Tuesday, May 10, 2011

Total Comp is what really matters

Negotiating compensation is a core part of any job search right? One thing to remember is that when you’re looking at an offer is to consider the entire package being offered and not get too caught up on base salary.

A few easy to digest thoughts on total compensation and negotiating for your new job:

1) Base salary DOES matter - Its not the end all be all of the package but you do have to make enough to pay the bills. Life is about cash flow and base salary is the most consistent form of it. You won’t notice the difference between 45K or 46K so don’t freak out over small numbers but also, be aware of what your budget requires and make sure your base covers regular expenses.

2) Bonuses are great, especially if they pay out out - Lots of companies have a bonus percentage that pays out annually as part of a total package. Trust me, they are great but tough to evaluate. The question you have to ask is “What percentage of the bonus actually paid out last year. Once you know that, you can safely evaluate whether the bonus is legit or not. If it is, rock on!

3) Equity is a wild card - It’s really hard to evaluate equity as part of an offer so you’ll have to make a few assumptions in order to help come to your decision. For example, is the company public? If yes, then you can sort of guestimate the value and have a ballpark idea of the value. Private company? MUCH harder to do but again, not impossible. What percentage of the company do you have? Is it significant? Is the company trading private equity on the secondary market? What is the internal valuation of your grant? These are important questions to ask because equity can be a HUGE piece of total comp so you’ve got to make sure you’re doing your due diligence.

4) Sign-on the dotted line - Like I said before, cash flow is king so a sign-on bonus should be considered a great thing if you have one in your new offer. A sign-on can also help bridge the gap between a small cut in base salary or waiting until some equity vests. Long story short, a sign-on bonus can give you or your candidate JUST enough of a nudge to make taking that new job easy.

Ok, that’s it today...remember, it’s about total compensation and making sure you’re happy with the deal.

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