Continuing our compensation discussion from our Day 4 article, what other things can we negotiate besides base salary?
Let us take the case that you have a pending job offer with a base pay of 105K. When you did your financial analysis of your spending and savings goals, you came up about $10,000 short in the offered base salary. We will assume that the base pay is not negotiable. What else could be a source for that $10,000 for 2021?
If the base salary is not available to negotiate, that does not mean the negotiation is over. You want to consider if there are negotiation opportunities in the rest of the compensation package: the benefits and other “perks.” Benefits and “perks” will vary considerably with each company and should be analyzed to understand the opportunity to generate cash and investments over time.
Benefits and Perks:
Keep in mind that some of these benefits and perks are individually negotiable and others are governed by Federal, State, Local regulations or Company Policy and must be applied in the same manner to all employees. In general, here are some additional benefits and perks that are negotiable to varying degrees.
A. Benefits that are generally negotiable with a new hire:
– Sign-on Bonus is used to sweeten your job offer, provide cash for unpaid expenses, help in relocating, and assist in other more personal issues. This is a one-time award of dollars. Generally, they range from a few hundred to a few thousand dollars.
– Performance Bonus is usually a very structured practice in the company. It is a method for the company to award earned profits to employees. For new hires, some companies have flexible performance bonuses during the first year that can be used to award individual performance. You may also be able to shorten the time period of performance, for example 6 months instead of a year, for the award. “Are you open to a 3% performance bonus if I have the lab fully operating within 6 months?” After the first year of employment, performance bonus programs are more tightly controlled and can become the major source of your annual compensation if you take on management responsibilities.
B. Benefits that are generally available to all employees but vary widely in negotiation opportunity by organization:
– Relocation expenses for employees will range from cost plus a per diem to a fixed dollar amount that you manage to complete the relocation. In general, your cost to relocate is covered and there may be some “leftover” dollars. Please check that relocation is included as part of your job offer.
– Paid vacation time, sick days, holiday pay, personal days, bereavement, jury duty, military leave, newborn, and more. Pay attention as to how you can be compensated based on your usage of these type of benefits. Some companies you USE, or you LOSE with no compensation. Some companies award fixed number of days and if not used can be cashed-in at end of year; for example, 14 days that you do not USE could amount to a few thousand dollars.
– Commuter Assistance program could save you commuting expenses.
– 401 (k)/403(b) Plans will usually have a match that the company will provide. The company will match your contribution to some percentage limit such as 6 %. Check on the “vesting” of the company contribution and when can you borrow against your contribution and the company contribution.
– Discounted Stock Purchase Programs will usually allow a 15% discount for you to purchase company stock. Be sure you understand the vesting or holding time required by the company before you can sell any stocks. This can be another source of cash or an investment option.
C. Benefits that are highly regulated with limited negotiation opportunity:
– A highly regulated benefit is the Medical programs for Health and Dental for yourself and family. If health conditions are of concern for you or your family, carefully evaluate and estimate your expenses for the medical benefits provided. Some companies may pay you to go on your spouse’s medical plan and it may be worth it.
Our $10,000 deficit of cash that we are seeking in our Base Salary could also be negotiated in our benefit package. A negotiated $5,000 Sign-on bonus for “expenses” and the 3% Annual Performance Bonus of $3000 will make-up much of the $10,000 we are seeking. In addition, how we utilize other benefits can generate additional cash: we will skip vacation this first year and cash in another $3,000. Your total WORTH in cash and investments may take a year to totally realize. The good news is that the more you learn about your compensation, the more you will find your WORTH!