Comparing Compensation Packages
When considering whether or not to leave one job for another, one of the most important things to consider is how your current compensation package stands up against the new offer. Unfortunately it’s no longer as easy as comparing salary to salary. Most companies today offer stock-options, stock grants, and long and short term incentive plans that usually have vesting schedules that can vary widely. Health insurance, flex schedules, tuition reimbursement, travel expenses, 401k’s, company cars etc. all make it just a little more difficult to know what you’re really being paid.
Compensation packages today, however, are much more complicated than they used to be and most employees don’t really understand the value of the complete package they may currently be receiving. If you’re considering a new position or have an offer on the table, it’s important to know exactly what you may be leaving behind. In most cases, this information will also give you a little additional leverage when negotiating with either a new or present employer.
For those executive who command six figure salaries, it’s often common for them to retain financial experts to decipher the long term value of a compensation plan and many retain lawyers to make sure they’re not moving backwards instead of forward. Most of us, however, don’t have that luxury but there are a few things you should keep in mind to make sure you come out ahead.
- Do your research. Simply taking the time to prepare a spreadsheet will help you compare offers. It’s important to know and understand the value of your current compensation package.
- Take the time to prioritize the items on your list that you have to keep and those that you’d be willing to give up. If your current compensation package doesn’t include any perks, it may be to your advantage to accept a lower salary if there are added bonuses that you might not currently have.
- Start with the value of your annual salary and any cash bonuses you will receive. It’s also important to note when your next salary increase is due and how it would affect your current salary.
- Don’t forget to include possible severance packages. In the current IT environment of downsizing and outsourcing, it’s important to know that you will have some options if your position is eliminated.
- Include bonuses, incentive plans, and benefits. Make a note of how much each of these items is worth in dollar value. Don’t forget medical, dental, disability, and other insurance plans as well as tuition reimbursement, company match of 401K plan and other retirement plans as well as accrued vacation or sick time.
- Perks may include the use of a company car, or cell phone.
- Free or reimbursed parking, daycare, and or sick child care may also need to be included. Monthly or annual membership dues to chambers or other like organization should also receive a value.
Once you’ve created your spreadsheet, use it to plug in new offers as they come in. Compare similar items such as salary to salary, bonus to bonus, etc. Although the new offer may differ from your present situation, that doesn’t always mean it isn’t still better. In the case of long term incentives, make sure you plan on being with the company for the minimum amount of time it would take to realize their value. If not, cross them off.
If you find yourself in a position of negotiating with either a potential employer or your current bosses, realize that the best way to explain your position is to let them know what you’re considering. Nobody wants to bring someone on board that isn’t going to be happy so odds are they’ll do what they can to work with you.
Keep in mind, however, that compensation is not the only thing to consider when considering a new opportunity. There are way to many professionals out there today that hate their jobs but stay because the compensation package is just too good to leave behind. Ultimately, the best option is the company that compensates you fairly, offers a stimulating, enjoyable work atmosphere and realizes the importance of their employees.
