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Their Offer May Not Be As Good As It Appears


   Article by Carole Martin


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 an increase in salary from his last job as well as a starting 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 his discovery, but wished he could go back and talk about some of those issues. Unfortunately, he had signed on the dotted line that afternoon.

Most people quickly accept the first offer presented to them. Have you ever negotiated an offer?

Avoid Accepting an On-the-Spot Offer

It is generally wise to do some homework and evaluate what you are gaining and losing prior to accepting offer. Had he done his homework, Nicholas would have realized the following:

Nicholas was offered $55,000 per year, with a hiring bonus of $5,000 paid in two payments over the next six months. Gain: $10,000.

When he looked over the benefits package, he discovered he would now have to pay the insurance premiums for his dependents. His last employer had paid the entire family's premiums. Loss: $4,200.

His new vacation package provided only two weeks' time off accrued over the next 12 months. His former package included three weeks of vacation. Loss: $962.

In his last position, Nicholas received a 6.5 percent yearly bonus based on company earnings. His new company does not include a planned bonus as part of the salary. Bonuses are earned based on performance and given as deemed appropriate. Loss: $3,250.

His former employer matched 50 cents for every dollar contributed up to 6 percent on his 401k. This company does not match funds. Loss: $1,500.
More Can Be Less

Nicholas's calculations showed a loss of $10,000 in the first year of his new job based on the cost of insurance premiums, lost bonus and lost matching 401k contributions. He quickly realized this offer wasn't as great as he originally thought.

Although he got that $5,000 hiring bonus, which should cushion the fall, he didn't anticipate the higher tax rate on special checks that was deducted from the bonus money. These taxes can run as high as 41.5 percent.

Leave Negotiating Room

Nicholas got the job he wanted, and that can be more important than money. But it would have been wise to make the decision with all the facts before signing the offer letter. He might 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 29 percent to 50 percent of your salary. There are other factors to consider, like more challenging work, a better company or increased opportunity. It may be worth giving up dollars now to invest in your future. The decision, however, should be thought through before rushing ahead.

If pressed to accept an offer on the spot, always stall for time. Tell the company 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" that window quickly slams shut.


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