Negotiating a Compensation Package

You had a great interview and you expect an offer. Have you prepared for the offer negotiation call or meeting? It is a crucial step in the job search process and many people take the first offer without negotiating the best compensation package possible.

To demonstrate how accepting a bad base salary offer can affect your financial future, consider over five years how much you would have added to your gross salary if you had negotiated a salary that was $2,000 more than offered? You’ve missed out on more than $10,000 because most annual increases and bonus payments are calculated as a percentage of your annual base salary, therefore your loss is compounded. Add to this the loss in interest that you could have made had you saved the difference, the loss keeps growing!

Employers almost always offer less than what they are willing to pay. They expect that there will be a negotiation of salary and other benefits. If they state a range, they are hoping to pay mid-range so strive for the top half of the range. If they are firm on their low offer, try to negotiate more vacation, a car allowance or a higher performance bonus percentage. Look at salary survey information to determine whether you are asking for the moon or are in the right ball park.

Make sure you show your enthusiasm and let the employer know you want the job. Then start asking questions and negotiating the best package you can. Once the final offer is on the table, ask for at least 24 hours to think about it and get it all in writing. If you have to, confirm everything in an email so you have a paper trail to fall back on. Do not sign a vague offer letter. Ask for clarifying additions before you sign as you do not want to have misinterpretations of what has been offered. Never accept an offer under pressure. Time to process the offer is very important as you can easily get swept away by emotions. Take the time to calm down and think logically and analytically about the offer. Asking for time also allows you to ask for second opinions from friends, colleagues and mentors. Some questions to consider while contemplating an offer:

Does this offer meet your financial needs?
If the offer is low, have you compensated by negotiating more vacation or other perks?
Does the job fit your career values?

Here is a checklist of possible things to consider when negotiating a compensation package:

__Base salary hourly rate, monthly or annual salary.
__Commission a percentage of sales, may be added to base salary.
__Performance bonus usually a percentage of base salary, ask what metrics the bonus is based on and how often bonus is paid.
__Signing bonus an initial bonus upon signing the offer of employment. Large signing bonuses may mean the base salary is not negotiable.
__Profit sharing can be stocks in the company or percentage of net profits.
__Vacation How many weeks? When can it be taken? How does it accumulate?
__Paid sick leave or personal days How many days? How do they accumulate?
__Retirement plan RRSP matching plans, pension plans, stock options.
__Disability insurance How much is the employee portion? What is covered?
__Medical How much is the employee portion? What is covered?
__Dental How much is the employee portion? What is covered?
__Optical How much is the employee portion? What is covered?
__Extended Health How much is the employee portion? What is covered?
__Life insurance - How much is the employee portion? How much are you covered for?
__One year leaves e.g. receive 80% of salary for 5 years, get the 6th year off with pay.
__Moving costs moving expenses, house search trips, temporary housing costs covered, loss of sale on present property, mortgage rate differential, mortgage fees and closing costs, remote location living allowance, outplacement services for spouse.
__Car allowance parking, mileage, maintenance, insurance.
__Expense account company credit card or reimbursement.
____Cell phone allowance
____Point’s programs (frequent flyer miles etc.)
____Home office allowance
____Memberships to gym
__Professional Development
____Tuition reimbursement what is eligible (only in-house?)
____Conferences
____Memberships in professional organizations
____Subscriptions to industry magazines

If you find this intimidating, career coaching can help you determine your best strategy when negotiating a compensation package.

Return to Article Library

Do you have questions or comments regarding this article? Email Joni Rose at joni@careerminded.ca