How do you weigh base comp versus benefits? Is it worthwhile to counteroffer?
This question isn't strictly for WS but you all have been so helpful in the past that I'm posting it here for your input. I have obfuscated some details to protect myself and the target company.
I am a mid-career professional and I have been job hunting since summer. I have received some offers but have turned them down for various reasons (one was absurdly low, the other wanted a ton of international travel, etc).
I recently completed 5 rounds of interviews with a company in Florida. They offer some interesting benefits like good health insurance on Day 1, on-site spa & gym and they also gift you a vacation on your 1-year anniversary with the company (7 days in just about any major international city you can think of). They also offered a 7% bonus, estimated based on company performance. Finally, their 401k is a little unique - employer maxes out at 3% but you do not have to contribute. So I guess that's more like a pension structure (???) but they call it a 401k.
The problem is that their base comp was very, very low. Like if I were to collect every salary survey for my position, their offer wouldn't appear anywhere on the low-end of all the results; they miss the low-end by at least 20k (about 25%), my desired base comp would be about 40k higher (almost 50%) than their offer. Their offer wasn't absurd, but still . . .
Along with the offer they offered a generous relocation bonus right around 9k. To me this indicates that they know that their base comp offer is low and are making it up in straight cash. But that's just year 1.
I've never been in a position to counter-offer before. What is the best way to go about that? Does it make sense to do that when you're this far apart? How do you weigh the unique benefits into your thinking?
Firstly, congratulations on the role :).
At first blush, it seems like they are lowballing a bit, and offering ancillary non-comp benefits to compensate for the same. I think it helps to chart out their consideration and see where they may potentially be shorting you.
Offering Consideration (using figures only for presentation purposes of course) 1) Preferred consideration/Market Consideration (Top end) - $120k 2) Market Consideration (Base Case) - 100k 3) Market Consideration (Low End) - 80k 4) Company Consideration - $60k
Intangible/Discretionary Benefits 1) Health Insurance 2) Spa and Gym 3) 1 year anniversary vacation 4) 7% discretionary bonus based on company performance 5) 401k structure - 3% company payout (treated as deferred compensation)
Non-Recurring Payments 1) Y0 Relocation Payout - $9k (subject to clawback?)
My first reaction to the above would be that your all in even assuming aggressive assumptions has you bordering the bottom end of market consideration even when factoring in the intangible/non-recurring payments. Assuming a 3% payout along with relocation/discretionary bonuses, you end up with an all in monetary consideration of $75k ($1.8k of which is deferred). A vacation is nice, but it would have to be some substantial vacation with all expenses paid along with first class flights to say a Europe tour (and even then it tires out after one year). A conservative assumption of a $5k comparable puts you around the bottom end of the market range.
I think ultimately it depends on how you view the overall prospects and whether you feel you will find a comparably better offer to the one you've received. Health and spa/gym benefits are nice the first few times, but the utility goes down after a period of time, particularly if your work suggests you'll be working longer hours where you won't be able to enjoy the amenities.
Of course, as with anything I think the above is just an exercise in guesswork with back of the envelope assumptions. You could value some of the benefits far greater than I would, so I'm not one to advise you to go against this offer if you feel it's a growing company that will bolster your prospects. I'd definitely try to get them to sharpen their pencils and add another $10-20k to their consideration, because the base comp in the above theoretical example seems substantially lower than market for someone in your case with a few years of experience :)
Thanks for the reply. At what point do you think it doesn't make sense to counter offer? 20K more would be a start, but that's asking them for almost 25% than where they are now. It almost feels like we're too far apart.
You should counter as you won't feel fair to yourself if you don't. You should ask for the $20k by explaining how you both have experienced and understand the market.
The 401k sounds like a 'Safe Harbor' match. Check to see if there is any vesting schedule.
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