No BS Guide on Compensation and Benefits PackagesSep 17, 2023
Whether we’re looking at a new job or pursuing a promotion, compensation and benefits packages are a huge priority for pretty much every professional.
And hey, who’s blaming you?
There’s more to a career than earning potential, but compensation and benefits ensure we’re able to live the way we’d like. And to do this, we need to earn what we’re worth based on experience, skill set, and industry standard.
With that said, appropriate compensation isn’t a straightforward number. There are several aspects to consider when looking at a full compensation and benefits package, going far beyond base pay.
In addition, there’s no standard way to do compensation, especially in industries like tech where there’s a huge variety between start-ups, non-profits, and established companies.
Overwhelmed, yet? You’re not alone! Many professionals aren’t sure of what they want, need, or are being offered, even by the time they’re signing their name on the dotted line.
In this post, I’m clarifying any confusion with my “No BS” guide on compensation and benefits packages.
I’ll include guiding questions, different sectors of compensation and benefits, and tips for finding the right package for your needs.
What is the best compensation plan?
The truth is, there is no perfect compensation plan.
Everyone has different needs, whether they need a higher base salary to support a family, unlimited PTO for flexibility, or extended health benefits for ongoing health concerns.
When it comes to benefits and compensation, we can’t always have it all – though some companies will offer close to it.
So, when deciding what the best compensation plan for you is, develop a plan by considering both your wants and your needs.
Think about this at the beginning of a job search, both so that you can target the companies that offer what you need, and so that you know what to ask for in negotiations.
How do you know when a compensation package is right for you?
It’s pretty darn hard to decide if a comp package is right for you if you haven’t defined it clearly. I recommend all my clients create a list of comp package must have’s and nice-to-have’s - ideally before they even start searching. You’ll want to think about about your current needs, priorities, circumstances, and your future career goals when creating this list.
You should consider:
Total compensation: This includes base salary, bonuses, stock options, and other perks. Is it fair based on your skill level, experience, and industry?
Health benefits: Consider your needed coverage, whether they offer extended coverage to family members, what the deductibles and copays look like, and if they offer mental health support.
Financial goals: Does the compensation package align with your short and long-term financial goals?
Development opportunities: Is there potential for growth, both in title and in salary? Does the company offer training programs, tuition reimbursement, or an allowance for a leadership or executive coach?
Work-life balance: Do the benefits include flexible work hours, parental leave, sabbaticals, remote or hybrid positions, and PTO?
Retirement benefits: Will your employer contribute to your retirement plan? Will you receive a 401(k) or pension plan? Some companies offer further retirement planning resources or will match your retirement savings.
Market research: Is what you’re being offered standard in your industry? Is your wage both fair and competitive in comparison to similar roles and for people achieving similar results at work?
Compensation and Benefits Packages: A Step-by-Step Look
Ok, so you have a general idea of what kind of compensation and benefits will fit your needs. Let’s get into the nitty-gritty.
When receiving a job offer, these are the kinds of terms you should look out for in your compensation and benefits package.
While they’re not all necessary parts of a total package, make sure to take the ones important to you into account.
While you may look at cash compensation as a hard and fast number, it’s actually more nuanced than a single dollar amount.
These are the ways you’ll receive cash compensation in your total compensation package:
Your base salary is the direct cash amount that you can count on, typically the amount of your entire year.
For employees, salary is typically bi-monthly, bi-weekly, or weekly based on your employer’s standards.
Independent contractors may receive a monthly or weekly retainer or an hourly wage. It’s also common for those receiving a retainer to have an hourly rate for any work done outside of their contract including special projects, overtime, and rush work.
Though usually not in a base compensation package, it’s also possible to receive one-time bonuses during negotiation.
This could be an incentive or signing bonus, or a relocation allowance.
Your company’s compensation structure, which should be outlined in your written offer letter or employment contract, may also have the possibility for cash bonuses based on a combination of personal and company performance.
Companies can also offer stock options, restricted stock units (RSU), and employee stock purchase plans (ESPP) as part of your compensation package.
Either you are given stock as a part of your package, or you’re able to purchase stock for a set, predetermined price.
Sometimes, companies will offer to match your retirement plan in company stock instead of cash, though this gamble isn’t as common as it was in the pre-Enron days.
There may also be an opportunity for profit sharing in your compensation package, with a portion of company profits given to employees.
Profit-sharing distributions are often given based on performance, both individual and team-based, and seniority in the company.
While compensation is very important, you can’t undersell the importance of benefits. Employee benefits are often even more valuable than a pay raise if they are well-rounded and suited to your needs.
No matter your base salary, benefits can offer you emergency support, flexibility in your job, and of course, medical insurance.
These are some of the most common benefits you’ll find in a package. Most are considered essential, though your needs may vary.
Each benefit package is also vastly different from the next, with different coverages being offered across companies.
Paid time off – This includes sick days, personal days, and vacation days that employees can take while being paid. Some companies will offer unlimited PTO, while others offer a set number of days. Additionally, some companies choose to offer separate buckets for time off, while others lump it all together.
Employee assistance plan – You could be offered free therapy, crisis counseling, and other mental health resources. These resources may also be extended to your dependents.
Tuition reimbursement – If you’re thinking of returning to school to build a new skill set, your company may pay for part or whole tuition. Some companies will only offer tuition reimbursement if your courses directly relate to your job or industry, while others will reimburse you no matter what you study. In some cases, companies will also offer to pay for previous student debt. These provisions often come with an agreement to stay with your employer for a certain amount of time or else you’ll have to pay back the reimbursements so be sure you’re crystal clear on the terms.
Retirement benefits – These benefits can help secure your future financial well-being through employer-sponsored plans or pensions.
Health, dental, and vision insurance – Health benefits should cover, at minimum, a portion of your medical, dental, and vision expenses. This may include contributions to premiums or an employer-sponsored medical plan. If you choose an HSA-eligible health insurance plan, your company may contribute to your HSA each year.
Life insurance – You may receive life insurance as part of your package, ensuring financial protection for your loved ones (beneficiaries), in case of your death. Typically, a base amount of insurance is provided for free, and you’ll have the option to purchase more coverage.
Transportation & housing allowances – Companies may offer to cover other expenses related to your position, including transportation, meals, and housing allowances. This is particularly common for jobs requiring relocation or extended time spent working in other cities.
Short and long-term disability insurance – If you become unable to work because of a disability, your company would then supply an income replacement through disability coverage.
Parental leave – If you’re planning on starting a family, your employer should offer you paid parental leave, both for birth and adoption. You may even be eligible if you are a foster parent who receives a new placement.
Employee discounts – You may receive discounts on products, freebies, partnerships with external vendors, or discounts on company services as part of your compensation.
Wellness initiatives – Some health-based company initiatives include gym memberships and access to workshops about wellness, both physical and mental. Many health insurance companies provide a break on premiums if you participate in activities like meeting with a wellness coach.
Less common benefits
Though less common, you may also find some of these benefits come up in your offer. Depending on your needs, you may want to seek out these extras.
Adoption benefits – Employers may offer adoption benefits including financial assistance and education along with parental leave. They may pay for part of the adoption fee, typically up to 80% of the total amount.
Legal plan benefits – Your benefits can include access to high-quality, cost-effective lawyers.
Sabbaticals – Some employers offer an opportunity for sabbaticals, also known as extended leave. This leave could be paid or unpaid and taken for study, travel, or other personal needs.
Work from anywhere – Your company allows you to work from anywhere, whether that be in a remote city, state, or even country. You will need to coordinate carefully with your employer and any foreign governments to obtain required visas and properly manage tax payments if you work internationally.
Separate education & training budgets – While it is more common for employers to reimburse tuition for training related to your position, some will offer separate education reimbursement for you to learn in other fields and develop a diverse skill set. You may even be able to hire a leadership or executive coach using this benefit.
Final Thoughts from a No BS Career Coach on Compensation and Benefits Packages
I hope this guide has been helpful in de-mystifying the wonderful world of compensation and benefits packages.
When you break it down, securing the right compensation package for you is like anything else with your career – you need to compare your needs, beyond basic finances, to what your potential employer is offering and make a call on whether it works for you.
Base pay is just the beginning of the conversation.
If you need help determining what is most important for you in a compensation plan or evaluating an offer, a single strategy coaching call could be a big win for you. Book a coaching session today.