If you’ve turned on a television in the last 18 months you’ve probably seen the commercials encouraging consumers to ask car dealerships to “Show them the CarFax” before purchasing a used vehicle. A CarFax report is a certified report detailing the history of the vehicle. The report covers several important topics such as if the car has been in any accidents, service records, ownership history, and if the car has had any title issues. This product has gained quite a bit of momentum in the past few years due to the perception that used car dealerships are rather selective with what information they share with potential buyers. Having a CarFax report prior to beginning the negotiating process with the dealership provides the consumer a non-partisan assessment and gives a clear picture to the history of the vehicle. Given all of the information a CarFax report can provide it wouldn’t be prudent for someone looking to purchase a vehicle to starting negotiating a price for a vehicle before having the proper information.
Every day when people interview for positions at new companies they make the same mistake. They discuss salary before they have collected all the information to make the most informed decision. While there are no CarFax reports for people looking for a new career opportunity there is a document the company has that will be almost as useful… the benefit sheet. When benefits are introduced into the equation the issue is no longer a matter of “salary” but a matter of a “compensation package”. Below are some of the questions that job seekers should have answered before discussing their salary with a potential employer:
What are the health insurance costs? – Just about every company has insurance options but the policies offered have a great degree of variation depending on the employer. It’s very common for monthly premiums for coverage to fluctuate several hundred dollars between employers. Once a job seeker has obtained the information for the monthly premium it’s also equally important to acquire the knowledge of what is the annual deductible and co-pay. The cost of health care is steadily rising and the difference between having a good health insurance plan and a below average plan could result in the loss of several thousand dollars per year.
Do they offer dental, vision, or life insurance? – Many times in the adrenaline rush of finding a new career opportunity people can overlook how costly dental work and eye glasses have become. Individuals with small children at home should give this careful consideration given the high cost of braces and eyes glasses. Baby boomers may also value the opportunity to purchase life insurance at a greatly reduced group rate then what they could negotiate on their own.
What is the annual company match on the 401K and how long until employees become fully vested? – With most companies eliminating traditional pensions the 401K has become the standard for how many people are saving for retirement. While it might seem like a small difference between a 3% match and a 5% match short term, over the course of 35 to 40 years with compound interest the difference could be a couple hundred thousand dollars. The vesting period for companies typically varies from the first day of employment to the completion of the employee’s fifth year. Many employers have a graduated scale that only a percentage of their contributions are guaranteed until the vesting period. Before making a career chance it’s always important to realize the long-term financial consequences of losing a portion of the company match.
Does the company typically give an annual or year-end bonus? – While it may seem trivial to ask about a holiday or annual bonus during an interview it can actually make a very large difference in an individual’s annual salary. Companies typically give anything from the “jelly of the month club” to a percentage of annual salary. When encountering a situation with multiple job offers a 3% – 5% annual bonus can be a deciding factor and make a huge difference in otherwise similar compensation packages.
Is tuition reimbursement available? – Education is one of the most valuable gifts in the world and quickly is becoming one of the most expensive. Tuition reimbursement can often add thousands of dollars a year to a compensation package and encourages a company culture of reinvestment and career growth. This is a great tool to attract many younger professionals entering the workforce who would like to continue their education but have acquired tens of thousands of dollars in student loans from their undergraduate programs and aren’t in a financial position to assume more debt. One item to take into consideration is that many of the tuition assistance programs require a commitment to stay with the company for a specified period of time after using the benefit otherwise the company requires the assistance be repaid to the organization.
Very similar to reviewing a CarFax report for a vehicle, having a solid understanding of a companies benefit package enables the job seeker to approach his or her negotiations with confidence. The next time the question is posed, “What are your salary expectations?” respond with “Show me the JobFax!” or… “I’ll be happy to discuss compensation after we review the benefit package.”