What should I evaluate when considering a new job offer?
Today, few people stay with one employer until retirement. Instead, it’s likely that at some point during your career, you’ll be searching for a new job. You may be looking for more money, greater career opportunities, or more flexibility. Or you may be forced to look for new employment if your company restructures. Whatever the reason, at some point in your working life you might be faced with a new job offer. Should you take it? Here are some things to evaluate.
Salary: How does the salary offer stack up against your previous job? If the offer is less than you expected, find out when you can expect performance reviews and/or pay increases (a typical company will review your salary at least annually). You can compare your salary offer to the salary range for others working in the same industry by looking at salary-related websites. In addition, consider the availability of bonuses, commissions, and/or profit-sharing plans that can increase your total income, and find out whether they’re dependent on your own job performance, the company’s performance, or a combination of both.
Employee benefits: What benefits does the company offer, and how much of the cost will you bear as an employee? A good employee benefits package can add the equivalent of thousands of dollars to your base pay. Benefits may include a retirement plan (hopefully with employer matching contributions); health, dental, and vision insurance; disability, life, and long-term care insurance; vacation time and sick leave; flexible spending accounts for health and dependent care expenses; tuition reimbursement; student loan assistance; child-care programs; transit programs; counseling services; pet insurance; and other miscellaneous benefits.
Personal and professional consequences: Will you be better off financially if you take the job? Is there schedule flexibility? Will you need to work a lot of overtime? Travel extensively? Consider any related costs of taking the job, such as transportation and day care. Also take a close look at the company’s work environment and culture. You may be getting a good salary and great benefits, but if the work environment doesn’t suit you, you may want to think twice.
I received a new job offer but the salary is low. Should I make a counteroffer?
Probably. Getting paid less than you should when starting a new job can affect not only
your current paycheck but also your long-term asset accumulation. For example, the less money you earn, the less you have available to contribute to your retirement plan, and potentially the lower the amount of matching employer contributions you’ll receive if they are offered.
In addition, because your current salary is typically the benchmark for future pay increases and bonuses (which are often expressed as a percentage of your salary), the effect of a pay gap is cumulative. Unless corrected, pay disparities may widen over the course of your career. For example, a low starting salary at job #1 could serve as a benchmark for your salary at job #2, which could serve as a benchmark for your salary at job #3, and so on.
To determine whether the salary offer is competitive, research and compare salaries based on industry or company standards. You can look at salary-related websites to get an idea of a typical salary range for someone in the same occupation, in your geographical location, with your education, experience, and skills.
If the salary offer is low, go back to the company and articulate your strengths. What skills and qualities will you bring to the table? State the amount of money you want. Make it clear that if the company accepts your terms, you are willing and able to accept its offer immediately.
What happens next? There are three possible scenarios. First, the company might accept your counteroffer. Second, it may reject your counteroffer, either because company policy does not allow negotiation or the company is unwilling to move from its original offer. If so, you’ll have to decide whether to accept the original offer. Third, the company may make you a second offer, typically a compromise between its first offer and your counteroffer. Again, the ball is back in your court. If you need time to evaluate the latest offer, ask for a day or two to think about it. If the company isn’t able or willing to give you more money, it might be able to offer you job flexibility, such as telecommuting or flex scheduling, that might make up for the lack of a salary increase.
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This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. Waddell & Reed does not provide legal or tax advice. This information is prepared by an independent third party, Broadridge Investor Communication Solutions, Inc. and is provided for informational and educational purposes only. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. This information is not meant to be a complete summary or statement of all available data necessary for making financial or investment decisions and does not constitute a recommendation. Please consult with a tax professional regarding your personal situation prior to making any financial related decisions. Also note that the information provided may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Waddell & Reed, Inc., nor its Financial Advisors give tax, legal, or accounting advice. Nothing contained herein is intended as a solicitation or an offer to buy or sell any product or service mentioned and they may not be suitable for all investors.
Duane Silbernagel is a Financial Advisor in Lincoln City, Oregon offering securities through Waddell & Reed, Inc., Member FINRA and SIPC. He can be reached at (541) 614-1322 or via email at DSilbernagel@wradvisors.com.
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