Congratulations, you have gotten a job offer or maybe more than one. It’s tempting to jump at the first offer, but remember, there is room to negotiate. Understanding offers is important to making more money. Here is a framework as to how to think about offers.
1. Start with base salary
Base pay is usually the largest part of your compensation package and sets the tone for salary negotiation. Usually, base pay is set in line with a company salary band from their own data and 3rd party data. You’re job is to verify or challenge that.
So first, start with understanding your value. Do your salary market research. Paysa’s salary tool is an easy way to understand what the average salary of a job is and when you sign up you’ll get a personalized market value score based on work history, skills and location.
2. Ask about equity
Many companies offer ownership in the company as compensation instead of higher pay. Equity value will depend on the company (private vs public) and will vary over time and performance. At an established public company, you’ll know how much equity is worth but keep in mind the stock fluctuation which will effect the value. If your offer is from a startup, value is harder to figure out. Here is a guide to think about equity in a startup and see our guide on fundamentals of equity compensation. Generally speaking, a “go big or go home” mindset is the way to go.
3. Ask about bonuses
A bonus is additional pay due to superior performance by you, the team or the company. There are many different bonus structures. Ask about how bonuses are structured, how many people get them and generally how much. Remember, a bonus isn’t worth anything if you can’t actually get one.
Also, ask about sign-on bonus. What is your opportunity cost for leaving your current situation whether that is your job, side projects, location, etc. What’s going to help you “jump”?
4. Ask about benefits and perks
Benefits aren’t as glamorous as a big paycheck, but they offer real value. In terms of money, benefits can be thought of as 30% additional money, according to the Department of Labor. So, a $150K base salary can mean an added $45K in benefits. A benefits package usually includes health insurance, vacation, and pay if you become ill or disabled on the job or off. Find out what portion of benefits you’ll employer pay and how much you will pay.
If you have a family or planning to have one, then health insurance costs matter. How much you pay for benefits is subtracted from your salary and that decrease can mean the difference between a good offer and a not-so-good one.
Pay attention to the paid time off or PTO options in your offer. A new trend among tech companies is to have a “take as much time off as you need” policy (Netflix). While such vacation policies sound generous, investigate how much time the staff is actually taking.
Ask about extras like paid public transportation, free food, and professional development. HR folks are generally not shy about telling you all this.
5. Ask about working from home.
Employers are getting more comfortable with employees working from home, especially in cities with lots of traffic. Ask about their policy around this and see if you can work it into your weekly schedule. Also ask yourself if you are comfortable working from home? And how important is the value of “face time” at the office. Is that going to come up in your annual review?
6. Factor in location and cost of living
List the things that matter most to you like quality of life, commute, school system, weather, etc.
If you’re considering moving, ask about the company paying for relocation costs and temporary housing.
7. If you have multiple offers…
Congrats! Along with comparing multiple offers side by side across your key criteria, do your detective work about the company on review sites to get the inside scoop on cultural and leadership. Also, check out Paysa offers tool to evaluate multiple offers.
Author: Chris Bolte