If you are like the millions of Americans whose New Years Resolution is to find a new job in 2018, ideally it comes with a pay raise. One of the first steps you should take is to assess what you are currently making now. This goes beyond just your salary, but into your what is called your total compensation -the complete package of pay and benefits that comes with your current role. Without a comprehensive understanding of your current situation, it will be tough to tell what is a better offer. You might get a higher salary, but find that their healthcare costs are higher, or they contribute less to your 401k. That sweet pay raise can evaporate quickly.
Some companies make it easy to figure out your total compensation, and have features in their HR systems that will tell you everything the company counts as compensation. If you don't have that tool available, you will have to add it up yourself.
Things to consider:
Base salary: What your company pays you for showing up. If you are paid hourly and receive overtime, you will need to calculate your average annual overtime – especially if your job has a lot of fluctuations in hours. You should also factor in expected pay raises and promotions in the near future. Additionally, if you position is defined by pay bands, know where you are vs. your title. If you are at the top of the band, you cannot expect an increase in pay without changing companies.
Variable compensation: Unguaranteed income that depends on different circumstances. Usually your variable compensation is in the form of a bonus, profit sharing, or sales commissions. You should have a complete understanding of how variable compensation is determined. You should also have a realistic idea of the actual dollar figure you can expect. Just because you have a theoretical annual bonus, if the company hasn’t paid a bonus in several years, you should not count that as part of your bonus.
Long-Term Incentive: Long-term incentive (LTI) is any compensation that is paid out in the future, often beyond the next year. This is usually stock options or grants. You should calculate and decide how much you will leave on the table.
Benefits: Look at your full suite of company paid benefits – that you use and need. The biggest variable is healthcare – what coverage you need, what your current employer provides, vs. what your out-of-pocket costs are. The devil is in the details here and you should try to get as close to the mark as possible. You might get significantly less coverage at another company or pay significantly more. Paying an additional $500 per month, for example, can quickly erode any pay increase you might receive.
Retirement: You should know all the details about your retirement plan at work. Does the company have a 401k or 403b? If they match funds, what do they match? Are you vested in those funds (can you take it with you if you leave)? If so, when? Is there a pension? What happens to that pension if you leave? You need to know what you might leave behind, as well as what the company provides.
Paid Time Off: How much time off do you get currently? Add up vacation, sick time, company holidays and paid leave you might use (like maternity leave). Compare that to a future employer’s plan before you accept a job offer. Going from four weeks of vacation and ten paid holidays to two weeks that starts accruing after your first year can be an unpleasant surprise.
Perks: Add up perks you use and would have to replace in a new job. It could be anything from a company-subsidized cafeteria, parking, gym membership, or cell phone plan. If you never use the perk, don’t count it towards your compensation.
Tools to do the job: Anything your employer currently pays for you to do your job. It could be little stuff like providing a laptop, tools, cell phone. Or big stuff like a company car, and travel – while this may seem standard, you would not want to take a job and find out you need to buy $5000 worth of tools or cover your own travel expenses.
Claw-backs: Do you owe your company any money? Tuition assistance, signing bonuses, and relocation expenses usually come with claw-back provisions if you leave before a certain time frame. Assume they won’t overlook it. Know what that number is, and when you are no longer on the hook for it. That said, a future employer might be willing to give you a signing bonus to keep you whole, within reason.
While compensation is just one of many variables that helps define a career opportunity, it is an important one. Once you understand your total compensation, you can make a smarter decision about what a better offer looks like.
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