What comes to mind when you think of negotiating a job offer? The number of dollars on your paycheck, of course! But there's more to your total compensation package than your regular take-home pay.
Why is total compensation is important?
Total compensation includes all financial and non-financial aspects of the job offer. It helps you compare across options, including your current position. And it helps you negotiate more effectively. You might have one offer that doesn't include a bonus, but has some other monetary benefits, perks, etc. For example, large tech companies will likely provide large base salaries, stock options, bonuses, and the best available health insurance, while a startup might offer IPO equity and a large salary.
Total compensation is actually really important to think about before you start interviewing and not just at the offer stage. When talking about compensation with a recruiter, most people think about the base salary. Sometimes they don't realize that there are other potential talking points. Base salary can change later on depending on the whole offer.
If the offer falls short of your expectations and needs, there may be a way for the employer to make up for that deficit with some other aspect of compensation. Some aspects of compensation are typically fixed, like health insurance benefits and retirement savings and matching percent.
What if I'm a contractor?
It pains me to say it, but if you are considering a contract role with an hourly rate, your bargaining power will be limited and your total compensation may or may not be similar to a full-time role. Even though your paycheck might be higher than a full-time role (due to having a relatively high hourly rate), contracting has a lot of disadvantages simply because it's not a full-time role. Usually this means no bonuses, possibly not having retirement matching, health insurance isn't as good, no employee perks, the job is less secure, minimal focus on career development, etc.
So even if your hourly rate seems good, it may not make up for the lack of other financial and career development benefits. It really depends on your preferences and what works best for you. Some people are fine with contracting, especially those who can command a much higher hourly rate than the norm.
A few tips for effective negotiations
Always ask for what you want and deserve, regardless of whether it's a full-time or contract role. Always ask questions, especially if there is missing information. Always negotiate. Always get the offer details in writing and for time to review and respond to it. Never agree to anything verbally or in writing before you can review the entire package.
Things you can negotiate during a job offer:
Paid time off
Stocks/RSUs or equity/IPO potential (pay attention to whether this is guaranteed money, based on stock price, number of stocks versus money, vesting schedule, etc.)
Employee performance bonus amount/%
Company performance bonus amount/%
Retention bonus (1 year, 2 year, etc.)
Annual cost of living raise (needs to match inflation)
Level and/or title
Product and service discounts, memberships
Preferred work schedule (e.g, hours, 4-day week, etc.)
Remote/work from home options
Professional development budget (tuition, training, conferences)
Child care stipend
Home office equipment reimbursement
Mental health days
Charitable gift matching
Fertility and family benefits
A couple of tips
Think about anything you are leaving behind at your current role. PTO? Tenured professor role? Benefits, perks, etc. And make sure these are accounted for in your negotiation.
Having other offers is great for leverage, but even if you don’t have that, you are still negotiating based on salary data, market rate, your value, etc.