If you have recently graduated from college or will soon be doing so and are looking for your first professional job, it is important to have a clear understanding of the compensation strategies used by different companies, so that you can ultimately accept the most appropriate employment offer for your existing and future needs. Since the compensation strategy used from one employer to the next can vary tremendously and the perks of one job can often offset a lower salary, every savvy professional can benefit from the information discussed below.
Understanding Compensation Strategies
Compensation strategies can be defined as the methods and ideas that are used by a company, organization or other employer to attract and retain qualified workers. While salary is obviously important to most employees, other aspects can play a similarly important role. For instance, the availability and affordability of employer-sponsored or subsidized health insurance plans might inspire someone to accept an offer of employment that pays slightly less than a similar job with more expensive or less comprehensive insurance coverage.
Other examples that are often considered when determining which job offer to accept can include:
- The option to purchase or otherwise acquiring stock in the company
- The type and amount of sick or vacation leave
- The potential for increased pay and responsibilities in future years
- Retirement benefits
- The possibility of flexible work, including the option of working from home
Determining How the Compensation Strategy Of A Company Can Impact You
Once you have an understanding of what a compensation strategy is and what it might include, it is time to establish how useful the specific attributes of that strategy will be for you. If you are like more than nine out of ten people born between 1977 and 1997, you don't expect to keep the job you're applying for more than three years. In that instance, it is quite likely that the retirement plans and advancement opportunities with that employer are not very high on your list of priorities. However, if you are married, have kids or expect to do so in the near future, having great insurance, sick leave, and employer-paid maternity or paternity leave could be very important to you at this juncture in your life.
If nothing is any more or any less important to you, you can easily determine the value of the benefits package. First, you will need to speak with the Human Resources department of each company you might work for. After getting the percentage value of your benefits package from them, multiply it by the annual, pre-tax salary you have been offered. That final number represents the value of your benefits package and a higher number represents the highest value. That information can make it easier to determine which job you should take and might also assist you during negotiations with other employers.
In conclusion, compensation strategies are often quite specific to different employers and can include many variables such as vacation and sick leave, investment opportunities, and other incentives that are provided to the workers. As a result, if you are looking for a job that will start a career, it's a good idea to familiarize yourself with the facts shared above.