When you receive a job offer, it’s important to take the time to carefully evaluate it before accepting. A lot of people make the mistake of accepting a job offer based solely on salary. Although starting salary matters, it isn’t the only factor that matters. Here are factors to consider when evaluating job offers.
Salary
There’s no denying starting salary matters – if you’ve been recently laid off, you’ll definitely notice a $10,000 pay cut in your family budget. Starting salary is especially important if you’re in the market to purchase a house. Mortgage lenders use the Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS) when determining how much money you can borrow for a home. The lower your starting salary, the less you can borrow for your dream home.
Health Benefits
Besides starting salary, you’ll want to ask about health benefits. Employers are increasingly shifting from traditional benefits towards flex benefits. The advantage of flex benefits is you can pick and choose the coverage that matters most to you. You do this by allocating flex credits you receive based on your salary. If you have flex credits leftover, you may even be able to choose to receive them as taxable cash. That’s what I do with my flex credits – my excess flex credits are deposited in my bank account along with my pay.
Retirement Benefits
Although only one third of employers offer workplace pension plans, you should still ask about them. All retirement benefits aren’t created equal. What type of retirement plan, if any, does the employer offer? Defined benefit (DB), defined contribution (DC) pension, and group RRSPs are the most common retirement plans. An advantage of employer retirement plans is lower investment fees. Be sure to find out if the employer matches your contributions and if so, up to what percentage of your salary. If you’re not taking advantage of your company match, you’re leaving free money on the table. When I found out my company had a DB pension plan, I didn’t have to think twice about accepting the job offer!
Opportunity for Advantage and Employer’s Prospects
Before you accept a job offer you should ask yourself if there’s an opportunity for advancement. Your chances of being promoted are a lot better at an employer with a clear path up the corporate ladder than an employer who can articulate a path. The last thing you want is to be is stuck in a dead-end job for the next decade. Be sure to ask about if the company promotes from within. Most people don’t want to put up with the headache of job hunting just to get promoted. When I was hired, I remember the department manager talking about a clear career path. Depending on how quickly I caught on, I could be promoted in as little as a year.
You’ll also want to look at the employer’s prospects. Most hiring managers won’t come out and say a company is struggling, so you’ll have to do some digging yourself. The hiring manager at one job I applied for said she had just laid off half the department – the second I heard that, I knew I didn’t want to work there!
Company Culture
Company culture is the behaviour of employees within an organization. Culture matters a lot – you want to find a company culture that fits with your personality and work ethic. Some companies are laid back with a lax dress code, while others are super strict and enforce company policies to the letter. You may be an excellent worker, but if you don’t mesh with the company culture, you may not get promote or worse, you might get let go.
Vacation, Hours and Travel
Although it’s probably not a good idea to start a job interview by asking about how many weeks’ vacation you get, you should still find an opportune time to ask about vacation. Vacation is usually based on years of service – find out how many weeks’ vacation you start with and when you’ll start receiving more. My employer started me with 3 weeks’ vacation (which can be carried over to the next year) and three personal days – that’s almost 4 weeks of time off!
Some companies offer flexible work hours. You can beat the morning rush by starting earlier or working later. Some employers even let you avoid the headache of rush hour entirely by working at home. I’m fortunate that my employer offer flexible work hours. I’m able to start at 9AM and leave at 6PM, avoiding rush hour traffic for the most part, which is helpful since I cycle into work.
Have you ever had to choose between job offers? What factors matter most to you?
Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.