Imagine this situation: you’re searching for a job and you finally receive an offer. Hooray! But, how do you determine if the job offer is a good one? There’s a lot more than salary to consider when it comes to understanding how a job offer stacks up financially. Here are some things to think about and questions to ask your potential employer as you review your offer.
Cash Compensation vs. Benefits: The big number that most of us think about when it comes to evaluating job offers is salary – but it’s also important to consider what benefits your potential employer can provide. A good decision-making rubric to use is the 75/25 model, which means considering the total value of the job in terms of 75% salary, 25% other benefits. Keep this in mind when evaluating your job offers.
Retirement: An employer-sponsored retirement plan is one important example of a non-salary benefit that workplaces commonly offer to full-time employees. When considering a prospective job, ask about the retirement plan and features you can expect. Will contributions come solely from your paycheck or will your employer match contributing funds up to a certain percent? Maybe your employer will even fund part of your retirement without you contributing. What are the tax advantages of the workplace retirement fund, and how much control do you have on the investment options? All these questions will help you when considering and comparing job offers.
Health Insurance: Another critical benefit at any job in the United States is health insurance. If healthcare coverage is not provided, you may be looking at hundreds of dollars in premiums every month depending on your state, income level and healthcare needs. If healthcare coverage is provided, ask for more details about your own costs in terms of co-pays, which is the set cost-per-visit to access any given healthcare service such as seeing a family practice doctor, and deductibles, which refers to the amount you need to pay before insurance kicks in. Also consider what healthcare services are included or exempt, such as dental care, vision care, and mental health services.
Flexible Spending Account: Instead of, or in addition to, traditional health insurance, some employers may offer a flexible spending account (FSA). This is a special kind of savings account that allows for pre-tax contributions, so you can save money while reducing your income taxes. Funds in your FSA can only be spent on eligible expenses during a specific time frame, which include hospital fees, glasses and contact lenses, prescription drugs, and so on.
Income Protection: What happens if you get sick or injured? What if you’re no longer able to do the job? These questions are important for all employees, and particularly those with dependents. That’s why some employers will offer a form of income protection, such as life insurance or disability insurance. Understanding what income protection is available at your potential future workplace could help to evaluate which job offer truly makes the most sense for you.
Bonus and Commission Structure: In many positions, your base salary doesn’t capture what you’ll actually be taking home. Be sure to talk through the bonus and commission structure with any potential employer. Are bonuses regularly provided at a certain time of year, or are they solely based on performance? What’s the criteria for merit-based bonuses? It’s possible that COVID-19 has affected the bonus structure at some workplaces, so keep this in mind when reviewing your options.
Other Company Perks: How much paid time off are employees entitled to? Is there a limit to vacation days and sick days? How about caregiving days, in case you need to leave work for a child, spouse, or parent? Other company perks to ask about include meals, memberships, and professional development courses, as some employers will pay for or share the cost with workers. And, don’t forget that company culture itself can be a valuable perk. Time is money, so if you’ll have to give up every other Saturday afternoon for this particular role, consider if the sacrifice is worth it.
Potential for Growth: The best and most financially lucrative job offer might not be the one with the highest starting salary. Ultimately, you’re probably looking for a role where you can learn, grow, and maximize your earning potential in the future. Ask how long other employees have been in their roles and about the company’s approach to internal versus external hiring. What roles could you be appropriate for in five years’ time? This should give you some idea about what your future with the company could look like.
There's a lot to think about before accepting a job offer! Starting a new job is an exciting time, and these are just a few important topics to be aware of as you consider your new position. For more about what to keep in mind in terms of benefits, you can also check out HUECU's recent presentation here. Good luck, and congratulations!