How Much Do You Make?

Discussing compensation is a crucial and often difficult part of your conversation with a recruiter or potential new employer.  I find that some candidates are reluctant to disclose their current compensation, or their expectations regarding future compensation, due to the misconception that they would somehow be giving up negotiating leverage.  Nothing could be further from the truth.  In fact the ability to have a frank, business-like discussion of your compensation history and expectations can only help during the interview and offer stages of the hiring process.  And a clear understanding of all aspects of your compensation package will prevent any conflicts or disagreements which could adversely affect your first days on the job.

Many candidates assume that all the recruiter or hiring manager is interested in is base salary.  While this headline number is often all that is used in early discussions to ensure that the company’s and the candidate’s expectations are in the same ballpark, as a candidate proceeds further through the process, and gets closer to a potential offer, it helps the recruiter to have a better understanding of the candidate’s total compensation package.

Different organizations may choose to include or exclude specific items in their official total compensation measurement, but I want to briefly discuss some of the many financial benefits that can fall in that category:

  • Base Salary.  The most basic (and typically largest) component of total compensation.
  • Cash Bonus.  Cash bonuses can be a fixed amount, a fixed percentage of base salary, or a variable amount based on company and/or individual performance.  Cash bonuses are typically paid out annually.
  • Equity Compensation.  Stock, restricted stock units, and stock options are all types of equity compensation.  Often equity vests over a period of years, so it can be difficult to assign an exact value to it when determining your total compensation.  Equity is often used as part of a long-term incentive plan to keep key team members.
  • Retirement Benefits.  Companies offer a variety of retirement benefits including 401(k) plans, profit sharing plans, and defined benefit plans.  It is important to understand how and when the company contributes to your retirement plan, how long the vesting period is, and how much you need to contribute to participate.
  • Insurance Benefits.  This includes Health, Dental, Life, and Disability insurance.  It is important to assess the quality of the policy as well as the employee costs to determine the overall value.
  • Education and Professional Fees.  Many professions have continuing education or professional licensing requirements.  Some companies will pay for these expenses, or provide reimbursement up to a certain amount.
  • Vacation.  Although we don’t usually think of our vacation time in terms of a cost to our employer, this is an area of total compensation that is an important consideration for many people.
  • Other Benefits.  Most companies provide cell phones, computers, iPads or other communication and productivity tools to their employees.  And some companies provide their executives with car allowances, golf memberships, and travel benefits.

All of this can add up to a significant percentage of your total compensation, and represent real financial benefits.  It is critical that you know exactly what your total compensation is, and what is most important to you, so that you can evaluate potential job offers with this in mind.

In future posts, I will discuss some of these items in more detail, as well as some of the intangible considerations you will want to look at when evaluating a job offer and comparing it to your total compensation.

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