Say you get an offer that is 15% higher than your present pay. Should you take it? The answer can be either yes or no depending upon the total value of the offer versus the total value of your current position and geographical cost comparisons. Let me explain.
Discounting all other factors like relocation cost, family issues, and a new job fit, there are other factors to consider. Here are a few:
- Geographical comparisons – There’s a big difference between working in Yazoo City, Mississippi then moving to New York City. But what about moving from Zanesville, Ohio to Winslow, Arizona? Use Payscale.com for pay comparisons between cities. You’ll be amazed at the results: Home/apartment, food, gas, utility and clothing costs all add up differently in different locations.
- The value of your benefits – Healthcare costs are vastly different by organization. Some ask you to contribute 15% to 50% of the cost. Some will match your 401K contributions up to 6% of your salary, while other companies don’t have a 401K. The value of your total benefits can be anywhere between 25% or 40% of your total compensation. What about dental and eye care? How long do you have to wait to be vested? If you plan to leave in 3 years, you may lose the company contributions. Read the fine print.
- Incentive compensation programs – How much is the potential range of payouts? Are the objectives to payout reasonable? Is a bonus tied to measurable goals or subjective assessments by your boss? What has been the past history? There’s a big difference between an incentive plan for a company that is growing incrementally at 2% a year and one that doubles its revenue every 2 years. Companies in trouble or missing quarterly earnings usually can’t pay out incentives.
- Stock options – Usually stock options are for the decision makers. Some companies give stock options to middle management, while others (especially start- ups that need talent but can’t afford big benefit plans) provide stock plans for employees to “buy in” to the stock of the company. Check out the programs and plans of a company before accepting a job offer. Again, read the fine print.
- Other considerations – There are a number of smaller factors where any one of them may be important: Opportunity for remote work; training/development prospects; daycare; eldercare; counseling; financial coaching; legal assistance; gym member; wellness counseling; life and disability insurance; courses for certification; tuition reimbursement; educational assistance; parental, bereavement or family leave or paid time off. While you can’t predict what you will need in the future, these benefits give you the support you need when you need them.
The point of this article is to show you the difference between pay and total compensation. Some factors will decrease your total compensation (like moving to a high-cost city from a rural area), while others will increase your total compensation (a generous 401K contribution from your employer). Do your homework and come out ahead.
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