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Friday, April 8, 2011

Look Beyond The Base: "Total Compensation"

Whether you are a hiring manager or a job applicant you should ensure that you have a full and complete picture about all the components of the compensation plan an employer is prepared or able to offer. This is key information for a hiring manager to have so it can be used to sell a prospective employee on all of the benefits of joining an organization.  As a prospective employee, knowing and being able to quantify all of the components of "total compensation" will enable you to make a more informed decision as to whether or not to join an organization. 

The term "total compensation" is most often used to describe not only a candidate's salary and wages, but also all the various plans, programs, benefits and opportunities that become available to the incumbent during their employment.

Other components of "total compensation" can include:
  1. Flexible Work Hours - compressed work week, telecommuting or working from home and flexible working hours.
  2. Professional Development - tuition reimbursement programs, professional association dues payments and funding for attending conferences or workshops.
  3. Pay for Time Not Worked - sick pay, sabbaticals, floater days, vacation entitlements and carry over of vacation days not used.
  4. Health, Accident and Liability Protection - flex benefit plans, competitive levels of co-insurance and no deductions, no caps and or reasonable spending limits on prescription drugs along with travel accident insurance coverage.
  5. Disability Coverage - do short term and long term disability plans exist and are the reimbursement levels competitive (e.g. STD 12 months coverage at 100% of salary, LTD level of 60% of the employees pre-injury earnings).
  6. Deferred Income Benefits - is there a pension plan, does the employer match or contribute to the plan and is the plan a defined benefit or defined contribution plan.
  7. Company Vehicle - does the company offer a company car as a perk and do they pay for the insurance and operating costs (e.g. fuel, maintenance, etc.). 
All compensation considerations need to be understood and assessed in addition to base salary and bonus numbers in order to gain a full understanding of the total compensation an employer is prepared or able to offer.  Knowing all of these components of "total compensation" will lead to hiring managers making a stronger articulation of the job offer and also enable prospective employees to make a more informed decision to either accept or decline a job offer.

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