If you’ve turned on a television in the last 18 months, you’ve probably seen the commercials encouraging consumers to ask car dealerships to “Show them the CarFax” before purchasing a used vehicle. A CarFax report is a certified report detailing the history of the vehicle. The report covers several important topics, such as accident history, service records, ownership history and title issues, if any.
This product has gained quite a bit of momentum in the past few years due to the perception that used car dealerships are rather selective with what information they share with potential buyers. Having a CarFax report prior to beginning the negotiating process with the dealership provides the consumer an objective assessment and gives a clear picture of the vehicle’s history. Given everything such a report can provide, it wouldn’t be prudent for a potential buyer to start negotiating a price for a vehicle without having this information in hand.
But every day when people interview for positions at new companies, they make the same mistake. They discuss salary before they have collected all of the information to make the most informed decision. While there are no CarFax reports for job seekers, there is one company document that will be almost as useful—the benefit sheet. When benefits are introduced into the equation, the issue is no longer a matter of “salary,” but a matter of a “compensation package.” Below are some of the questions job seekers should have answered before discussing salaries with potential employers:
- What are the health insurance costs? Just about every company has insurance options, but the policies offered have a great degree of variation depending on the employer. It’s very common for monthly premiums for coverage to fluctuate several hundred dollars between employers. Once a job seeker has obtained the information for the monthly premium, it’s equally important to learn what the annual deductible and co-pay are. The cost of healthcare is steadily rising, and the difference between having a good health insurance plan and a below-average plan could result in the loss of several thousand dollars per year.
- Do they offer dental, vision or life insurance? Many times, in the rush of finding a new career opportunity, people can overlook how costly dental work and eyeglasses have become. Individuals with small children at home should give this careful consideration given the high cost of braces and eyeglasses. Baby boomers may also value the opportunity to purchase life insurance at a greatly reduced group rate than what they could negotiate on their own.
- What is the annual company match on the 401K, and how long until employees become fully vested? With most companies eliminating traditional pensions, the 401K has become the standard for how people are saving for retirement. While it might seem like a small difference between a three-percent match and a five-percent match short-term, over the course of 35 to 40 years with compound interest, the difference could be a couple hundred thousand dollars. The vesting period for companies typically varies from the first day of employment to the completion of the employee’s fifth year. Many employers have a graduated scale that only a percentage of their contributions are guaranteed until the vesting period. Before making a career choice, it’s always important to realize the long-term financial consequences of losing a portion of the company match.
- Does the company typically give an annual or year-end bonus? While it may seem trivial to ask about a holiday or annual bonus during an interview, it can actually make a very large difference in an individual’s annual salary. Companies typically give anything from the “jelly-of-the-month club” to a percentage of the annual salary. When encountering a situation with multiple job offers, a three- to five-percent annual bonus can be a deciding factor and make a huge difference in otherwise similar compensation packages.
- Is tuition reimbursement available? Education is one of the most valuable gifts in the world and is quickly becoming one of the most expensive. Tuition reimbursement can often add thousands of dollars a year to a compensation package and encourages a company culture of reinvestment and career growth. This is a great tool to attract many younger professionals entering the workforce who would like to continue their education but have acquired tens of thousands of dollars in student loans from their undergraduate programs and aren’t in a financial position to assume more debt. One item to take into consideration is that many of the tuition assistance programs require a commitment to stay with the company for a specified period of time after using the benefit, otherwise the company requires that the assistance be repaid to the organization.
Very similar to reviewing a CarFax report for a vehicle, having a solid understanding of a company’s benefit package enables the job seeker to approach his or her negotiations with confidence. The next time the question is posed, “What are your salary expectations?” respond with “Show me the JobFax!” or “I’ll be happy to discuss compensation after we review the benefit package.” iBi