Author Topic: Help me evaluate this compensation package  (Read 4683 times)

cosmie

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Help me evaluate this compensation package
« on: November 02, 2013, 01:41:35 PM »
I'll be graduating soon and have spent the last several months sleuthing around interviewing, and my offer letters have finally started arriving. For several non-compensatory reasons, the position below is my favorite and I'd like to optimize my offer. But I've never evaluated or negotiated a complete compensation package, so I'm not sure what's actually negotiable, what are good/bad benefits, what to have clarified, what is conspicuously missing, etc. This is one of the few places I'm comfortable sharing such detailed information, so I'd love your input/advice on the matter.

The offer:
Cash Compensation:
  • Base Salary: <redacted>
  • Variable Compensation: <redacted>
  • Joining Bonus: <redacted>
Other Benefits
  • Cash Balance Pension Plan*: 4%/yr contribution, fully vested after three years
  • 401(k)*: 100% match first 1% then 50% match next 5%
  • Insurance: HSA Health, Dental, Vision, AD&D, Life, Short- & Long-term Disability
  • Company HSA Contribution: $1,000/yr (2/3 of the $1,500 deductible)
  • Paid Holidays: 7
  • Vacation Days: 10, pro-rated first year
  • Sick Days: Not mentioned (Is this part of vacation days?)
*These percentages are based on total compensation, including any paid out variable compensation.


The job is as a <redacted> for a F500 manufacturing company. Although I'm familiar with what area, I only have the vaguest idea of what my role itself would entail. According to Indeed.com the average salary is $88k ($75k when I localized it).

So, I'd like your opinion on a few areas:
  • As an inexperienced new grad, do I have any leverage to negotiate?
  • If yes, which aspects should I try to negotiate (and by how much)?
  • In general, would this be considered a good or bad benefits package?
  • Is the information they provided (listed above) missing anything that would be prudent of me to ask about?

Thanks!

Edit: I've redacted some of the specifics figures for my offer, but left the thread in general for others that may have questions about what areas to inquire about.
« Last Edit: November 29, 2013, 11:35:19 AM by cosmie »

Tyler

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Re: Help me evaluate this compensation package
« Reply #1 on: November 02, 2013, 02:12:22 PM »
Congrats on the job offer!

Honestly, I think everything looks pretty solid.  Pensions are pretty rare these days, so that's a nice perk.  That's a pretty low deductible for an HSA, and the company contribution is nice.  The starting salary seems reasonable for a new grad considering the average for the job, and I'd assume the variable compensation is based on company/team/individual metrics for the year, although you might ask how they calculate it so you can understand how to maximize it.

It sounds like you like the job, so I say go for it.  I personally wouldn't push the negotiation too hard unless you have another legit offer for more money that you could ask them to match.  In that situation, play it as a positive -- "All things being equal I really want to work for you guys.  Can you match my other offer?"  If you do ask for more, plan it out ahead of time -- what will you do if they refuse? 

If I were in your shoes, the one thing I would follow up on the most is getting a better understanding of the role for the job.  This is what you'll be spending a good portion of your day doing, so it's important to know what you're getting into. 

Cyrano

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Re: Help me evaluate this compensation package
« Reply #2 on: November 02, 2013, 02:24:57 PM »
If you're so inexperienced that you have only a faint idea of the job responsibilities (probably something like make our databases talk to each other and deal with the hiccups when they don't), then you're being hired because you seem smart enough to figure things out in the job. It's a fair offer for a new grad, but not a fair offer for someone with 3-5 years experience. Try to find out what the company's typical habits are regarding raises. If the company typically gives a large performance-based raise a few years down the road after they know that you know what you're doing, your room for negotiating starting salary is limited, and whatever you get now will come out of that future raise. At a large company, salary and bonus are likely the only things that are negotiable, and the other terms are probably part of a benefit plan that covers all employees similar to you. If the company doesn't have a track record of performance based raises, you will find yourself underpaid in a few years. In that case, negotiate now or be prepared to do it later.

cosmie

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Re: Help me evaluate this compensation package
« Reply #3 on: November 02, 2013, 04:26:54 PM »
Quote
Congrats on the job offer!
Thanks! :)

Honestly, I think everything looks pretty solid.  Pensions are pretty rare these days, so that's a nice perk.  That's a pretty low deductible for an HSA, and the company contribution is nice.  The starting salary seems reasonable for a new grad considering the average for the job, and I'd assume the variable compensation is based on company/team/individual metrics for the year, although you might ask how they calculate it so you can understand how to maximize it.
Thanks for the spot check. I was surprised about the pension too; one thing they highlighted was that you get both the Pension contribution and 401(k) match. I guess most companies that still offer a pension make it an either/or?
 I just checked - the variable pay is based purely on company financial performance. If they hit their yearly goals, it pays out at 1x. If they exceed their goals by 50%, it pays out at 2x. The company manufactures components for a fairly cyclical industry, so I need to see how often it doesn't pay out.

Quote
It sounds like you like the job, so I say go for it.  I personally wouldn't push the negotiation too hard unless you have another legit offer for more money that you could ask them to match.  In that situation, play it as a positive -- "All things being equal I really want to work for you guys.  Can you match my other offer?"  If you do ask for more, plan it out ahead of time -- what will you do if they refuse? 
Two of my other offers pay more, one of which is a 20% bump in base. But neither are in comparable positions or industries, and both are in high COL areas where rent alone would eat the difference up and then some. So I'm not sure if I could use the positions as leverage? This is still my favorite offer despite that, but I don't want to leave any more on the table than necessary...

Quote
If I were in your shoes, the one thing I would follow up on the most is getting a better understanding of the role for the job.  This is what you'll be spending a good portion of your day doing, so it's important to know what you're getting into.
I definitely plan to, but won't know until after the window to negotiate is over. I have a site visit in about 2 weeks to meet my hiring manager and prospective team, where I can find out specifics on what is expected of me. But I have to finalize my offer within 24 hours of that visit, so there's no room for negotiation at that point.
« Last Edit: November 29, 2013, 11:37:10 AM by cosmie »

lhamo

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Re: Help me evaluate this compensation package
« Reply #4 on: November 02, 2013, 05:52:34 PM »
Run, don't walk, to your local library and get the book "Ask For It."  Great resource, especially for women.

Of course you can negotiate.

I would definitely use the higher base salary offers as a starting point.  It is a fact that you have been offered those starting salary packages.  You don't have to say what city, how the other benefits differ, etc.  Again, put it in terms of "I really want to join your team but company B has offered me a base of $x and company C has offered me a base of $y.  I'm excited about this position and wondering if we can meet somewhere in the middle at around $z."  This is just an example off the top of my head and may not be the best way to frame it (I suck at negotiating, hence my need to read the book, not once but twice already) -- Ask For It will have very good advice.

It does sound like a good package for an entry-level job to me, but a big point of the book is that you really need to negotiate hard, especially as a women joining the job market, in order to be sure you aren't selling yourself short not just for your first position but also for every position that follows.

Good luck!
   

Sarita

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Re: Help me evaluate this compensation package
« Reply #5 on: November 02, 2013, 05:59:24 PM »
Hi-- A couple more thoughts & questions (I work in HR-- have done both Fortune 500 and mid-size corporate + non-profit)
1. Is the vacation accrued over time or given to you in one lump sum at the beginning of the year?
2. Find out about sick days and whether they have short-term disability.  It should be different from vacation.  Hopefully you will never need to use it, but you should know what it is. I wouldn't ask about this directly though,if you can help it.  Best to ask if they have a benefits summary.  Most employers will have something they can provide to prospective hires.
3. Is the signing bonus net or gross?
4. Do you need to move to get to this job?  If so, do they offer relocation?  how much? 
5. If you have higher offers elsewhere, I would recommend trying to negotiate.  The truism that the best time to negotiate is before you accept the offer is true. As long as you do it very respectfully, they won't necessarily be surprised or hold it against you.  I'd recommend saying something along the following: "I am really excited about the offer and your company is my first choice.  I do have two other offers, however, that pay x and y.  Would you consider matching them?"   If they say no-- or that they can't, because they have standard rates of pay for all incoming hires at that level-- then ask if they would consider increasing the signing bonus.   Companies will often be more willing to negotiate signing bonuses because it's a one-time expense as opposed to a higher salary that they need to carry for years to come and that also may complicate internal equity concerns.

I fully support your decision to go with the company that simply feels best to you, and not just take the one with the higher salary.  In my personal and professional experience, cultural fit/values alignment with an organization is way more valuable than money.   I took a 40% pay cut to go from corporate to non-profit and I have never been happier.

Best wishes and congratulations!

StarryC

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Re: Help me evaluate this compensation package
« Reply #6 on: November 02, 2013, 06:48:20 PM »
Ask for more in salary.  They may say no.  You can still take the job. 

I've said something like, "I was expecting an offer of closer to $65,000 a year.  Do you have any more room?" if you don't have other offers to play off of.  Of course your salary is below average, because you are substantially less experienced than the "average" worker.  But, try to get up above $60!

This first salary is the salary on which all future raises will likely be based.  (3%, 10% raise)  If you move companies they will ask this salary and base your offer on it.  So, even a slight increase here, will pay off over your lifetime.    Also, paycheck wise, $3,000 a year is $250 a month.  $5,000 would get you close to maxing a Roth just with the negotiated raise. 

ch12

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Re: Help me evaluate this compensation package
« Reply #7 on: November 03, 2013, 06:06:48 AM »
Ask for more in salary.  They may say no.  You can still take the job. 

I've said something like, "I was expecting an offer of closer to $65,000 a year.  Do you have any more room?" if you don't have other offers to play off of.  Of course your salary is below average, because you are substantially less experienced than the "average" worker.  But, try to get up above $60!

This first salary is the salary on which all future raises will likely be based.  (3%, 10% raise)  If you move companies they will ask this salary and base your offer on it.  So, even a slight increase here, will pay off over your lifetime.    Also, paycheck wise, $3,000 a year is $250 a month.  $5,000 would get you close to maxing a Roth just with the negotiated raise.

+1 - My own company is notorious for not negotiating (with clients or with employees), but in the vast variety of places, there's flexibility on the numbers, especially if you've done your homework. Is that 75k a year for someone with 3-5 years of experience? There's probably a gap between entry level and mid-level pay, as there should be.

Do you have other offers? It's the best way to get a boost in pay.

chasesfish

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Re: Help me evaluate this compensation package
« Reply #8 on: November 03, 2013, 06:41:30 AM »
I think you call them up, tell them you really appreciate the offer, like the company, and think that their offer is fair and very close to something you'd accept.  Tell them that you have offers from others, but want to work there.

Then ask them if they have any room on the base salary and if they can bump it up a little, you'll take the job.

I think that's how I would handle a negotation with a place/location I want to work.  Don't get greedy, ask them if they have some room to move, but tell them that its where you want to work.  You may get an extra $3,000 out of this without risking the job walking away.

Belial

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Re: Help me evaluate this compensation package
« Reply #9 on: November 04, 2013, 10:54:30 AM »
If they won't be flexible with salary, you might ask for additional vacation time instead.  Two weeks for a new employee is reasonable standard, but there's a lot of variation in when you get additional time off.

Lina

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Re: Help me evaluate this compensation package
« Reply #10 on: November 04, 2013, 11:20:01 AM »

5. If you have higher offers elsewhere, I would recommend trying to negotiate.  The truism that the best time to negotiate is before you accept the offer is true. As long as you do it very respectfully, they won't necessarily be surprised or hold it against you.  I'd recommend saying something along the following: "I am really excited about the offer and your company is my first choice.  I do have two other offers, however, that pay x and y.  Would you consider matching them?"   If they say no-- or that they can't, because they have standard rates of pay for all incoming hires at that level-- then ask if they would consider increasing the signing bonus.   Companies will often be more willing to negotiate signing bonuses because it's a one-time expense as opposed to a higher salary that they need to carry for years to come and that also may complicate internal equity concerns.



I think this is a good recommendation. In my experience there is almost always some wiggle room. In my current job I got about 20 % more than their first offer by showing them that I had other options. I have never accepted the first offer and I have always been able to get some more then the initial offer. I have a colleague that is making 10 000 dollars less per year than me because he didn't negotiate. We started basically at same time in similar positions at another employer, fast forward 6 years we are again working in similar positions for another employer but I am making 10000 dollars more. For every salary increase I will benefit more and it will also affect the pensions.  I would ask if they can match the other offers and if I got a no I would ask for a day to consider their initial offer. If I still really would like to work there I would call back next day to accept the position.