A salary is the amount of money you will be paid, usually calculated on an annual basis, for doing a job. While salary is not the only factor a person should weigh when evaluating a job offer, it is a significant concern for most job seekers. Studies have suggested that the majority of job applicants do not negotiate for a higher starting salary, and this mistake can cost an individual a substantial amount of money over the course of his or her career. A person who begins the process of job searching should have an ideal salary range in mind and be willing to fight for what he or she is worth.
If you are searching for a job, preinterview research is a vital tool that you can use to calculate your value to a prospective employer. You can access information about the average pay for your occupation at the website for the U.S. Department of Labor. Other career-building sites may have this information as well, and many of them are free to use. You might also ask trusted members of your professional network what they would expect to be paid for the job you are considering. This information will give you a starting point, but you should also focus on your own individual skill set and what you believe you are worth. It may be useful to build a list of your accomplishments and attach a dollar value to them. For instance, if you contributed to an effort that saved money for your previous employer, you might provide an estimate of how much the company saved per year. People without an extensive work history can emphasize academic achievements, as these can demonstrate both talent and a strong work ethic.
Most experts agree that you should avoid revealing your salary requirements during the first in-person interview. The first interview will help you determine whether or not a good fit exists between you and your prospective employer. As salary negotiations can be difficult, there is no need to engage on this topic until you are sure that you are interested in proceeding to the next step. However, experts do suggest that you establish a ballpark minimum range for your salary either before or, at the latest, during a second interview.
When you open a discussion of your salary requirements, your prospective employer will often ask you about your past salaries. You do not have to reveal this information, and doing so can sometimes work against you. It is perfectly acceptable to respond to salary queries by firmly stating the range that you are looking for in a new position. If the interviewer persists, you can simply restate your goal range, revisiting the skills you possess that make you worthy of this level of compensation.
Finally, you should clarify your expectations about salary growth potential. It is a good idea for you to find out about the company's approach to awarding raises. Some companies give raises based on an annual performance review, while others may have a different review structure or a system of bonuses in place. You should do your best to obtain this information before you accept an offer.
Commissions are a form of compensation offered to employees who work in sales. Commissioned positions typically pay a base salary plus some percentage of the employee's sales, called commissions. If you are evaluating a job offer with this type of pay structure, you should find out how commissions are calculated and when they are paid. For example,
some commissions are calculated based on profit margins rather than total sales. If you are higher up the sales chain, you may receive some percentage of your sales team's total sales. Whatever the case, commission rates may be negotiable.
Some companies award bonuses, which may be based on merit, on the company's profits, or on some combination of these factors. During negotiation, it is vital to clarify how a company calculates employee bonuses and when these will be awarded. Some companies pay out bonuses as cash, which will raise your yearly taxable income. Other companies may allow you the option of taking the bonus in stock. You may be able to negotiate the terms of your bonuses, and doing so may be worthwhile, especially if your salary will place you close to the upper end of a tax bracket .
Stock options, a perk once reserved for upper-level executives, are now more commonly available to employees at all levels in companies that offer them. Stock options allow employees to buy company stock at a preset price and hold it until a specified expiration date. This type of compensation can be lucrative, depending on the company and the terms of the options they offer. Before interviewing you should gather information about the company's stock price and performance in order to evaluate this part of your compensation package.
Stock options are generally offered either as qualified, or “incentive,” stock options (ISOs) or as nonqualified stock. ISOs, which are usually reserved for upper-level management, qualify for a lower tax rate when cashed out. Nonqualified options are taxed at regular income-tax rates when cashed out, so this distinction is important to note.
A retirement plan is a benefit offered by employers that is designed to provide income for employees after they retire. There are several different types of retirement plans that an employer might offer. A defined-benefit plan, often referred to as a pension, awards a specific monthly benefit at retirement. This monthly benefit may be a flat dollar amount, or it may be calculated based on your salary or years of service at a company.
A 401(k) is an example of a defined contribution plan. A defined contribution plan does not ensure a specific monthly benefit at retirement. Rather, you contribute a percentage of your pretax income to the account each month. This amount, or some percentage of it, may be matched by your employer. If you have a 401(k), you will usually have the power to choose how much of a contribution you would like to make each month, and you may also be able to decide how the money in your account is invested. These factors will influence how much money your account will accrue before you retire.
As part of the negotiation process, you should find out what type of retirement plan the employer offers. You may be able to negotiate some of the terms of your plan. If the plan is a 401(k), for example, you might be able to ask the employer to match your contributions fully rather than matching only a percentage.
Employers usually include a range of other benefits in a job offer that prospective employees should take into account and may be able to negotiate. Health insurance is a very important consideration. Some companies offer their employees a choice of several plans. When considering an employer's health insurance provisions, you should check to see what percentage of the monthly premiums the company covers, as well as how much it will cost to add family members to the plan and whether your current doctor will accept the new coverage. Some employers offer Flex Spending Accounts (FSAs), which are special tax-advantaged savings accounts where employees can deposit money for use against future medical expenses.
There are a number of other perks that may or may not be present in your offer. Employers sometimes offer an on-site fitness center, or they may provide reimbursement for part or all of your membership fees to designated gyms or recreation centers. You may also be given discounted insurance rates for participating in employer-sponsored health and fitness plans.
Job offers may include details about transportation and travel-related expenses. If you work downtown in a large city, you may be able to negotiate coverage of parking expenses. Sales positions sometimes come with the use of a company car and gas card or other amenities such as a laptop, smartphone, or paid wireless services. Companies that require frequent air travel may allow you to accrue airline miles for your own personal use. You should nail down the terms of any of these arrangements in order to avoid hidden costs associated with a new job, as well as to maximize your benefits. Some employers may be more flexible on these kinds of details than with the amount of your salary.
If you will have to relocate for a job, your employer may provide assistance with moving-related expenses. If this assistance is available, it will usually be delineated in your job offer, and if so it will be fair game for bargaining. When considering a move to a new city, you should compare the cost of living there to the cost of living in your current location. There can be significant differences, especially if you are moving from a smaller city to a larger one. Knowing how your expenses will compare to what you are used to will help you evaluate the offer you are entertaining and decide whether your compensation will be sufficient.
During the interview and negotiation process, it is legitimate for you to ask questions about the company's culture. These can include queries about how performance is evaluated, how teams are structured, and the ways in which employees communicate with one another. You can also talk to other people you meet in the organization or those who work with it in some capacity. Vendors and customers are two pools of observers who may be able to supply you with a good working picture of how the company operates day-to-day and what it might be like to work there.