Compensation Advice for New Grads: Look at the Perks
By Sheila Curran, BusinessWeek
Don’t be so focused on salary that you overlook key benefits like health insurance, retirement-plan contributions, and time off.
Almost 1.5 million new grads will enter the workforce this summer.
If you’ve got good grades, did some internships, and have some job-search savvy, you very well may have your choice of offers. But don’t flunk your first real-world test by incorrectly assessing the pay and perks of any positions you’re offered.
While you’re still in school, convenience and salary are likely the key determinants when deciding on a job. But after graduation, there are many other factors to consider beyond pay, such as cost of living and benefits. You also need to realize that you may have more flexibility than you think when it comes to negotiating the best possible total compensation package. What You Need to Know
True, on-campus recruiters usually have set policies on salary and benefits. And unless you have a “hook,” like having worked for the military for several years before coming to college, it will be hard for you to make a case why you should be treated differently. However, the majority of employers do just-in-time hiring, meaning someone has to leave before they will recruit someone new. If you’re offered one of these positions, you may have more flexibility.
Here’s what you need to do know and do to increase your chances of negotiating a better compensation package:
• Know the prevailing salary for someone with your background and experience in the type of work and organization for which you’re being considered.
• Identify what benefits are important to you, and check the company’s human resources Web site for information on benefits.
• Wait until you’ve been given a job offer before you try to negotiate either salary or benefits.
• Be professional. Resist pressure to give an immediate answer, but also realize that you can’t renegotiate or keep them on hold forever. Salary
Recent grads are often thrown by questions about salary. The first rule of salary negotiation is that the person who states a number first loses, so there’s a very good chance that a recruiter will ask you what you expect to be paid. You can finesse that question by saying that you would expect to be paid the same as someone with similar background and qualifications—which is why it’s important do to your homework—or that you’re willing to discuss salary when you’re further along in the process.
So, let’s say you can hold out and get them to name a figure first. How do you know if it’s a reasonable offer? If you can, network with someone in the company to find out what people in the kind of position you’re interviewing for typically make. If that’s not possible, call the organization’s human-resources department and ask if there’s a salary range for the position. Most salary ranges are divided into quartiles, and usually new-graduate hires will be given a salary in the first quartile of the range.
Base salary isn’t the only thing to consider, however. Ask when you will be eligible for performance-based raises. Some companies start with lower salaries but have six-month reviews and potential raises. Knowing that there will be the chance for a bump in salary after six months might make it easier for you to accept a starting salary that’s lower than you would like.
Make sure you know ahead of time what a figure really means. If you think a job offer of $30,000 in the Research Triangle Park area of North Carolina is too low, consider that you would have to make almost $49,000 to have a similar standard of living in San Francisco. (Consult a Web site like salary.com to help you figure this out.)
Also, bear in mind that the figure you’re quoted may include other financial compensation such as a signing bonus or relocation funds. That’s the good news. The bad news: You will receive these extras only once. But since this is an area where there might be more flexibility, be sure to ask.
Few student jobs provide benefits, and frankly, they’re not all that important for students. But once you graduate, having good benefits is essential. For one thing, you will most likely no longer have health insurance. And even a small accident or relatively minor operation like an appendectomy can cost you many months’ salary. Check out the health-insurance coverage that comes with your job. Sometimes it’s fully paid for you. Other times you have to contribute—and the amount of contribution can vary significantly.
Graduates often overlook 403(b) or 401(k) plans, particularly if they see the word “retirement” attached to them. However, these can not only provide a forced savings plan but also significantly increase the value of your compensation. Many companies will give you a one-for-one match up to a certain percentage of your salary. Universities and other nonprofits are often substantially more generous, requiring you to simply contribute a small percentage of your income in return for as much as an 8% match. That’s the equivalent of getting an 8% pay hike!
Other benefits—educational benefits, gym memberships, subsidized transportation, time off for volunteer work—may be worth a great deal or nothing at all depending on your personal circumstances. New grads in particular often lament the fact that they no longer have a winter, spring, or summer vacation. If time off is important to you, check your job offers carefully. As a new hire, you may find you have to wait a year before you can take even two weeks off.
Be sure to check a prospective employer’s Web site. Much of this basic information should be available. If they don’t have set policies spelled out, it might mean that there’s some room for negotiation on certain matters, especially at small companies and startups.
Don’t expect that you will be able to put an employer on hold indefinitely while you gather job offers. If you’re pursuing other opportunities, it’s acceptable to call those employers and tell them that you need to make a decision on another job offer. And it’s also O.K. to ask if they’re in a position to make a quick decision on your candidacy.
The hiring manager has to be committed to you before he will appreciate these types of questions, let along more granular, detailed questions about the specifics of your offer. You will need to ask after getting the job offer if there’s any flexibility in the terms of the compensation package.
Recognize that unless you will be working for a very small company, it’s easier for management to increase salary, add items like moving-expense reimbursement, or give additional days off than it is to enhance benefits like health insurance.
It’s perfectly acceptable to thank the manager for her offer and say you remain very interested but need time to think about a few issues. But once you’ve agreed to changes in the package or you’ve accepted an offer, don’t go back and try to renegotiate.
Your school’s career center can be a valuable resource in this stage of the process. Many offices welcome calls from new grads who are trying to decide whether to take a particular position, or who want an expert opinion on the relative value of job offers.
The most important thing to remember is that the “sweet spot” time for negotiation is after you’ve been offered a job and before you’ve accepted it! When employers want you, but they don’t know how much you want them, you’re in the driver’s seat. Use the time to assess your needs, your values, and your opportunities.
Curran has more than 25 years’ experience in human resources and career coaching. She is currently executive director of the Duke University Career Center. She is co-author of Smart Moves for Liberal Arts Grads: Finding a Path to Your Perfect Career.
© 2008, Yellowbrix