Understand the Value of Benefits
When looking for a new position salary is usually at the forefront of our decision to accept or reject an offer. Obviously, salary is very important, however it’s better to get the big picture of total compensation. Total compensation is the sum of the cost of salary + benefits and is a better gauge of what you’re being offered. Benefits make up a larger percentage of total compensation than most employees realize. According to the Bureau of Labor Statistics the average benefits package accounts for almost 31% of total compensation. Of course, this varies from employer to employer, so do your homework when comparing offers.
What kind of benefits do companies offer and what do they cost? Consider Jane. She is a software engineer who just landed a new job paying her $100k annually. She also has a good benefit package provided by her employer. Let’s look at Jane’s total compensation and the value of each line item.
FICA / Medicare $7650 (7.65%)
Many employees don’t think about their employer’s contribution to their Social Security as a benefit. However, if you’ve ever been self-employed or a contractor you are very aware of the value of this 7.65% contribution.
Health Insurance $9600 (9.6%)
Dental Insurance $1200 (1.2%)
Life Insurance $500 (0.5%)
*4 Weeks Vacation $7692 (7.7%)
*8 Personal Days $3076 (3.1%)
*7 Paid Holidays $2692 (2.7%)
Gym Membership $600 (0.6%)
401k Match $4000 (4%)
Stock Options $15,000 (15%)
Tuition Reimbursement $4500 (4.5%)
Parking Allowance $1200 (1.2%)
To calculate Janes total compensation, add her salary to the cost of her benefits except vacation, personal days, and holidays as those are accounted for in her salary.
Total Compensation $136,600
Benefits $36,600 excluding vacation and holidays
Benefits $50,060 including vacation and holidays
As you can see benefits can make up a substantial portion of your total compensation. It’s important to review the benefits carefully to assess not only their cost, but their actual value to you. For example, parking allowance will not be valuable to someone who takes the train to work. Consider what benefits are most valuable to you then you can make an informed comparison of offers you may receive.
Danielle Foppe is a Recruitment Manager at Business Centric Technology. If you are interested in learning more about how to get the best IT talent in the Dallas metroplex, contact Danielle specializes in recruiting IT talent in Dallas, Ft. Worth and North Texas. If you are looking for a rewarding career contact us today.