Receiving a job offer can be very exciting, but before you accept, it’s important to take the time to evaluate the entire compensation package, especially when you have two similar offers to consider. A total compensation package refers to everything of value, both monetary and non-monetary, that an employer gives you in exchange for the work you do.
What is the total compensation package?
When evaluating a job offer, remember that most salaried full-time employers offer a total package made up of a combination of base salary, bonus, incentives, commissions, paid days off, vacation, personal and sick days, medical, dental, vision insurance, flex benefits, and retirement savings plans.
There is an entire sub-discipline of human resources dedicated to establishing employee compensation and benefits policies. While compensation and benefits are tangible (think base salary), there are intangible rewards such as recognition, work-life, and development. Combined, these are referred to as total rewards. It’s everything of value, monetary and non-monetary, that an employer gives you in exchange for the work you do.
After salary, the next most-valued benefits were the ones that offer flexibility and improve work-life balance. A majority of respondents reported that flexible hours, more vacation time, more work-from-home or hybrid options, and unlimited vacation time could help give a lower-paying job an edge over a high-paying job with fewer benefits. No surprise here. I would argue that flexibility will overtake health and dental for the top spot following the modern post-Covid era.
Why do benefits and perks matter?
Benefits and perks, loosely defined as items outside of base salary and bonuses, are important to consider for several reasons. First, they can help offset the costs of necessary services, such as medical insurance, that you might otherwise have to pay for yourself fully — or even be unable to afford. Employees frequently get a better rate by joining a company’s health insurance plan than they would if they purchased policies independently.
Second, they can help you maintain a healthy work-life balance and can open up a larger selection of possible employers that you might consider —providing the right combination of non-tangible benefits that are both inexpensive and highly sought after among job seekers can make a business that can’t afford high salaries and pricier job perks a preference for employees who experienced the COVID-19 years and a transition to full-time home working. Hybrid schedules appeal to people who find commuting five days a week inefficient and costly but don’t want to go back to a fully at-home situation. Other employees may enjoy the rhythms of office life but would like more autonomy over the hours they work.
Finally, some benefits and perks can have a long-term impact. Tuition subsidization could lead to a promotion and higher salary or a retirement plan that covers you for eventual retirement, these benefits reward you for your efforts while also helping make your career better and more long-term goals more secure.
1. What’s most important to you?
Values, goals, and lifestyles vary from person to person, so there’s no one-size-fits-all perfect compensation package. For some, health insurance and Retirement planning might be the only must-haves. Remote or hybrid work schedules have become a deal-breaker for some individuals. And perks such as tuition reimbursement could make all the difference for others with education-heavy professions.
2. What details do you need to know?
Once you have a job offer in hand, review the salary first, but don’t stop there. Read over the fine details about benefits and additional perks from your potential employer.
There are many Salary Guides available that provide up-to-date compensation data. A few you can try are Salary.com, Payscale.com, and Jobbank They will include starting salaries as well as other insights into perks and benefits. (As with anything found on the internet take the reviews with a grain of salt. It’s preferable and talk to people you know who work at the company if at all possible.)
Depending on your industry and the companies you are considering, you may also want to consider a checklist approach with categories of importance:
|History||Work schedule||Cost of living|
|Work arrangement (hybrid etc.)||Relocation expenses|
|Work schedule and overtime|
There are other tools you can use, for example, we’ve also found a free calculator that does some of the figuring for you. Fidelity Investment’s changing jobs calculator looks at all things money-related when you’re considering a new role—such as your current and new salary, bonuses, commission, retirement plan matching, as well as if you’re relocating or changing employment status (full-time, part-time, freelance)—to show you just how much more (or less) you’ll make compared to where you’re at now. Just beware no tool can measure personal happiness factors. An additional and simple pros and cons list might be best if compensation isn’t the only factor in your decision.
Questions to consider:
It is essential not to accept or decline an offer based solely on the salary. Consider the benefits package and the salary growth potential within an organization. Bonuses should not entice you into accepting an offer if you are not sure about working there. If the salary is lower than you expected, there may be room to negotiate.
Before accepting a job offer, be sure to read over the fine details about benefits and additional perks from your potential employer. Remember, a top-notch compensation package may make a lower salary more attractive, while certain perks may be negotiable.
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