of your salary. Remember to ask whether the bonus is a target that can be surpassed if you or the company perform exceptionally well.
Whatever type of bonus you’re in line for, don’t forget to find out the tax rate for this part of your package. Why? Taxes on bonuses are typically higher. Yes, we know.
Equity is, essentially, the company sharing its profits with you as part of your compensation. It can take the shape of stock options (including ownership-restricted stock with a vesting period) or performance shares as time goes by.
So many questions to ask here— start by finding out what kind of equity is offered as well as what taxes apply to it (they vary depending on whether or not your options are vested). Also, pay attention to the vesting period: how long you’ll have to work at the company to get full ownership of your equity. If your equity is performance shares, make sure you understand the schedule well, as it can span several years.
Why is this type of compensation on the table? In earlier times, it was only senior levels that got equity as part of their benefits package. Alternatively, a wider profit-sharing pool used to be restricted to start-ups and smaller businesses.
However, now many companies are taking the leap. Equity compensation is useful to the organisation because it motivates employees and keeps them loyal.
Other points to consider
There are still other, subtler elements to consider before you jump up and say ‘yes’ to your dream offer. You need to evaluate how the complete financial package stacks up against other aspects. It’s not all about the money, is it?
What to pay attention to? Here are some good starting points:
Will you get good chances for promotion? Does the company typically offer options for integral growth? How does this affect your compensation (for example, joining bonuses and vested stock)?
Will you have to commute into the office daily or can you choose to work from home? Think of how this will affect both your finances and time availability.
Is this the right time for you to enter the company? Will your talents be fully applied and appreciated at this stage?
Do you like the environment you’ll be working in? What about your future manager and colleagues? If accepting your dream offer means putting up with a setting that drains you, you might want to reconsider!
Don’t make it just about the pay— there is so much more you can get and offer. You deserve a work environment that nourishes you and helps your career grow. Of course, the benefits package is an important part of any job offer and, with this guide, you can break it up and understand it better. Good luck, may wise decisions be with you!
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