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
Commute
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.
Employer Benefits
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.
Health Care/Plans
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?
401K Match
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.
Life Insurance/Disability
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.
Culture
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.
Flexibility
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.
Maternity Leave
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?
Paternity Leave
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.
Opportunity
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.
Charitable Work/Policies
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
It’s been a while since I evaluated a job offer, but I think the things you mentioned are all spot on. And your negotiation for your first job offer reminded me of mine for my first job in IT:
HR- How about $35 k per year? (Knowing I only made $30k at the time, but a usual offer would be more like $50-$60k)
Me: Sure! (Even though my commute went from 10 minutes to 40 each way)
In the end it was a great decision because my income has increased drastically due to the decision to move into IT. But I sure regret not negotiating at all! At the time I was just happy to be getting out of the call center, where I was working full time to get my debt free undergrad, and into something that didn’t involve talking to angry people on the phone all day.
I worked in a call center for the first 11 months out of college, it was a nightmare for me. I am not very patient and trying to walk people through our product when they didn’t know how to use a computer – eeeesh. Couldn’t get off the phones fast enough.
Thanks for the comment Liz!
Wow – a great overview AE. You hit all of the key factors I can think of. People could still get confused though, without a good way to organize all the factors and what is most important to them. The decision framework I learned could be a good match to this. People rank which factors are most important and weigh the jobs against those factors. It almost makes the decision for you 🙂 The unknowns your sibling is dealing with is an issue. Lots of risk in the “great plans” ahead – but maybe your sibling is tolerant of risk.
Every time I write “decision” or “make a decision” I think – Vicki could probably help here!
I am going to grab your decision framework post and add it in at the bottom.
I think he will stay with his current employer, after he negotiates some more to reduce some risk.
Great, comprehensive overview! One thing I’ve negotiated over the years is PTO. Some companies are pretty rigid on PTO, but it is worth asking for more!
One the paternity/maternity leave, I’m sure you’re aware of the new FMLA policy where you get 12 weeks of leave unpaid when you have a child. The unpaid part sucks, but most of us are on our way toward FI so it may be doable? Im contemplating taking 8-12 weeks off unpaid when we have our next little nugget.
Hey – Long time no chat! 🙂
I have heard of some success on PTO negotiation when switching jobs, when the time comes it will be on my to-do list!
My wife is taking advantage of the 12-week policy using disability and PTO – I don’t think I would take unpaid leave personally, but it is a great option for people who are willing to.
I’m glad you wrote this post, Mr. AE. I agree that things like flexibility, culture, benefits, and commute are important factors when considering a job offer. I took all those in consideration when I accepted my current role.
The other factor I have always valued when taking on a new role is skill building. I worked in the brokerage and in mutual fund sales to learn more about investing. In my current role, I am able to improve my online relationship building and writing skills.
I think the main thing I appreciate, though, is to have a role that I don’t have to take home with me. I mean, I’m ok with taking extra courses to advance my career. But I prefer to keep my spare time for blogging and investing as much as possible. Thanks for sharing the great post!
Thanks, Graham – being able to learn a new skill or invest in yourself is important, I should have put continuing education on the list, considering I just wrote about having your employer pay for your graduate degrees.
Good write up AE! There is so much more to a job than salary. Albeit for me the first thing to focus on is fun and challenges, if the job won’t make me “happy” I’m out. No salary or benefit will make this work. Tried this and failed miserably…
That’s awesome Team CF, I made the decision to sell out for the $, I don’t hate my job but I don’t particularly love it either.
Curious to see how long you can keep that up. Did it for a few years, but there is a limit to how much you can dislike a job at one point 😉
Great post, Mr. AE! There is so much more to assessing a job offer besides the salary. Alan passed up a higher salary several times over the years because it meant more hours and more on call. In the end, it wasn’t worth it to us to give up the time and stress.
Being on call – hard pass. I don’t want to bring my work computer with me to the lake cabin!
Awesome list! Wish I had something like this years ago. I’ll be sharing it with my kids.
Making prior job changes I’ve also weighed the opportunity for travel, training and educational opportunities, tuition reimbursement, and disability insurances.
Tuition Reimbursement! Gah! How did I forget about that – just wrote about it 2 weeks ago!
I know a few people that have taken lower paying jobs to travel around to other countries, if that is one of your goals, might as well have someone else pay for it!
So much yes to this! I start my new job next week. Salary-wise, it’s about $1,000 less than I was making. But! I was previously a contractor with zero benefits. My new job offers PTO and plenty of holidays, as well as a generous retirement plan. Plus, it’s the job I WANT to do, anyway. It was like a dream when I got the offer. 🙂
So yeah, even though it means we’ll get slightly less cash each month, the numbers work out in favor of the benefits.
Congrats! That is awesome! Welcome to the world of retirement benefits!
I went from public service to the professional IT industry and my first offer was literally double what I made from my previous career…I did not even negotiate (trust me, it was not hard to double my previous salary).
1) I felt it was a fair offer
2) I was just so happy to have the job
Similar to you, I also had the Midwest niceness embedded in me ( I still do).
However, I am currently looking for a new job (love my current one, but my other half needs to move back to the coast to assist with a sick family member). I bring that up because not needing a job and looking for one is WAY different than needing a job and not being able to find one. It is great to be the one who sets the terms!
The salary is definitely a plus, but like you, I am actually more focused on the culture, the commute, and other non-traditional characteristics that seem to be more prevalent in younger companies.
It is nice to see this list as I don’t feel nearly as odd turning down jobs because they want me to work 70 hours a week or the culture just seems off. Thanks for posting these points as it definitely gives me more willpower to keep looking for the job I want, not the job I need!
It’s hard to get rid of that midwest nice factor!
I don’t know how much it would take to get me to work 70 hours for someone else, at least 30% more than I make now and that would still be a pretty tough sell
A great overview. You touch a bit on it in work / life balance section, but what’s the positions overall responsibilities. Will I have direct reports, will I be on call, expected to work off hours, will I have to give performance reviews, hiring decisions, etc.
Often when asked about salary in an interview, I’ll counter and say I need to understand my full responsibilities first. Getting feedback from your network of current or former employees of a company are a great way to help understand these things.
Thanks Brian
That is a good call on the responsibilities, you wouldn’t want to take 10% more in pay for 30% more responsibility.
Working off hours is the worst, I have done a few on call weekend and realized pretty quick that it is not for me.
For me, the team I’m working with and flexibility are huge. That’s why I haven’t left my job in quite some years. Great team (most of the time) and a bunch of flexibility.
100% with ya – don’t work with a**holes!
When I took my current job I negotiated a signup bonus based on poor health care. To date that’s been fine because I’m relatively healthy.
As for the rest, many times in my career I’ve had the opportunity to take a job that pays more or even way more then I currently made. In each of the unchosen paths I noted the jobs were a dead end. I.e. After the role was finished I’d have outdated skills and difficulty finding a new position. Unless those positions had paid enough to stop working I would have been a fool to take them. Those jobs are more common then you think. None of em make as I make these days and I work less doing it. Choose your career, not your job.
Thanks FTF – A career with growth potential is huge, technology is changing the landscape so quickly you need to think ahead and do some research before dedicating your brain power everyday.
Great article. When Rick was laid off in 2010, he eventually got a job offer for 25% less than what he was making. As a single-income, blue-collar family, taking that job would indeed hurt. (In fact it was that along with our financial stupidity that got us into loads of consumer debt). However, the job was with a stellar company that provided terrific benefits, lots of opportunities and a secure future. 7 years later he’s making 25% more than his pay before he got laid off, and we’re building wealth by taking advantage of the phenomenal benefits. The other thing to consider is the potential for learning. Rick moved from his original area of hire to another area in the company and is now doing one of the toughest jobs in the company. Very few people can do this particular job. Having this extra skill set makes him valuable not only to his current company but to competing companies as well.
The salary is just a starting point. One should closely look at the total comp package. For me, the other factors you wrote about such as PTO, commute, and work-life-balance are just as important. Taking a job that pays 20% more is not worth it if it causes me to be miserable.
I always get nervous when I start to think about annual pay reviews – especially the meetings involved to try and get what you’re worth, I really fret about it in the lead up!
You’ve really covered every possible angle here for weighing up job options. I have to say that I’m glad we don’t have to factor health insurance into our decisions in Australia, I can see that employers could take advantage of how much leverage they have over your life – not just the dollar amount – it could be a negative to receive all those things from your job instead of being able to negotiate them yourself outside of work.
Mrs DDU
Solid list you have here AE! The commute factor is especially important and it is shocking how few people actually take that one seriously when evaluating a job.
I would also consider asking how the company does performance evaluations and if they have some sort of ‘quota’ system in place. Some companies say that they have a fixed number of 1 and 2 ratings to hand out , or that a fixed percentile must be rated 3 etc. and if you are comparing two job offers it would be beneficial to pick the one that doesn’t place artificial limits on how you should be rewarded for having a good year.
For the 401k I’d ask if there was any sort of vesting period and if the company does true-ups if you happen to max out your 401k early. I’d also ask if the 401k supports the mega backdoor roth.
For non-entry level jobs it might be good to ask about deferred compensation packages.
Good read…there are things more important than salary when it comes to employment as you stated…i have enjoyed my 2 employers, that’s why i stayed there for so long….my next company will have to match my current vacation time, similar/better commute and better salary…
I think a big part is the ability to climb up the corporate ranks (if you’re into that sort of thing). Some companies require years of tenure to climb up the ladder. In other companies, it’s possible to climb up the ladder rapidly if you’re talented and work hard.
Opportunity is everything, 10x all the others added up! If you are like me and intend to go from entry level to running the company in 15 to 20 years then starting salary means almost nothing. I achieved my target and FIRE along with it and had a blast doing it. I know not everyone sees work as a competition where winning means becoming the top guy but that’s exactly how I saw it. Now post retirement I just do side gigs I enjoy part time and pretty much have five days off a week while still covering my families expenses and letting my investments just keep growing untapped.
Not only is paid paternity leave (or parental leave to be more general) on the uptick, a lot of companies are also looking at student loan assistance programs. Not the traditional tuition assistance plans for classes/degrees you pursue while you work for them, but helping you retire your existing student loans for the degree that landed you the job in the first place. I think more and more companies are going to put this in to place. We’ve been looking hard at it. Fidelity did it for their employees last year and I think they give $1k a year up to $5k or $10k total in aid over a 5 year span in a 401(k) like match type program. I really hope more employers follow this lead.
Nice summary. I would just add that you need to ask for contribution rates when evaluating benefits because the plans could be awesome but you could be paying double what you pay at your existing place which erodes the fatter salary that you negotiated. Cheers!