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Managing Your Career - Total Compensation Package

How to Make the Best of Your Next Offer

By James Del Monte, CERS, CPC, JDA Professional Services

Not that long ago, if a candidate haggled about anything at all in the interviewing process, it was about salary or hourly rate, and that was only after he or she felt confident that an offer was on the table. Other than a base wage and a traditional benefits package, not much else was offered to entice a candidate to accept a position.

What Comprises a Compensation Package Today?
Today, the components of a compensation package for IT professionals are anything but traditional. They can consist of a base salary, bonus pay, stock options, 401k matching, health benefits, continued training, free parking, free memberships, free lunches, commute time, limited travel, extended vacation time, work-from-home options, and much more. It is difficult to pinpoint the exact components of all compensation packages because they vary by industry and company, and a lot of it also depends on the employee’s ability to negotiate effectively.

Capitalizing on Opportunity – A Growing Trend
As often as we see people make career moves for higher base salaries, we're seeing a growing number of people trading high salaries and high stress for better situations.  Some people prefer to be employed closer to home, while other are looking for more flexible schedules that will allow them to spend more time with family.

As part of our ongoing commitment to being your leading provider of information concerning the IT industry, JDA Professional Services, Inc. makes a point to stay in touch with candidates and to understand why they leave their respective positions and/or employers.  In the three case study scenarios which follow, the individuals cited reasons for making career changes as pertaining to “better situations,” and starting salary is not always the motivating factor.  Instead, other compensation components help sway the employee, as you will see.

Case Study 1
JDA placed an Oracle DBA supervisor from a high-profile position into a staff-level position for $5,000 less than she was making.

(1) The commute from home to her new company took ten minutes; whereas, her former commute took an hour or more on a good day.
(2) Her new employer allowed her to leave at 4:00 p.m. to make Little League games.

Case Study 2
JDA placed a network administrator who doubled his compensation to join a consulting firm in a position requiring that he travel up to 100 percent of the time.

(1) Having a life outside of the office was not a priority.
(2) Money was the most important factor.

Case Study 3
JDA placed an IT professional whose base salary did not increase significantly; however, the employer offered to send the candidate to Oracle DBA training that would eventually result in 20 to 30 percent increase in earnings.

(1) Future earnings potential was much more important that starting pay.
(2) Continuing education was important for career advancement.

Decide What’s Important to You
If you’re considering making a move, you need to get a good understanding of what’s important to you now and in the future. To help with this decision, ask yourself a few questions:

  • "I'm making a great salary but the travel is getting old. Is it worth it?"
  • "I hate the commute. Is there something a little closer to home?"
  • "I'm going nowhere fast. Why was I passed over for a promotion?"
  • "With a young child at home and a spouse who travels, I need flexible hours. I realize that I may have to settle for a pay cut to make this happen. Can I make this type of arrangement possible?"
In most cases, negotiating a better compensation package is about more than just money. It is primarily about deciding how you can best achieve a work-life balance.  Sometimes you may have to compromise on things that are less important in a trade-off for the things that will result in a better quality of life for you and your family.

The Process of Negotiating Your Compensation Package
Now that you have taken a look at what factors should be considered in looking at your next opportunity, it’s time to learn about the process of negotiating a new compensation package.

Step 1.  Get Ready!
You've interviewed with a prospective employer, and all has gone well.  You have decided that this job is the right fit and the prospective employer has decided to extend an offer. The next step is salary negotiations.

Understand that the market sets the value for your skills, not you
It always comes back to supply and demand, no matter what the buzzwords. For example, JDA recently presented a candidate to three prospective employers, and all three extended excellent offers. Even though all three offers were in the $85K range, this candidate had her sights set on $100 - $110K. What she failed to realize was that not every individual is worth the high end of their salary range. In other words, just because a position has a salary range of $75,000 - $110,000, it does not mean that everyone with that skill set is worth $110,000. In this particular instance, the market set the value for this professional at about $85,000.

JDA’s latest Houston IT Salary Survey can give you a realistic idea of your current market value.  You can access our archive of Salary Surveys here..

Understand the total compensation package in your present position
Make a list of what your current compensation package entails.  Include everything from your base salary to your total benefits package to the “little” but “valuable” perks that come with working for your company.  It is important to take into account future earnings potential with your current employer and the anticipated timeframe of your next raise or promotion.  For example, if you have an anticipated raise within a three-month window, you will definitely want to add this to the total value of your compensation package.  

Step 2. Get Set!
After developing a good understanding of your true market worth and evaluating the pros and cons of your current compensation package, it is time to set the expectations for your next offer.

Never lose sight of the fact that you're negotiating a package
Don't get caught up on any one item. It would not make good business sense to pass up a great opportunity that could increase your future earning potential strictly on the basis of a less-than-anticipated starting salary. Remember to always keep your priorities straight.  What's more important to you: the salary, opportunities for professional growth, speculative stock options that may never come to pass, or a chance to learn a hot skill area and strategically position yourself for even better opportunities down the road?

Recently, JDA worked with a candidate who turned down an offer with a start-up company.  The start-up company refused his request for a 20 percent base salary increase, and the candidate settled for an extra $3,000 from his current employer.  If this candidate had taken the start-up opportunity, he would have experienced a higher salary growth opportunity while gaining a new skill set that would have furthered his professional advancement.

Carefully define your expectations to your prospective employer
Go back through your current compensation package and create a list of “must-haves” and “like-to-haves” for your new package.  Keep in mind the things that you decided were most important for you and/or your family’s overall quality of life.  To help with this process, ask yourself the following questions:

  • “Which components can I not live without?”
  • “Which components would I be willing to give up?”
  • “Which items would I like to see enhanced?”
  • “What new items would I like to have?”
Your goal at the end of this step is to have a well-defined, realistic idea of what you expect from your new compensation package so that you are able to clearly articulate your expectations to your prospective employer.  In addition, you must be able to ensure that your prospective employer understands why you have these expectations and why he should be willing to meet them.  

For example, one of JDA’s candidates asked a prospective employer for $10,000 more than the position paid.  When the employer asked him why he thought he was worth this higher salary, the candidate's reply was clear.  Without hesitation, he confidently announced that not only did he know what their issues were and how to fix them, but he understood the value of the fixes.  The candidate ended up getting the extra $10,000 plus a $5,000 signing bonus.

Step 3. Go!
Your prospective employer has just called to extend an offer; what do you do next?  First, take note that most companies are not prepared to negotiate with you.  Employers generally believe that they will make you a fair offer and that you will be thrilled to accept their offer "as is."  However, since you have thoroughly established your true worth and expectations, do not hesitate to counter any offer with which you are not completely satisfied.  Be sure to predetermine the point at which you are prepared to walk away before beginning the negotiations.  It is important, at this point, to remain realistic.  Turning down a fair offer and losing a great position to try and get an unknown better one is simply not good business.  

Before starting negotiations with your prospective employer, it is a good idea to practice asking for what you want.  Find a friend or spouse to conduct a “mock” negotiation with you.  The more you practice, the less nervous you will be and the better your dialogue will flow during the real discussion.  

If the prospective employer's need is great and your skills are scarce, don’t be afraid to ask for more than you expect.  Chances are your demands will be met.  Be aware, however, that the average shelf life of a hot skill is only about three years.  Companies realize this and are hesitant to commit larger base salaries, especially near the mid- to end-point of that period.

Depending on the company, there may not be much flexibility when it comes to establishing base salary.  For starters, equity across the board may need to be maintained.  In that case, it may be possible to negotiate a signing bonus, extended vacation, or other non-wage benefits.

If you do not receive an offer for a position that you really want but do have a specific compensation package in mind, you can always take the first step in discussing this with the employer.  We would recommend, however, that you proceed with caution.  If your asking price is more than the employer is prepared to pay, they may decide to withhold their offer.  From their end, it would be a waste of time to make an offer that would possibly be turned down.

These steps may be beneficial even if you are not looking to change jobs.  Perhaps it is time for a re-negotiation with your current employer.  If you decide to use this tactic, be sure you go to your manager with hard evidence of your past successes as proof that you deserve the extra perks.

Some Last Bits of Advice

  • Don't be greedy!
  • Use a reputable recruiter whenever possible.  It helps to have someone in the middle working on your behalf.
  • If you drive a hard bargain and get the compensation package you want, expect to perform above your employer's expectations.  Otherwise, you will find yourself on the short list when the market slows down.  
JDA Professional Services, Inc. is a Houston-based IT staffing firm specializing in the recruitment of strategic-technical to executive-level professionals.  We provide IT staffing solutions through full-time, contract, and project-based placements.  Since 1981, we have been helping companies build great IT departments while helping IT professionals find the right career opportunities.

Through our extensive client base and our ability to navigate the hidden IT job market, JDA can help you find the best opportunities available in the least amount of time.  

JDA is Houston’s #1 Source for IT Jobs & IT Career Information

In addition to being one of the leading providers of IT jobs in Houston, JDA is a top source for information on the local IT employment market.  Be sure to take advantage of all that our website has to offer.  Visit our IT professionals section for a complete list of IT jobs available in the Houston area in addition to helpful information regarding local IT salaries, current industry hiring trends, and proven “best practices” for managing your IT career. For a comprehensive list of industry trade group meetings and seminars occurring in our area, check out the Houston Hi-Tech Event Calendar.

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