Job Search: Update to Evaluating an Offer

Something I didn't really think about the first time I posted about Evaluating a Job Offer on May 29, 2014, was the indirect benefits related to medical insurance in a new job.

  Imagine This Scenario  

Your old job has a high deductible medical insurance plan. Your new job has a normal deductible medical insurance plan.

The end result is that every time you go to the doctor, or fill a prescription, you're paying less! Sometimes a significant amount less. A friend had an allergy prescription that, on the old plan, cost $120 every time. On the new plan, he's paying $35 each time. That's just one prescription, saving $85 about 4-6 times per year. Multiply that out, times the number of prescriptions you fill in a year, and the number of times you go to the doctor.

	Old Price	New Price	Savings Per Time Filled	Times Filled Per Year	Annual Savings
Prescriptions
#1 Allergy	$120	$35	$85	5	$425
#2 Other	$50	$10	$40	7	$280
Total Prescription Savings					$705
Doctor’s Appointment Co-Pay
Annual Check-up	$50	$10	$40	1	$40
Specialist	$50	$10	$40	1	$40
Total Doctor’s Appointment Co-Pay Savings					$80
TOTAL PROJECTED SAVINGS					$785 / year

You're easily saving almost $800 a year, just because of the type of medical insurance the new job offers. You should do the same analysis for any insurance offered by one or both companies including dental and vision insurance plans.

Job Search: Evaluating An Offer

Let's say you know you're potentially receiving an offer for employment. Most people wait until they receive the offer to start thinking about what to expect. Or at best, they think through their base salary plus an annual performance bonus.

In reality, there are a number of factors that could or should be included in an offer letter. Particularly as you move up in the ranks, there are more factors that are negotiable. Having an understanding of your current position on all these factors will help you better understand what you're looking for in your next position.

  Monetary Compensation   

• Base Salary - Also, note if it's paid bi-weekly or monthly.
• Annual Performance Bonus Potential
• Signing Bonus - Understand if there's a payback period - in other words will you have to pay it back if you leave within a specified period of time.
• Retention Bonus - If your signing bonus doesn't have a payback period, you may be able to negotiate a retention bonus (e.g., if I stay for 1 year, I get an additional bonus).

  Job Information  

• Job Title
• Grade Level - This isn't relevant for everyone, but is particularly relevant in federal government, or in some very large organizations.
• Supervisor
• Supervisory/Management responsibilities
• Budgetary responsibilities
• Office Location

  Non-Working Days  

• Holidays
• Leave Days
• Sick Days - This is only relevant if sick days are separate from leave
• Comp Time - This is time that you accrue based on extra worked hours outside normal working hours. Usually this category is no longer relevant as you move into managerial positions.
• Alternative Work Schedule Options

  Timeline  

• Start date
• Date that benefits kick in - Sometimes it's on day 1, and sometimes it's not until 30 days later.
• Contract length - If this is relevant, you'll need to include it in the offer letter. This could be relevant if you're in a temporary position that could turn permanent as well.

  Equipment   

• Desktop vs. Laptop
• Cell Phone - Do they provide one? Do they pay for the plan? Are there limits on the data and phone usage?
• Car - Rare, but some firms do have cars for executives.

  Additional Details  

• Performance Review Cycle
• Performance Review Criteria
• Training Opportunities / Expectations
• Travel/Commuting Reimbursement
• Tuition Assistance Program

And here's one that you'll need to think about the first time you enter into the ranks of around a Vice President position. You'll need to inquire about a guarantee of a severance package. If you haven't been a VP before, you may not even know to ask to have this in your offer letter.

I usually recommend creating a spreadsheet with all of these factors in rows. The next column should have information about your current position, and then subsequent columns can be used to evaluate one or more offers. That way you'll have a true picture of the components of an offer.

Here's a scenario to think about. Let's say you currently make $100,000, with a 10% performance bonus option. The new offer is for $110,000 plus a 5% performance bonus. Sounds better, right?

Now think about this. What if your current job has 9 holidays and 5 weeks vacation, and the new offer only has 7 holidays with 3 weeks vacation. In order to truly know if you're getting a better deal with the new offer, you need to monetize the days off that you're no longer getting.

If you monetize the days you work, assuming you take all your days off available, you can calculate your true earnings including: Base, Performance Bonus Potential, First Year Signing Bonus, and Monetized Value of Days Off. The total shows you're ahead by about $5k.

However, keep in mind this shows you a bottom line including your signing bonus that you'll only get that first year. Even if you took out that $5000, you would still be ahead, though by very little. Additionally, you'll want to add in how much you currently pay for various benefits, and how much the new offer would have you pay. If the new medical plan options are much more expensive, keep that in mind as you make your decision.

After all this analysis, don't forget to think about the intangibles! Work environment, type of work, clients you'd get to work with, etc. Sometimes that'll help you make the decision better than all the analysis in the world.