The Value Of Benefits And Bonuses On Top Of Base Salary
By Mark Swartz
Monster Senior Contributing Writer
“I want the highest starting salary possible” is a common catchphrase heard from job hunters. A higher salary can mean more money for you to spend, greater status, and a bigger raise at the next performance review.
But while salary is typically the biggest component of your total compensation package, an annual bonus and benefits paid for by the employer (either in full or partly) may also be part of the offering.
Recruitment specialist Cindy Schwartz, of personnel firm Quantum Management Services Ltd., knows all about the salary versus benefits debate. She spoke to Monster.ca from her Montreal office about why you should always consider benefits when weighing a job offer.
Monster.ca: Salary is what most job seekers focus on most when looking at a potential compensation package. Are you saying that this may not always be the best approach?
Schwartz: It can definitely be tempting to go for the highest starting salary you can get. But paying you an annual bonus allows employers to keep base salaries manageable. And many job seekers, especially junior candidates earning up to $35,000 or so, tend to overlook the possible importance of benefits such as health insurance, dental care, long term disability coverage, and other such items.
Monster.ca: Why might downplaying bonuses and benefits be a problem for job seekers?
Schwartz: Two reasons in particular. One is that employers have an upper limit in mind when it comes to starting salary. So if a job seeker is not prepared to negotiate an offer with some flexibility between salary, annual bonus and benefits, they may unintentionally price themselves out of a given search opportunity. The second reason is that you never know when you might have to actually make use of your health benefits. In emergencies they can make a huge difference for you financially.
Monster.ca: Can you give us an example of how being flexible between pay and benefits when negotiating a job offer can pay off for the candidate?
Schwartz: Sure. One of my recent candidates, a young married woman with an infant, came in looking to earn at least $35,000 as her base salary. Given her skill level and market demand, I was able to present her with a great opportunity. However the starting salary was $32,000.
Nonetheless this position also came with a 7% annual bonus (about $2,200). On top of this, it offered a comprehensive insurance plan that fully covered her husband and daughter too. This alone was worth about $4,000. So the total package added up to about $38,000 a year. If she’d been stuck on base salary she would have missed out on this great opening.
Monster.ca: You mentioned earlier that health benefits can come in very handy if they’re ever needed, but that junior candidates in particular may not value this. Can you expand on this?
Schwartz: I have a personal example to share here. When I speak with younger job seekers they are more likely to believe that they will always enjoy good health, and that Medicare will pay for everything in case of crisis. My good friend, who is only 35, had cancer recently. She was unable to work for 9 months while she underwent extensive treatment. She also needed time off work to get her strength back. Her benefits package paid 75% of her salary for the nine months. The employee benefits also covered the cost of the many scans and the expensive medications not covered by Canadian Medicare. If she didn’t have medical benefits she would have spent roughly $70 000 during her ordeal. Because she was covered, she only had to worry about getting better and not her mortgage payments and medical bills.
Monster.ca: When you are meeting with a new candidate, how do you know what to advise them in terms of possible trade-offs between pay and benefits?
Schwartz: I take time to assess what the job seeker is looking for overall when I first meet them. Some people already have benefits coverage under spousal or other plans. Or they prefer a higher base salary and less of a bonus. This helps guide me as to positions I would contact them for.
Monster.ca: Not all employers offer the same types and levels of bonus and benefits, do they?
Schwartz: There can be quite a bit of variation from employer to employer. For instance I have seen employers who offer no annual bonus at all. As for benefits, they can be comprehensive, partial or absent; also you may be required to pay a portion of the premiums out of your own pocket, or the employer may pay the entire amount themselves.
Most companies with more than 50 employees offer at least some sort of benefit plan. This doesn’t mean that smaller ones do not, you just have to ask to make sure.
Monster.ca: Any additional advice you would like to provide our readers here at Monster.ca?
Schwartz: Just that the more knowledgeable you are as a job seeker about your compensation options, the easier it is for us recruiters to work with you. Remember to look at all three potential sources of pay: salary, bonus, and benefits.
Flexibility around each of these items can work in your favour. Be realistic about your needs as they will probably change over time. And be kind to your recruiter—we really are here to help you!