When you receive a job offer, what do you consider most important? Is it the salary or the perks? In the tech industry, employees usually look beyond a paycheck.
A study revealed that most employees consider a job satisfying if they receive good pay, other benefits, and proper treatment by the management.
This guide will discuss why a compensation and benefits package is essential, and what to consider when looking at it.
Benefits in a Compensation Package
Salary is part of a compensation package. But, what other benefits should you expect from your employer? It should be noted that more established tech companies like Amazon, Apple, or Microsoft may offer better packages than startups. Here are some of the basic perks you may expect.
- Health Insurance: Among other benefits, this is the most crucial to consider as falling ill can take a toll on your finances. When you can cater to your medical expenses and those of your loved ones, you will focus better at work thus increasing your productivity. Companies offering health insurance can also benefit by applying for tax relief under Section 80D.
- Dental Insurance: Dental insurance can either be separate or part of a comprehensive health insurance cover. Dental insurance covers all dental issues, including preventative measures and emergencies. Usually, companies obtain dental insurance from the health insurance carrier at subsidized rates.
- Life Insurance: This benefits package is offered to executives in a company. The insurance takes care of the family once an employee dies.
- 401(K): 401(K) is a retirement plan where you agree to contribute a certain amount of your salary each month. Your employer also remits a certain amount of money toward the savings plan. The maximum contribution you and your employer can contribute may vary yearly to account for inflation levels.
- Disability Insurance: Disability insurance can be either short-term or long-term. The insurance ensures that you continue receiving a percentage of your income should you get ill to the point of being bed-ridden.
- Paid time off (PTO): Once in a while, you may need time off to run personal errands, attend a burial, sit an exam, or relax. Some employers will classify time off into bereavement leave, sick offs, vacations, or personal days.
Frequently Asked Questions
Are benefits more important than salary?
Benefits are more important than salaries for most employees. A good benefits package ensures that your health and retirement are well covered. A flexible work schedule is also important if you’re juggling work and school or you have young children.
What is the difference between a compensation package and benefits package?
Compensation includes bonuses, commissions, stocks, or profit shares. Benefits is the indirect pay you receive. These include a flexible work model, more paid time off, sick leaves, maternity/paternity leaves, and health insurance.
What is not included as a part of the employee compensation plan?
An employee’s remittance toward social security schemes is not included as part of a compensation plan. Compensation only includes the gross total wages for the work you’ve done.
Factors to Consider when Negotiating a Compensation Package
A compensation and benefits package for employees can vary depending on the employer. It’s possible to negotiate a better package. Here are the factors to consider when negotiating a compensation package.
What Do You Consider Necessary?
For some employees, reasonable pay is enough to motivate them, while to some, a flexible work model is all they want to remain loyal to the employer. Only you can decide what matters, and you should negotiate it with the employer when you’re offered the job. If not getting good health insurance for you and your family is a deal breaker, negotiate to have it included.
Your Level of Experience
Some perks are only given to the executive team or employees who have worked with the company for a certain period. It’s essential to consider the level of experience and skills you’ll bring to the table if offered a job.
The benefits and compensation package go hand in hand with your skill level. If you feel what you’re offered doesn’t match your skill, it is okay to ask the hiring manager if there is room for negotiation. If there is, you can pen a figure or perk you feel comfortable working for.
The Market Rate
Oftentimes, an employer will offer a compensation package after analyzing what other employers are offering for the same position. If the company has offered the market rate, it may be challenging to convince them to increase the pay unless you have unmatched skills.
The market rate is usually higher than the minimum wage. A minimum wage varies from state to state and is determined by the consumer price index. For example, in Los Angeles, the minimum hourly wage is $16.04. Los Angeles has a higher minimum wage compared to other states. The average rate in the US is about $7.25, as stipulated by the federal government.
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