You’re smart, educated, and in demand. You’ve been working diligently to apply for jobs, got a bunch of interview offers, passed pre-screening questionnaires, phone screening interviews, and panel interviews. You’ve attended nerve-wracking, brain-hurting technical interviews and full-on day-long onsite interviews. Perhaps, maybe because you’re incredibly busy, you’re a glutton for punishment, you thrive under pressure, or you just don’t want to draw out the hideous anxiety, you’ve managed to arrange all the interviews in a super short space of time, like Xiaohan Zeng who interviewed at five top tech companies in five days. And, after all that, you’ve impressed the recruiters so much, you’ve got more than one job offer. That’s massively impressive. Well done! But now, you’re faced with comparing salaries. This is not easy – and can be almost as stressful as all the hard work and interviews that got you here. After all, comparing salaries, compensation packages, and job offers is so important to your future – your financial security, your job satisfaction, your overall happiness. So we’ve put together a guide to help you compare salaries and choose the right job offer.
And again, well done for getting this far – it’s an awesome accomplishment!
What the Offer Should Look Like
It’s not all about the money. Yes, obviously, that’s a huge part of comparing salaries, but it’s about the entire compensation package. Whether you’ve got offers from big corporations or promising startups, your offers, depending on your industry, should include the following:
- Base salary
- Signing Bonus
- Yearly Bonus
What you’ve got to do is get in the right mindset. Examine each element and figure out where it sits in terms of importance.
Let’s Break It Down
Let’s Break It Down
So, you’ve seen the starting point for each offer. Now you need to weigh up which is best, which job suits you most, and which compensation package is the most rewarding. Do remember, though, that these offers are just the starting point. There’s always room for negotiation – and we’ll look at how best to do that a little later.
The salary. Vitally important. The be-all and end-all? Nope. Firstly, don’t just assume the offer with the biggest numbers is the best. Your yearly salary should be at the fair market rate for your industry and the locale. The cost of living in your area plays a major role in establishing the minimum salary you can comfortably accept. Use Paysa’s cost of living tool to get a clear picture. For most people, their base salary is the most important factor when making a purely objective decision, so put this one high on your list of priorities.
Bonuses are nice. They make us feel good. Generally, with job offers in tech, there’s a one-time signing bonus and a yearly bonus. These elements, while nice, shouldn’t be high on your list of priorities as they are either one-time deals or unreliable.
The one-time signing bonus is a nice touch. But don’t be swayed by a big number here. Remember, it’s a one-time thing, so even if you’re super-disciplined and you put the whole bonus away in your rainy day fund, it doesn’t help you professionally long-term. And, a big signing bonus can be a red herring meant to distract you from less agreeable compensation package terms. So be wary of big shiny one-time bonuses.
Yearly bonus offers vary hugely between companies. Many are based on a combination of your performance and the company’s growth or performance during the financial year. A solid yearly bonus plan with a company that’s predicted to continue to grow for the foreseeable future bumps up your paycheck, so this is definitely an important factor. Having said that, remember that you should never rely on a yearly (or any other kind of) bonus to make ends meet. While it is a fantastic perk, if the company fails to grow as predicted or experiences related issues, in any given year, your bonus may be smaller than you anticipated.
Equity is potentially valuable – but you’ve got to know what you’re looking at. There are often terms and conditions that potential employees overlook. Are you being offered stock options? That’s the right to buy stock at a fixed price for a defined period. Are you being offered restricted stock? That’s the right to purchase common stock with restrictions like vesting schedules or company buy-back schemes. Is there a vesting period? That’s the time before shares are legally owned by the employee. How about cliff vesting? That’s when stocks vest at a specific time rather than gradually. So your equity compensation offer may state that your stocks won’t vest until you’ve been with the company for one year. You can learn more about employee equity here.
How important equity is depends on your priorities and the companies your offers are from. A slightly reduced salary at a hot new startup set to explode in the next 12 months could be an awesome move, as your stocks could eventually be worth mega-bucks. On the flip side, the hype may be short-lived and your stocks worth nothing. Stocks at a tech giant like Facebook or Google, however, are likely to remain high-value and carry decidedly less risk. And the level of equity varies greatly depending on your role and seniority. David E. Weekly, a senior product manager at Google, describes equity at a tech giant like Facebook for a level 3 employee (has a few years of experience) would, upon sale at full retail value after vestment, substantially beef up their annual bonus. For a mid-career or L4 employee, that equity compensation would likely double your annual bonus and at L5 (senior level) equity comp should be approaching equal to your base salary. An L6 employee could expect equity compensation significantly above your base salary, and if you’re L8 (director or higher), your base salary compensation would be a mere drop in the ocean compared to your equity compensation.
Remember the Value of Benefits in Your Compensation Package
Consider the Value of Benefits When Comparing Salaries
Equity, bonuses, and base salary are all well and good, but when comparing salaries or compensation offers, don’t neglect to examine the value of the benefits you’re being offered.
Always plan for your future. Whether you’re fresh out of grad school or you’re in the process of making a strategic career move, always look at the long view. Most of us don’t want to work until we drop, even if we love what we do. I, for instance, love my work, but I still want to be able to enjoy a long and (hopefully) healthy retirement. To do that, when comparing any job offer, you’ve simply got to look at the retirement plans, unless you’ve already got a healthy plan of your own in place.
There are different kinds of retirement plans, and some companies offer more than one type, so it’s worth figuring out what your options are. A defined benefit plan is a traditional pension where both you and your employer make regular contributions and, upon retirement, you’ve got a guaranteed monthly income. Some companies may also offer a defined contribution plan like a 401(k) where you make regular contributions via your pre-tax paycheck, the money is invested and has the potential to grow, but there’s no guarantee for ROI. IRAs, or individual retirement accounts, are generally only offered by smaller companies. These plans work like 401(k)s but have different contribution limits, and some take contributions from after-tax paychecks but then don’t re-tax the sum when it’s withdrawn in retirement. Some employers match up to 50 percent of your own contributions up to a set percentage of your income. Be sure to establish whether the plan is vested, in which case, the amount of contribution matching or other benefit may increase over time.
Health insurance is a hot topic and, whatever your age, should sit high on your list of priorities when it comes to comparing compensation packages. Establish whether it’s individual or family cover, what conditions or treatments are exempt from coverage, how much you’ll have deducted from your paycheck, copayment charges, and prescription costs. Is it just health insurance? Or is vision and dental covered, too? Even if you’re fit and healthy and have no kids, you never know what’s around the corner, so a solid employee healthcare package is a must-have.
Death isn’t something any of us like to think about, but remember that it pays to think ahead. If the worst should happen, life insurance can help your loved ones financially. You’ll find most companies offer life insurance equal to a minimum of one year’s salary in the event of your untimely demise. Find out how much the payout would be, whether you need to have been employed and enrolled for a certain length of time before the insurance is valid, and whether you can purchase additional cover at a discounted rate.
Sick Leave and Disability
You’re fit and healthy, but again, who knows what’s around the corner? Maybe you get an injury that means you simply can’t fulfill your responsibilities. Maybe you contract a debilitating condition that puts you out of action. To make sure you’re still financially stable in this event, take the time to examine the disability portions of your job offers. Does your offer include long-term disability insurance or just short-term? Short-term insurance protects you from financial hardship due to disability for between 2 and 6 months and, on average, according to the BLS, covers 64 percent of your pre-disability salary. Some companies add stipulations like employees having to use all their allotted sick days before being eligible for short-term disability.
Long-term disability isn’t as common, but it’s something you should give thought to, as anybody’s life and circumstances can change dramatically unexpectedly. LTD kicks in, covering between 50 and 70 percent of pre-disability salary, when STD runs out and cover lasts between 2 and 10 years, or until the employee reaches age 65.
We all need a break from time to time, so make sure there’s plenty of vacation time in these offers. The average paid yearly vacation in the US is just 13 days – we know you can do better than that. And don’t be fooled by the provision of “paid time off” – this generally includes all time off including sick leave, vacation, and personal days. Don’t let a generous-on-the-surface number of PTO days fool you.
Daycare is costly. Even if you don’t have kids right now, you may meet your significant other, settle down, and start a family. And daycare is expensive. So give the provision of on-site or company-sponsored daycare moderate priority when comparing salaries, and higher priority if you already have little ones.
Continued Learning Provision
Time to educate yourself, attend classes, or pursue other professional development activities is a nice bonus. Even if you think you’ll love the job and won’t ever want to work anywhere else, remember – you can always be better – there’s always room to improve your current performance. Give extra weight to offers that include an educational stipend or that sponsor your continued learning.
While this is fairly intangible, it carries a lot of weight. Your work-life balance has to be right for you to perform at your best professionally, to maintain motivation, and to be happy, content, and satisfied. Working 80 hours a week every week doesn’t lend itself well to having a balanced life. Give priority to offers with schedule or location flexibility, too, as this can lower your stress levels, reduce commute costs, boost productivity, and increase job satisfaction.
There are all kinds of other perks that employers may offer to sweeten your deal. We’ve all heard about the insane perks offered to Google employees like the onsite beach volleyball pit, video gaming facility, rock climbing wall, the pet-friendly campus, the provision of onsite washers and dryers for employees to do their laundry free of charge, and power nap pods. There’s Wi-Fi enabled shuttles for employee transport, motorized on-campus scooters, exercise classes, language lessons, and more. Every company has its employee perks – those little added extras that can make life easier or brighten your day. While these little extras are undeniably nice, they probably shouldn’t be deal-breakers.
There are so many other intangible things that aren’t strictly part of the offer but are still important when comparing compensation packages. These intangibles include the type of company – a tech giant where you have a single, defined role, or a dynamic startup where you’ll likely wear many hats and have to dive right into the fray? Does the company lend weight to your resume? Are you excited by the role and the challenges you’ll face? What’s the work culture like? Do you feel you’ll get on well with your peers and your boss? How long is your commute? All of these intangible things seem fairly small – but together they should be among the top spots on your list of priorities because they have a huge impact on your happiness, your productivity, and your performance. If these things aren’t right, no matter how great the rest of the compensation offer, you won’t succeed and you’ll be miserable – and probably fairly quickly be starting the job search all over again.
Do Your Research
Do Your Research
Figure out your cost of living, then establish what are the absolute must-haves and deal-breakers for you and where you’re flexible. This is your basic framework and comparing salaries and compensation packages should all be geared around this. Use Paysa to find out exactly how much you’re worth based on your skills, education, and experience. Then move on to our salaries tool where you can find the average salary for your role, the companies you’ve got offers from, and by location. For a more thorough evaluation of your job offer and easy comparison, check out our evaluate an offer tool.
Negotiating For the Best Offer
You already know your worth and your deal-breakers. Now consider this: What do you really value? Why? What do your prospective employers value? Why? This is the mindset you want to establish when you negotiate. It’s not all about what you can get at the expense of the company, but rather how you can get more of what you want while giving the company more of what they want. How not to bomb your offer negotiation from Haseeb Qureshi explains it beautifully. And remember, any negotiation you enter into or any decision you make has to be multi-dimensional to be right.
Let us here at Paysa help you in your decision-making process. Use our data science approach to help you compare salaries and compensation packages. Read all of our resources on negotiating salaries, comparing job offers, and establishing a rewarding career at your dream company. And don’t forget to sign up for a free Paysa account to get the most from us. Congratulations on your multiple job offers and all of us here wish you every success.