We all want to get the most competitive job offer. When thinking about an offer, the first thing that naturally comes to mind is annual base salary. Earning a high base salary is a universal desire because it is guaranteed, it affects your weekly paycheck, and you’ll be able to smile when asked, “How much money do you make?” In addition to benefits and perks, there are some other ways to get creative when negotiating your compensation package that could actually put you far above your financial target.
Bonuses: Effective Motivational Tools or False Promises?
There are various factors that go into deciding a new employee’s salary or compensation. Just because you are interviewing at a billion dollar company with more than enough money to spend, does not mean they have the ability to pay you whatever you wish. Internal equity is always a big factor. They will not pay the new guy more than the team lead; you have to prove yourself! This particularly applies if you are transitioning into an unfamiliar role or learning a new skill. Just because you made X amount at your last job doesn’t mean the new company is going to pay you five percent more, especially if they have to spend the first three months teaching you a new trade. However, if this is the job that you want, prove your worth, and you can earn your prize once the company benefits from your talents.
Companies will often offer their employees a base salary plus a bonus, which is either paid out annually or quarterly, and can be a percentage or a fixed rate. Sometimes the bonus depends on the company’s performance, other times it depends on your performance. Most often, it’s a combination of both factors. Consider why companies prefer to offer a bonus structure over higher base salaries. Typically, the purpose is to motivate employees. Most people work harder when working towards a goal, versus doing the same job day in and day out for the same exact weekly amount. Why stay the extra hour or above and beyond what is expected if you know that your tax return is going to read the same number as your offer letter?
Sometimes smaller companies with lower budgets are also fans of the bonus structure. Small companies are usually aware that they do not make the highest job offers, but they are looking for someone who will add value and grow along with them, and who isn’t all about the money. They might even have the budget for what you are targeting, but they need to be careful about how they spend it. If they pay you more than allocated, they are most likely passively looking for someone cheaper to replace you, or you risk getting laid off if you are not generating more revenue than what you are being paid. However, if you have a bonus to work towards, then both you and the company can feel more confident about your compensation, since by review time you will have used your skillset to generate the company more business or revenue.
Reviews and opportunities for growth are things you should be aware of when presented a job offer. This is supremely important for entry or junior-level candidates. If you shop around for job offers, waiting for the highest one, you could be missing out big time! (This is also the case for what Salary.com or your friend says you should be making) If a job offer from a great company comes out to five thousand less than you wanted, but they are offering a ninety day review, then go in there and prove that you are worth that extra 5K! If you are just waiting for the magic number, then you risk missing out on your dream job. You are also likely to spend more time and money going on extra interviews, relocating, and commuting- just waiting for a number. You could have more efficiently spent that time training, learning, getting paid, and working your way up to a raise or a bonus.
Reviews and bonuses can also be used to attract candidates for the long term. Hiring is expensive, and turnover is rarely a good thing. If you convince a company to dish out ten grand more per year than they planned, how do they know you won’t start looking around again in six months just to get something higher? If you know a bonus or salary review is on the way after your big project release, you are more likely to work harder to get it, which promotes company loyalty.
Be creative, be flexible, ask early, and be understanding. By no means are we suggesting that you work for a company that won’t pay you fairly, but don’t pass up a great opportunity with excellent growth potential just because the base pay isn’t exactly what you hoped. Think about the situation from the company’s point of view. When they are hiring a new candidate who they haven’t spent more than a few hours interviewing, it can be hard to dish out a lot of cash, or stake in the company, without seeing you in action first. Understand the reasons behind their compensation package and what the future looks like for you. Be upfront about your expenses, current situation, and future goals, and see if you can work something out will make both of you happy. You have nothing to lose by asking for some financial wiggle room, but when you get too picky, you may come off as greedy and your potential employer can easily lose interest. This may cause them to question your motivation, work ethic, morals, and how long you plan to stay with the company. Be careful to not burn any bridges before build them.