If you’re considering two job offers, consider this axiom we share each week with our candidates: Higher salary does not always equate to the best job offer.
While company culture and position responsibilities should be your first and second priorities, the value of the entire benefits package is just as important a consideration as the salary. In fact, when candidates do their due diligence in comparing benefits, strong packages often outweigh salary differences. The key in performing due diligence, however, is to look at the entire benefits package, including some benefits many people fail to consider.
If you really want to get serious about evaluating benefits…
Use our checklist of benefits (below) as you compare potential employers’ packages. If you are mathematically inclined, or love using spreadsheets, consider utilizing a simple system to quantify your assessments. You can even account for relative importance of each component to you by applying a multiple. Here is a simple 3-step process to follow:
- Put each of the components below into five tiers.
- Tier 1 is your salary.
- Tier 2 contains the benefit(s) most important to you.
- Tiers 3, 4, and 5 contain benefits of decreasing importance.
- Score each benefit on a scale of 1-10 (10 being the highest score).
- Multiply your scores for each component by the inverse of the tier number.
- Multiply scores for components in Tier 1 by 5, Tier 2 by 4, (no multiple for Tier 3), Tier 4 by 2, and Tier 1 by 5 for a weighted score.
- Add the weighted scores for each component to arrive at your sum total for each offer.
Your Benefit Checklist:
Medical Insurance: Look for coverage through a broad network that includes your own doctors. Consider whether a variety of plan types (HMO, PPO) are offered to suit your needs. Look at the annual premiums and the costs to the employee, and deductibles (annual and per-office visit). Compare plan co-pays, preventative care coverages, exclusions for pre-existing conditions, and when the plans have open enrollment. If you have a spouse and/or children you would like to be covered under your policy, look at the costs for adding them.
Dental Insurance: Stronger policies cover preventative exams, as well as surgical care. The best policies even include coverage for orthodontic care. Look for low employee cost, broad network, low co-pays, and low deductibles.
Vision Insurance: Evaluate similarly to dental insurance. Good plans will also provide coverage for eyeglasses and contact lenses.
Life Insurance: How much coverage will it provide your family in the event of a tragedy? Strong plans allow you to purchase additional blocks of life insurance at a low rate to meet your needs. If the package includes accidental death insurance, this will likely pay more than standard insurance in the event of an accident. Find out if this benefit is tax free under the employer’s plan.
Disability Insurance: Strong policies will offer both short and long-term disability insurance. Some policies have an allocation for short-term sick pay. Look for a low employee contribution.
Vacation, Holiday, Sick, and PTO: Look for a generous allotment of time to use as you see fit. Some plans offer the flexibility of a total number of days or hours, regardless of how you choose to use them, in addition to the holidays. Some plans enable you to carry over unused days to the next year.
401K Plans: Look for the highest percentage of employer matching, based on the highest percentage of your salary. This is incremental money in your pocket, just like a salary, but tax-deferred. See the vesting schedule to determine how long you must be with the company to maximize this benefit. Favor plans with low management fees, a broad array of investment options, website tools to help you make informed decisions, and included or available access to a financial advisor. Note: Defined benefit/pension plans are too rare now to detail.
Profit Sharing: A profit sharing plan could add to your annual income. Find out how much you could earn if the company does well, and what these bonuses have amounted to for your position in previous years.
Stock Options: Another worthwhile plan, this gives you the ability to buy company stock at a discount from market value at pre-defined intervals, which provides an immediate return on your investment.
Tuition Reimbursement: A wonderful benefit for those who want to advance their education and future employment and income prospects. Find out the percentage of reimbursement, the types of institutions that would be covered, and if you can attend a convenient online program. Find out if this benefit is tax free under the employer’s plan.
Dependent Care: Some companies provide on-site dependent care facilities, which may be at no cost, or provided at a discount. This can be worth thousands of dollars per year if you have children. Some companies provide an allocation for child or elderly care.
Flexible Spending Accounts: These accounts enable you to pay for medical or dependent care expenses on a pretax basis. Your contributions to these accounts will lower your annual tax liabilities, but you may incur inconveniences to use these funds. Find out what hoops you may have to jump through to get these funds, and what will happen with any unused money in the accounts. Be alert to exclusions of items or services you need, and plans that limit where you can make purchases.
Expense Reimbursements: Depending on the company and specific employee needs, you may be offered reimbursement plans for travel expenses, commuting costs, mobile phones, and any other job-related expenses.
Benefit packages are growing increasingly complex, which makes them a much greater consideration in evaluating job offers than they were just ten years ago. One benefit alone can be worth thousands of dollars per year. If you need more information about a particular employer benefit, it is your right to call human resources to get the information you need to make an informed decision.
Engage with us on Facebook! Tell us about the last job offer you took – was the salary or the benefits package more attractive?