People -- and rightly so -- focus on base salary when thinking about a new job or even a promotion.
"Base salary" is the driving force behind a total compensation package.
Companies use base salary levels to calculate other compensation elements – like bonuses, supplemental benefits, and even vacation time.
For example, the higher the base salary, the higher the bonus, and the greater the future income.
These different elements can really add up. Quickly.
What some people forget is very important:
Base salary isn’t the only force impacting total compensation.
In fact, people often overlook other elements – critical elements – when negotiating an offer. These other elements can mean significant money – and risk – in your total compensation.
Before agreeing to a job offer or promotion, consider these three hidden elements of compensation to maximize your total earnings:
These clauses limit your ability to work for a competitor of the employer for a specific period of time which may be several months or even years.
Companies want to protect their intellectual capital and competitive advantage. So they ask prospective employees to sign agreements restricting where they work after leaving the company.
These are often called "non-compete clauses," and they limit your employment options after you leave.
It may seem odd to think about where you will work when you leave – before you have even started – but you should carefully review these clauses before signing.
If you aren’t offered severance to compensate for the restriction, you may want to ensure the clause isn’t too broad. You could end up financially strapped, altering your career path for months (or years), if you leave your job.
Your new role might include more exposure and more risk to the company – if and when you leave. Even if you never signed a non-compete agreement, you might be asked to sign one now. So, make sure you review it carefully.
Whether you are starting with a new employer or being promoted by your current employer: This is a BIG one!
When being asked to move, people typically ask – and even receive – some cash compensation to cover the move.
But don’t forget! That additional allowance is taxed – heavily.
Plus there are numerous hidden costs associated with moving.
If you have a house, you need to consider the cost to pay realtor fees, renegotiate your mortgage, service cancellation fees, or utility initiation costs. Plus the cost of the move itself!
The money adds up much faster than people realize, and, usually, you have a limited time period (typically 6 months or less) to submit your expenses to be paid or reimbursed by your employer.
Most of the time, people assume the way one company approaches benefits is how they all do it. Not true.
Some offer a many benefits, and some offer very few. Many offer a mix.
One employer may pay for vacation, sick days, personal days, 401(k) contributions, life insurance, medical benefits, dental coverage, tuition reimbursement, maternity/paternity/family leave when a new baby is born, childcare, free meals, free parking, free transportation, and more.
Other employers and jobs just offer the basics (vacation and sick days) or, even, none.
One employer might not pass along much of their costs to its employees while another slices a chunk out of your paycheck each week as your contribution to cover the costs. And that chunk can be huge.
Even if you aren’t a big "user" of benefits, you should ask for a copy of the benefits plans.
Find out what your monthly cost to pay for your benefits will be – how much cost is passed from employer to employee.
Then, find out if your doctors are in-network or out-of-network. You should even check the costs of co-pays or cost of prescriptions you use. You might pay $5 for a prescription at one company, and then be charged $50 somewhere else.
If you are at the same company, a promotion might mean you are entitled to more benefits (or perks like a car allowance, stock options, commissions, bonuses), depending on your level.
The Bottom Line:
Not only is compensation more than just base salary, the total package (benefits, perquisites, etc.) changes throughout your career – even if you are at the same company for YEARS. Stay on top of what you are being offered. If you aren’t sure, ask!