Before you accept that new job, it is important to carefully evaluate the compensation plan. Here is a guide on what to look for in an ideal total compensation package.
Your compensation package plays a monumental role in where you end up working in the future. If you’re in the job market and get an offer with a salary that pays you $20,000 more than what you currently make, it goes without saying that you are supposed to take the money. But that’s where you’re mistaken! Oftentimes a higher salary might not actually mean more money in your pocket. Before we deep dive into the matter, let’s get to the basics.
What is a compensation plan?
A compensation plan, also referred to as a “total compensation plan,” includes more than just salary. It encompasses everything of value, monetary and otherwise, that an employer provides in exchange for the work you do. What can be included in the total compensation plan varies depending on the employer and position, but here are the most common pieces:
- Salary/hourly rate
- Paid leave – holiday, vacation, PTO, sick, personal, bereavement, military pay, jury duty, etc.
- Employee assistance program
- Retirement benefits – include 401(k)/403(b), pension plans, etc.
- Relocation expenses
- Career-advancement opportunities
- Learning and development offerings
- Disability insurance
- Life insurance
In addition, a growing number of employers are attracting job seekers with lush perks. The most common are:
- Family time
- Onsite health hub
- Pet-friendly offices
- Community support and activities
Why the total compensation package matters?
Before you evaluate the total compensation package it’s important to understand why it matters. A top-notch compensation plan demonstrates how well a company treats its workers. For example: The compensation package for Job A is salary and paid holiday. On the other hand, Job B offers a salary, 401(k), employee assistance program, and learning and development opportunities. Which one would you choose?
A plush compensation and benefits plan that covers the cost of essentials, such as medical, dental and vision insurance, that you would otherwise have to pay for from your pocket will save you from a lifetime of financial headaches. One that offers perks such as gym memberships and bonuses can help you upgrade to or maintain a healthy lifestyle. Lastly, it can allow you to plan for the future by providing retirement benefits such as 401(k).
How to evaluate the total compensation plan?
When you have a job offer in hand, it’s time to consider the total compensation package. If the salary isn’t what you expected, you may want to look at the added benefits that you’ll be receiving. Or if the perks and benefits aren’t that great, you may want to negotiate the package. Here are a few questions to consider when you want to evaluate the compensation plan:
- What is your base pay?
- Do the perks and benefits meet your (and your family’s) needs as well?
- Did you fully understand the benefits program?
- Does the organization provide competitive compensation and benefits packages in comparison to others within the industry?
- Does the organization encourage its workers to make use of its health and wellness programs?
- Are certain perks and benefits reliant on your performance?
- Do you need a specific length of employment before you qualify for perks such as stock options?
For one to be fully engaged in the workplace, it is important to find out what is a ‘must have’ in the total compensation package rather than a ‘would like to have.’ No job offer is perfect, so a big part of the evaluation requires you to let go of perks that don’t matter in favor of the essential ones. This should answer the difference between the ideal job offer you’re looking at and the actual job offer that you’re receiving.