What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


How to Evaluate a Job Offer

Congratulations on your job offer. Well done. And good luck. Now, how do you know if you should accept the offer?

The right answer varies with your circumstances. If you are an unemployed laborer looking for work in the area, perhaps the decision is easy. For professionals who participate in the national job market, the decision can be tougher. For executive positions, perhaps the offer is only the first stage of still more negotiating to come. Here we can suggest a few items to think about.

Most jobs are evaluated basically on 1) salary, 2) responsibility/expectations/qualifications, 3) implications for the future, 4) location/family and 5) other considerations.

1. Salary and other compensation. You know what you make and what is offered. You can find additional information in various salary surveys. This gives some idea of how you rank compared to others in your job and whether the offer is lucrative or not.

Time was when employees routinely expected to make at least 10% more in their new position. Now no or small raises are the norm. This means large increases are rare unless you are the perfect candidate or the position is a promotion with more responsibility. More often, promises are made or implied of promotions in the future with suitable performance, but the offer is for the same rank.

The employee bracket system, known as the Hay System, is used by most major employers these days. It is intended to ensure that those doing similar work get paid the same. But it does mean the employer considering you knows what bracket you are in from the qualifications on your resume. Most new employees are offered salaries near the midpoint. A few negotiate for salaries in the upper end of the bracket, but then good raises are difficult or impossible. (The system moves salaries toward the middle with more frequent, larger raises near the lower limit and slower, smaller raises near the upper limit.) If you negotiate salary, make sure you also negotiate a pay grade.

While you are at it, consider your situation at your current employer. Are you a valued, “star” employee getting top raises? If so, why are you leaving? Better pay? Advancement opportunity? If times are tough for you and others are considered the stars, perhaps you need greener pastures.

Although salary is usually the most important aspect of compensation, some jobs also offer bonuses and/or profit sharing. Perks such as health, life, disability and other insurance, extra vacation, a company car, wardrobe allowance, free lunch, free coffee, memberships in professional organizations, in a country club, commuter bus/train passes, paid parking space, limousine, chauffeur, relocation expenses, mortgage assistance, “buy my house,” and on and on can come into play. Are any of these a deal breaker? If yes, put them on the table and negotiate. If not, estimate their cash value and add them all together.

2. Responsibility/expectations/qualifications. From the interview and the job specifications, you should know what the boss expects from this job. You know your qualifications, your training, your experience, and you should know your own strengths and weaknesses. Is this job a good fit for you? Are people, facilities, resources, etc., etc., adequate to meet expectations?

What is the rank of the position offered? Who does it report to? How does the position interact with others in the organization?

What do you know of this company? Its reputation as an employer? Is the culture there acceptable? Are the bosses highly capable and well regarded?

3. Implications for the future. Do you have a long term career plan? Will this job help you achieve your goal? How will this assignment look on your resume?

If your career goal is a senior executive position, your time to collect the necessary credentials can be critical. Does this position open new doors and give you valuable experience and credentials?

What is the future of this company? Of this business line? Of this technology? The best salaries and perks usually go to the company's most profitable divisions. Is this job in a winning operation? Or merely an also ran? If the business has grand visions, are they achievable? Is success likely? Or will a major competitor eat your lunch? If this is a new company, do they have adequate funding? For how long?

Some have noted the "star" status of your new boss can be an important consideration. If he/she is "going places" i.e., likely to be promoted, you could be being groomed to fill that slot. Working for a winner offers more opportunities for advancement.

4. Location/family. Where will the job be located? Travel required? Where? How often? Safe? How is the commute to the job location? Will you have to move your family? Are they agreeable to the relocation?

If the relocation is more than a county away, what is the quality of life there? Schools adequate? Jobs available for other family members? How will the cost of living change? Taxes? Do you have friends or family in the area to help you settle in?

Some jobs have international components. They can be a great opportunity to take the family and see part of the world. They also require buy-in from the family. Are they agreeable?

5. Other considerations. Much depends on the circumstances of the job offer. Many other factors can arise. You have met the people. You have seen their facilities. The information you have accumulated may suggest still more items to consider.

6. The Grass is Greener. Most companies put their best foot forward on an interview. They try to gloss over any deficiencies in hopes their job offer will be accepted. Still, most employers have a few warts. You can probably find some of them by talking to former employees if you know any.

Your present employer may not be perfect, but at least you have learned to navigate its pitfalls. Your accomplishments have earned the respect of co-workers and supervisors. You have earned some perks there--longer vacation, vesting in pension, 401K, and profit sharing plans, etc. Do you want to start over at the bottom of the totem pole?

The usual advice is stay where you are if the offer is marginal. Hold out for a really great opportunity if you can.

Once you have gotten this far, is this position still tempting? Still in the running? Still worth further consideration?

If yes, now is a good time to fire up the Rolodex and renew contact with your relevant network. Do you know people still working there? Who have been there recently? Do you know people in the area? Re-read the company annual report. Check for recent news releases from the company. Any new developments? Any surprises? See: How_to_research_a_company

Finally, if no obvious choice can be made, one way is sit down with a pad of paper and list the pluses and minuses of the offer, compared with staying where you are, some ideal future offer, or other alternatives. If necessary score them and total up the numbers. Usually this will bring out clear differences if there are any. And perhaps sleep on your decision before you announce it.

If the answer is no, make sure you know why. Perhaps a revised offer will follow.

If a relocation is involved, ask them to bring your family out to help them decide. If other questions remain, perhaps a second interview is appropriate to answer some of your questions, see additional facilities, and meet more people in the company.

Whatever you decide, don't forget to put it in writing, and thank them for the offer.

Salary.com [1] has been highly recommended as a source especially of salary survey information but also with cost of living data, and relocation data.

Related Fool Discussion Boards

Post your questions on Motley Fool's "Ask the Headhunter" board. [[2]]

Advertisement