The Offer Is Not Always As Good As It Looks

by Carole Martin

Published on this site: June 22nd, 2005 - See more articles from this month...

Have you ever negotiated an offer?

If not, you are not alone. Most people DO NOT negotiate salary. They accept what is offered.

Whether you negotiate a salary or not is secondary to doing your homework before accepting an offer. It is always best to take some time before signing on the dotted line so that you understand exactly what you are gaining – or losing.

Here’s an example of someone who jumped at an offer before doing his homework.

Nicholas received an on-the-spot offer and was thrilled. This was the job he wanted and he was anxious to get started. He was going to get more money, and a bonus. What more could he ask for?

When he got home that evening, he sat down with pencil and paper and began to evaluate the offer, and what he was getting overall. He was not only shocked by what he discovered, but wished that he could go back and talk about some of the issues. But, he had signed on the "dotted line" that afternoon.

Once you sign the offer letter, you have essentially signed a contract. It is too late to go back and negotiate. Never accept an on-the-spot offer, unless it is absolutely out-of-this-world. It is generally wise to evaluate what you are gaining and losing.

Let's look at what Nicholas found out by doing some simple calculations.

Nicholas was offered $55,000 per year, with a hiring bonus of $5,000 paid in two payments over the next six months. This was a $5,000 a year increase from what he was making on his last job, and a bonus to boot. An extra $10,000.00.

When he and his wife looked over the benefits package they discovered that he would now have to pay the insurance premiums for his dependents. His last employer had paid the premiums for the entire family.

-$350.00/per month - $4200 per year

His new vacation package offered two weeks time off, accrued over the next twelve months. His former package included three weeks vacation.

-$962.00 one week’s vacation pay

Nicholas was receiving a 6.5% yearly bonus, based on company earnings in his last position. His new company does not have a planned bonus as part of the salary. Bonuses are earned based on performance, and given as judged appropriate.

-$3250.00 per year – lost bonus

His former employer matched 50 cents for every dollar contributed up to 6% on his 401K account. This company does not match funds.

-$1500.00 per year (based on 6% contribution)

His calculations showed a minus of $10,000 a year from his new offer, based on cost of insurance premiums, lost bonus, and lost matching 401K contributions. He wasn't quite so thrilled with the offer anymore.

At least he got that $5,000 hiring bonus, which will cushion the fall. But even that will be affected - he didn't anticipate the higher tax rate on "special" checks that was deducted from the bonus money. These higher rate taxes can run as high as 41.5%.

Nicholas got the job he wanted, and maybe that is worth more to him than the money difference. But, it would have been wise to make the decision with all the facts before signing the offer letter. He may have been able to negotiate another $5,000 to compensate for the benefits differences. Or, given the higher tax rate he could have negotiated for an increase in the hiring bonus.

It is always best to take some time to reflect on the "total package." Benefits can be worth another 20-50% of your salary. There are other factors to consider besides money more challenging work, better company, a greater opportunity. It may be worth giving up dollars now to invest in your future. However, the decision should be thought through before rushing ahead.

If pressed to give your answer to an offer on-the-spot, always stall for time. Tell them that you need to do some calculations and think about it. There is only one window of opportunity to negotiate your terms of employment.. Once you say "Yes!" - the window closes.

Make sure you take the time to consider all your options. It’s not always as good as it looks.



Carole Martin is a thoroughbred interview coach. Celebrated author, trainer, and mentor, Carole can give you interviewing tips like no one else can. Her workbook, "Interview Fitness Training - A Workout With the Interview Coach," has sold thousands of copies world-wide. "Boost Your Interview IQ" has been awarded one of the 10 best career books for 2004. Her most recent book, "Perfect Phrases for the Perfect Interview" and the others mentioned are all available at:
http://www.interviewfitnesstraining.com and http://www.interviewcoach.com