I Got an Offer! Now What?

March 1st, 2012 | Posted in by

As a recruiter, I see more employment offers in a few months than most people will see in their lifetime – and I’ve seen it all!

Whether you’re senior or junior, an executive or an administrator, how you evaluate a job offer is critical: it is not just about the money. Once you decide that this is the right job for you, the offer details need to be considered. Here are some things to consider before you put pen to paper:

1. I want the job, but WHY?

Sounds painfully obvious I know, but many people get swept into an interview process and are so busy trying to impress that they forget the need to evaluate whether this is the right job for them and why. Just as they are presented with an offer, panic sets in and doubts surface.

If you’re excited about the offer and have a good feeling about your ability to succeed and be happy in the new role, then odds are you’ve been asking yourself questions along the way. Before getting into the details of compensation take some time to think about what is important to you in a new role, a work environment and a manager. Know yourself well, and you’ll be able tell if this is a workplace where you’ll be happy and successful.

It is tough to put a dollar value on intangibles like learning experiences, team fit, or overall happiness and passion about your work. But if the new job offers a big improvement in these areas, they need to be considered with as much (or more) weight than the financial benefits.

2. Separate and evaluate all the compensation parts of your offer.

If the offer is purely a base salary, this is pretty easy.

More commonly, an offer is comprised of base, bonus, miscellaneous perks and sometimes options or equity. Each of these moving parts needs to be considered separately, and how you value each is an entirely personal. But here are some things to think about:

Base Salary:
Is this a good market rate for your skills and contribution? How does this stack up against your current salary, other offers and your cash flow requirements? How often are there salary reviews and when is the next one?

You don’t want to bank on the bonus as guaranteed cash flow, but you can definitely work the bonus into your evaluation based on the likelihood that it will pay out. How is the bonus calculated – company, team or individual performance? How has it paid out to other employees historically? The metrics for your bonus will often point to how your own success in the role will be measured, and should tell you what objectives the company wants you to work towards.

Options or Equity:
Without getting into the math and science behind how options and equity are valued and distributed, here are my two-cents on how to view this component of your offer.

Options and equity are a part of compensation that can’t typically be weighed into your cash flow equation. They are given for 2 reasons:

  1. to balance the risk of an early stage company, providing reward if the company succeeds, and/or
  2. as motivation to focus employees on building value and working towards overall company success

If the company is very early stage and your incremental contribution to its future success is significant, then options may be a big part of your package. How you value this is a personal question, based on your belief that the company will succeed and that there will be a strong exit somewhere down the line.

Conversely, if the company is more established, has products, customers, and lots of employees, your individual contribution to the future success is limited, unless you are a key senior exec. In this bigger company the options may be a nice reward and a motivator to keep you focused on the big picture, but should be a smaller consideration as you evaluate the comp components of your offer.

Other Perks:
Companies sometimes offer extras that are easy to monetize, like contributions to your RSP, a mobile phone, gym membership, or even meals. If these are things you would have paid for otherwise with your after-tax dollars, then you’re wise to add them in.

While every offer is a little different, each individual’s perception of the offer is equally unique. If you can first be sure that the role is right for you, then you can evaluate the moving parts of compensation and feel confident that your partnership with your new employer is off to a positive start.