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Don't Just Look At The Salary Of A New Job

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Don't Just Look At The Salary Of A New Job

Look at the whole package

Robert Drury
Sep 15, 2023
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Don't Just Look At The Salary Of A New Job

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It’s a very easy thing to do when you’re tempted to look at alternative jobs to take a look at the topline salary number and make a decision.

"I earn $80,000 now so my new job must pay me $80,000 as I don’t want to take a pay cut.”

The thing is, your salary is just one part of your employment package and you need to consider it all to make a like-for-like comparison.

Free Person Counting Cash Money Stock Photo
Photo by Karolina Grabowska

What else is there?

Just off the top of my head, there are a few factors that might influence your decision on your employment package outside of your salary, including:

  • Bonuses

  • Pension contributions

  • Life assurance

  • Payment protection

  • Holidays

  • Share options

Bonuses

Does your company offer you a bonus at some point during the year?

Maybe a Christmas bonus, or an end-of-year financial performance bonus?

How regularly is this bonus paid out? Do you get it regardless of performance, or have you only received it once in the five years you’ve been there?

If your bonus runs at 10% of your salary and it’s been paid out every year you’ve been there, then on our $80,000 salary that’s an extra $8,000 that you need to consider in your employment package comparison.

Photo by Jonathan Borba

Pension contributions

Some countries require their employers to make minimum contributions to an employee’s personal pension fund (the UK for example), and for some, the employers might make additional contributions.

If the standard rate of contribution is 3% of your salary each month and your employer has opted to give you a 5% salary instead, then on our $80,000 salary that’s an extra $1,600 you’ve got to add into the mix.

Life assurance

Life assurance pays out a lump sum to your beneficiaries in the event of your death and is usually linked to your salary. An employee with an $80,000 salary might expect their lump sum to be in the region of $320,000 (four times their salary).

Of course, you’re able to get life assurance outside of your employment, but if you’ve currently got it in your employment package and you won’t get it in a new role then you’ll need to consider the cost of obtaining this privately. The average cost of a policy of this type is $26 a month ($312 a year), based on data provided by Quotacy for a 40-year-old buying a 20-year, $500,000 term life policy.

Payment protection

Similar to life assurance, payment protection pays out money if you are unable to work due to illness or injury and this is usually a percentage of your salary. For example, you have a heart attack and need to take time off to recuperate before coming back to work then your employer might pay you two-thirds of your salary as your payment protection benefit.

As with life assurance, you can obtain this policy cover separately, and this can run from $10-30 ($120-$360) per every $1500 of monthly income, but if your new employment package doesn’t have it then you’ve lost something.

Holidays

There are minimum levels of holiday allowance within most countries, however, some employers go above and beyond the minimum and offer more.

If your country’s statutory minimum is 20 days but your employer is offering 30 days, then you’re receiving an extra 10 days of time off, making your salary per worked day look more attractive than an employer who only offers the minimum.

No, there’s no financial cost here but there might be a personal one when you don’t have enough holiday days to cover childcare and go on a family holiday. It’s a consideration.

Share options

This doesn’t apply to everyone, and the benefit doesn’t always come to fruition, so really it’s just the icing on the cake. It’s so difficult to quantify the value of share options, given that they aren’t guaranteed and the future value is hard to quantify, but if all other things are equal then having share options over not having them might be something to tip the balance.


Making your decision

If you’ve been keeping score of the employment packages of the two roles above, our current role received a salary ($80,000), bonus ($8,000), pension contributions ($1600), life assurance ($312) and payment protection ($480) giving a total package value of $90,392, not considering holidays and share options.

Compare that with a job that’s only offering you the $80,000 salary, and that’s $10,392 left on the table, leaving you worse off financially.

Ultimately, making a change in your job is normally more than just about the financials, and I’ve deliberately ignored the subject of “job satisfaction” in this equation. Job satisfaction is ever so much important, but you still need to pay the bills!


Getting Started in Product operates a bookstore that covers everything product and business-related, including:

Getting to Yes: Negotiating an agreement without giving in

The Art of Persuasion: How to influence people and get what you want

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