A total compensation package includes much more than just your base salary. It also includes any sick leave, benefits, holidays, bonus options and paid time off. There is a lot to consider when evaluating a compensation package. Even if the company is unable to offer you a higher salary, they may be able to accommodate you in other ways. The most important thing to decide is what is most important to you. What salary do you need to live comfortably? How much vacation do you think you’ll use? What are your healthcare needs? Are you someone who only sees a doctor occasionally or are you someone who requires frequent medical care? All of these questions are important to ask yourself, because your needs may be fulfilled differently depending on the organization.
Before you can really consider all of the options provided, you need to know which benefits are commonly offered, and what each one entails. Here is an overview of the most common components of a compensation package.
As a full-time employee, you will likely be offered healthcare coverage. This will include medical insurance, and could also include dental or vision coverage as well. You will have to select which plan fits you best.
Usually, you will be provided with details on the compensation package during the offer process. There may be an overview sheet that breaks down the costs of healthcare. This will help you to estimate how much is taken out of each check. When evaluating plans, consider how much you will have to pay for your plan, including things like the co-pay, the deductible and the maximum out of pocket. You may also want to check if your current doctor is covered by your new insurance.
Often times, a company gets a lower price on health insurance since they are purchasing it for many people. It would cost a lot more you to get the same plan on your own. This is also true for other coverage, such as vision, dental, and any other insurance your employer offers. When you are comparing compensation packages from two different companies, health insurance is an important element to consider. One company may offer a higher salary, but another may have much better health coverage. The amount your employer is spending on insurance can essentially be added to your salary, meaning that the largest salary may not necessarily be the best overall compensation package.
Vacation days are pretty straight forward. How many paid time off (PTO) days are you allowed to take? This amount may also include sick days, though some companies give you separate sick days in addition to your vacation days. It is important to think about this, because three weeks might seem like a lot of time off at first, but you may have to use some of it for sick days or emergencies.
Some questions to consider when looking at your vacation days should include whether you are eligible to take them immediately or if you need to earn them over the course of the year. Some companies require you to earn your vacation days as you work, whereas others give them upfront. Another thing to look at is whether your vacation days rollover each year.
If you have questions about taking time off for vacations, don’t hesitate to ask. An expert from Mutual of Omaha, Kacie, said, “Taking time off is not a negative thing and can increase an employee’s productivity upon their return. Each company is different, so I would be sure to have open communication with your manager and ask what is expected as far as time off, especially in the starting months.” 1
Retirement may not be on your mind, but eventually you will want to retire and it’s extremely important to have savings. A 401k plan is a retirement savings plan sponsored by your employer. It allows you to save and invest a portion of your paycheck before taxes are taken out. Taxes aren't paid until the money is withdrawn from the account.
?So how does a 401k plan work?
You’ll put money in, usually deducted directly from your paycheck. That money is put into a variety of investments (stocks, bonds, money market accounts, etc.), which are chosen by your employer, and they will sometimes match your contributions up to a certain amount. This is essentially free money, and many experts agree you should take full advantage of this benefit if it is offered to you. Young employees may feel that they have plenty of time to start saving, but these accounts often accrue compound interest, so the earlier you start, the more money you will have once you decide to retire.
If you still have questions after reviewing everything provided to you, don’t hesitate to ask HR or the recruiter for more information. Traci, a hiring expert from Accenture, offers this advice: “It’s okay, and expected, to take your time reviewing your offer. You’ll likely receive some form of verbal offer first, followed by a written or electronic document offer. Once you have the documents, take your time and review everything! The best way to evaluate what will be in front of you is to think about what your needs are.” 2