How to Understand your Compensation Package
When you are negotiating compensation for a new job, you should be aware that salary is only one component of this compensation. It is likely that your new employer will offer you what is known as a “compensation package,” which is a collection of incentives and benefits that combine to create the total value of the position. It is important that you carefully take into consideration all of the elements of your compensation package to ensure that you are being compensated an amount commiserate to your value as an employee and the position that you are fulfilling.
A close friend of mine just landed the job she’d been interviewing weeks and weeks for. After her new employer confirmed her starting salary, my friend was a bit confused and disappointed. It seemed what the company planned to pay her fell short of the salary expectations discussed during the interviews. Why? Because, the employer felt as though extra perks like her telecommute option for one day per week and extended vacation time made up for the difference. Although her actual salary didn’t fall within the range initially given, her entire compensation package made up for it.
There are many different elements that can go into a compensation package, and each employer is different in what it will offer. Here are some of the basic things that tend to show up in these packages:
- Paid Vacation: When you consider paid time off as part of your compensation package, you should feel that it is time that you will not be working, but you will still be collecting a paycheck. This is a valuable aspect of your salary—but check closely to ensure that the paid time off that you are receiving is actually of the correct value. You should be receiving as your vacation pay, the same that you would be paid for working. This generally causes an initial salary offer to be lower, however.
- Health Insurance: Getting health insurance coverage from an employer is a major benefit because you will not only have the luxury of not having to think about paying the premiums because it will be automatically done for you, but the cost is also much lower than policies you could get on your own.
- Perks: This is an element of compensation packages that can truly baffle new employees. A “perk” is something that is often of vague value, or of value only to certain people within the company. It is essential that you compare the list of perks with your own situation and lifestyle as a means of determining if these perks really have any bearing on your perspective of the package. For example, if you don’t have any children it probably wouldn’t matter to you if one of your perks was onsite daycare. However, other perks may be of more interest to you—company tickets to sports events, a gym membership, or a company car may have a lot of value for you.
One thing that you should remember when you enter into compensation discussions with a new employer is that there is a lot of room for negotiation, but there are some things that you are not going to get headway in no matter what. For example, you may think that you can just pick out pieces of the proposed compensation package and ask if you can cash those in for a higher salary. After all, why should you have to accept a lower salary because of perks you don’t use? While this makes sense to you, you aren’t likely to convince a hiring manager to actually convert perks and other elements of your compensation package for cash. It is almost always easier to get extra benefits—such as a few more vacation days—than it is to get a higher salary.