In a prior post, I discussed some ways of obtaining information that can help negotiate a job offer. When you receive a job offer, it’s easy to only focus on the hard numbers:
- Base salary
- Bonus (if available)
- Sign-on bonus (if included)
- Stock/Stock options (if included)
These are the data points most easily benchmarked against your current position (or against the market). But if you focus only on those numbers, you are not evaluating the entire offer effectively.
Benefits are extremely important to you (and, potentially, your family). They are also a significant part of your compensation.
A great benefit package:
- Ensures you can stay well–and provides great care in the event of a serious accident/illness–without bankrupting you (I mean this quite seriously)
- Provides enough paid time away for work that you can have a great work/life balance while not worrying about lost income
- Invests in your future by providing things like employer matching funds in a 401(k) or offering discounted employee stock purchase plans
- Ensures you have insurance coverage for unforeseen events (short- and long-term disability; life insurance)
- Offers other things that make your life easier and heathier, such as a transit pass; onsite bike lockers/shower room/gym (or discount to a local gym); discounts on food; etc.
But how much do these cost–and how to weigh them as part of your offer? The Bureau of Labor Statistics calculated that, on average, benefits cost an employer 30.9% of the overall cost of employment. A 2011 SHRM report states that, on average, employers spent 19% on mandatory benefits (such as unemployment compensation, workers compensation, and Social Security); 19% on voluntary benefits (such as health insurance, flexible spending accounts, vision plans, insurance); and 11% on time not worked benefits (paid holidays, sick leave, vacation, personal/bereavement leave).That’s 49% of the total $ spent on employing you.
Now you have a sense of how much you should value that benefits package as part of your offer. What should you be looking at specifically?
- What does the health plan cost you per month compared to your current plan? What are the annual coverage maximums and co-pays? Can you keep your current providers under the new plan? It’s important to understand these differences as they can add up to real money out of pocket.
- Does the new company offer a flexible spending account or health savings account for medical expenses? That can save you $ in paying for these costs pre- versus post-tax. If you have–and use–an FSA with your current employer, and the new employer doesn’t offer an FSA, that can impact you financially.
- How much does the new employer contribute to retirement (401k, 403b, etc)? This is $ to you, so it’s important to know what the delta is (if any) between your current employer and the new one.
- How much paid time off will you receive? Does it increase over time with certain anniversary dates? Is it paid out when you leave? Companies with PTO plans do not usually let you ‘bank’ time & roll it over into the next year. It is also not often considered compensable time. If your current employer has a vacation plan that lets you bank time–and cash it out if you leave the company–and the new one does not, that’s something to consider. Also look at how many paid holidays you will receive, how much sick time, etc.
- What are the other perks/benefits of working for the new employer? Do they offer a parking subsidy or transit pass? What about an onsite gym? Do you receive free/discounted food or drink? Can you purchase company products at a discount? (Microsoft Employee Store, I’m looking at you…)
Altogether, the differences between benefits packages can mean large overall differences in your compensation–or how much $ will be coming out of your paycheck (or pocket) that isn’t with your current plan today–with a new employer vs. current. It’s well worth taking the time to crunch the numbers and discuss the differences you find with the recruiter. It’s worth noting that most recruiters will not be able to make changes to benefits–with very few exceptions (seniority-based vacation accrual for one) they are usually the same for all employees. But they may be able to make a case for increasing your base compensation a bit if your out of pocket expenses will increase under the new plan.