Some recent events brought me back to my first job offer “negotiation” and what a cluster F that was. On one end is someone that has had this conversation hundreds of times, on the other was a younger, nervous Mr. AE that had too much Minnesota Nice ingrained. It went something like this:
Mr. AE: “Ahhh, can you increase the starting salary to $40,000 a year?”
HR: “We don’t typically increase starting salary from the $36,000 base.”
Mr. AE: “Oh, ok…….. ahhhhhhhhh…..ummmmmm….Is there anything we can do to get me closer to $40,000 per year?”
HR: “We can give you a $2,000 signing bonus if you agree to the terms today”
Job. Offer. Accepted.
I should mention, that I was reluctantly negotiating because my mom told me “that is what people do.” The $2,000 signing bonus sounded pretty awesome at the time, but signing bonuses don’t compound. That was a win for HR, a one-time cost that they weren’t committed to next year. A one-time cost that wouldn’t be compounded with my next raise. They got me good.
Looking back, I now realize that not only do we lack financial education for high school and college students, we also suck at teaching people how to evaluate important decisions they will face early in adulthood. Right out of high school or college, they are going to make a huge decision that will impact 5 of the 7 days every week.
99% of the time I see or hear about a job offer, the first (and sometimes only thing) that comes up is starting salary. Income is important for pursuing Financial Freedom, but other factors are just as important to your current and long term sanity.
This is all coming back to me because one of my younger siblings is currently in a bidding war between the company he works for, and a competitor. There is a significant difference between the current offers, to the tune of $3.50 per hour, but his current employer has “big plans” for him down the road. All the people working in the office are in their 60s and they want him to start learning and taking over some of their responsibilities. It’s the classic Cash Now, or more Cash Later conundrum.
Anyways, he reached out and asked me what I would do, and that spurred me to write a post about evaluating job offers.
Factors to Consider When Evaluating Job Offers
I am guilty of focusing on my salary as much as the next person, we even work it into our yearly goals. It is super important, it sets the tone for all the financial decisions that come once you start collecting paychecks. Negotiate early and often and drive that number sky high, but there are some perks of my job that compete with the bottom line. Below you will find everything you need to look at when evaluating job offers.
Vicki from MakeSmarterDecisions has a great way to help you organize all the factors below, here is a link to her Decision Making Framework
Work weeks are a lot longer than 40 hours if you need to commute. Even with the trusty bus it still takes me about 40 minutes per day to get to/from work. If I was driving myself, it would be double that (bus uses the shoulder to skip traffic, no parking, limited walking).
We had a recent college grad quit within the first 2 weeks because it was taking him to long to get to/from work every day. Poor planning on his part, but I understand the decision. Making an 8 hour day an 11 hour day is not appealing.
If you value your time, factor in the commute.
Many of the below items do contribute to your overall package and should be weighed against your current situation or competing job offer. The salary might be higher, but you could end up making less if the rest of the package is crap.
Are the available health plans cheap? How do they stack up to your current employer or other job offers you have?
- Do they have the plan you are interested in?
- HSA, or a high deductible plan if you are young and healthy
- FSA (Flexible Spending Account)
- What do the children/family plans look like?
- Is Vision and Dental Available/subsidized by your employer?
Pretty straight forward, do they offer an employer match on your contributions and up to what percent? This may not seem very important day 1, but it is tax-free earnings that goes straight towards your retirement. We get a measly 1.5% if we contribute 6%, hopefully, they will increase the match as our company grows.
I didn’t even know companies did this when I first got hired, but we are automatically insured for our yearly salary completely paid for by our employer. Not a significant cost (does increase as you get older) but something to at least look at.
Employee Stock Purchase Plans (ESPP)
You can view my full write up on ESPP here, but review their plan if they have one. Most of the ones I know about give a 15% discount on stock purchases.
Extremely hard to define and verify, but extremely important. You don’t need to be best friends with your co-workers but you don’t want to work with a bunch of a**holes either.
Few ways you can do some research
- Employee Voted Awards – You can find “Best place to work” awards with a quick Google search
- Reviews – Glassdoor.com shows employee reviews. I wouldn’t put too much weight on an individual review as it could be from a hostile Employee/Employer breakup. Look for trends before letting it factor in your decision.
- Linked In – Find some current or former employees and see how long the employment history is, if everyone is leaving after short stints it might be a red flag.
Also, business casual is a must for me, I don’t remember the last time I wore dress pants or even khakis to work.
The number one reason I have not looked for a new job, even when I was underpaid last year, is flexibility.
Work Life Balance
Are you going to be working 40 hours per week or 60? It might be a little bold to flat out ask this during the interview process, but it feels like many companies are noticing the trend and not driving employees into the ground. The research you do on culture above will shed some light on this factor.
Set your own hours
I work 7 AM to 3:30 PM almost every day. Some people come in at 9 and leave at 6, outside of mandatory meetings we can set our own hours. I don’t know if I could go back to a rigid work schedule. Someone else telling me when to eat lunch…….hard pass.
Work From Home
I only WFH a few days a month, but with Little AE here that flexibility is going to be very convenient. If I need to jet to a doctors appointment or stay home if she is sick, I won’t waste an entire PTO day.
Time Off Policies
Getting paid while you are spending a day on the lake is a great feeling, and while you can easily put a monetary value on it, you may find time off way more valuable than the dollar figure.
Factors to consider:
- How Much – How much do you start with, does it go up over time and where does it cap?
- Carryover – Are you allowed to carry PTO over into the next year? How much? If you don’t use it do you lose it?
We are able to carry a full years worth of PTO every year over to the next without penalty. Makes a big difference, especially if you want to take a longer vacation and still have a stockpile. I am up to 5 weeks of PTO every year and 9 paid holidays, it would be difficult to find a setup like this somewhere else.
For parents (or future parents)
We have some recent experience in this area, if you are planning on having kids while working for this employer ask about their leave policies.
Paid – Is any part (or all) of your maternity leave paid?
Short Term Disability – Do they provide short term disability after birth with a % of pay?
Any paid time for Dad? More thank likely the answer is no, but its worth a shot. I had to (happily because I had enough banked) use PTO to stay at home for 2 weeks after Little AE was born. Wish I could have stayed longer but one of us needed to keep a PTO buffer in case something happens down the road.
I really hope paid Maternity and Paternity leave gets some traction in the coming years, I know it is a personal decision to have children, but unpaid leave forces really difficult decisions that wouldn’t be an issue if there were better policies. I don’t know how families that are truly living paycheck to paycheck do it.
This is a tricky one, not only does the opportunity for growth need to be present, but you need to trust that your employer will promote from within. My brother is struggling with this part right now, and I get it, humans don’t like uncertainty, it is way easier to take a sure bet.
Even though my starting salary was low for a college grad (with an MBA) the opportunity for growth was present. The company I work for had over 30 consecutive quarters of growth, with new positions being created monthly. You don’t want to end up in a dead-end job, it may be worth it to take a little less if there is significant runway in front of you.
Be sure to ask about advancement opportunities, they might be able to give you some stats on how many employees were promoted in the last year.
Fully admit that charitable work was not on my list when I looked at any potential employers, and it would still be way towards the bottom.
That being said, our employer recently rolled out a new program for employees where they will match up to $750 that goes to a certified 501(c)(3) charity OR they will match your volunteered hours with a cash donation of $25/hour.
I was floored when I saw this email come out and think it is an awesome program. Matching volunteer hours with cash is an added bonus for a very young company that might not be able to swing the $750 a year out of pocket.
Giving employees the option to choose what they want to support is something I have not heard of before. Makes it more personal than pooling everyone’s money together and having HR cut a check.
Evaluating Job Offers: Take Away
Like I mentioned earlier, salary is very important and should be weighed heavily when evaluating job offers, but there may be other factors that end up making you miserable. You are making a big commitment when you accept and start a job, it’s not always easy to up and leave for something else. Don’t make a snap judgment on salary alone. You need to ask, what are these things worth to you?
Is there anything that is worth more than salary to you? Do you consider anything else when evaluating job offers