I’m a finance professional by day, and blogger by night. In the ten years since I graduated from college, with my bachelors degree anyways, I have worked at four different companies. Some would call that job hopping, but if you are familiar with the metro Detroit area and all the financial turmoil that has happened around here in the past decade then you might understand my situation a bit better. Gone are the days when you worked for a company for 30 years and then retired on a full pension. Once pensions got cut and layoffs became more prevalent we started to see a shift in employee loyalty, and for good reason. We have families to take care of, bills to pay, and we can’t do all of that on broken promises and false hopes. The first company I started with out of college was great experience, but they began selling off assets left and right just a couple years into the job. I could see the writing on the walls and realized that if I wanted to move up then I needed to get out. My second job was at an automotive finance company that received one of those widely discussed “bail outs” that you have heard about time and again. While this was a much larger company it turns out they weren’t any better off financially. The worst part is that they cut bonuses, raises, and 401k contributions but the hours kept rising. I realized that I was losing out on work life balance while making less money. Then one day I got a call from a recruiter about an awesome position open at a highly profitable restructuring firm. Finally, a profitable company! They offered more money and promises of higher bonuses and 401k contributions, it was a win-win. Then, 11 months into the job, I was called into the CFO’s office and he informed me they had to let me go. As it turns out, when the economy rebounds the only type of businesses that don’t benefit are turnaround and restructuring firms…yikes! I was given a severance package, but I never did receive the bonus nor 401k contribution I was promised.
My rambling above really does have a point. I always looked for the job and company that offered me the highest salary. To be honest it was pretty much my only requirement. It has taken me a decade to learn something that would have benefited me from the get go… there is more to choosing a company and position than salary! I’m talking about both from a compensation and sanity perspective. Allow me to elaborate.
Work/life balance is like a unicorn, a mythical entity we have all heard stories and read about, but nobody has ever seen or experienced. The goal for most companies is to squeeze every last ounce of energy out of you in order to extract the highest profit possible from the business. Let’s not blame “the man” or “evil corporations” because those are non-human entities. It’s not like someone is at the top, the God of the company if you will, and saying they are going to force mandatory 80 hour weeks on all of us. The CEO himself doesn’t have that power. This is what years of corporate conditioning have done to us. It trickles down from the top. It all has to do with the mindsets within the company. Do they promote flex schedules, work/life balance, and support you taking your vacation time? These are all issues that job seekers should be asking long before they get into salary conversations, and HR departments should adapt to making these items more clear to job seekers. I’m tired of reading job descriptions posted and all they discuss is salary and compensation. If you want me to apply then tell me about your flex scheduling options and how much vacation time you offer! Also, I am tired of this “use it or lose it” policy for vacation time. In my current role I tend to lose it! That’s it, poof, a benefit I have earned but rarely receive.
Truth be told, companies prefer to dazzle you with higher salaries and skimp on benefits. Once you get accustomed to something you tend to always expect it, otherwise you might become unhappy with the company if one day you no longer receive it. They clearly aren’t going to come and cut your salary for no apparent reason, in fact your salary no becomes the base from which they adjust for inflation each year via small raises. They know what to expect with salary adjustments each year. However, healthcare is a major x-factor when planning out personnel costs for any company. We all know it’s becoming more expensive every year to insure ourselves. We have no clue what new government policy is going to be adopted, adapted, or taken away….any of which can cause a massive fluctuation in the cost of healthcare. So as I said before, companies prefer to share more of the cost with their employees right from the get go. You could be spending $20,000 a year in insurance premiums to cover your whole family, and then still have high deductibles that need to be met throughout the year. Believe it or not this is all coming out of that so-called “fat salary” they are paying you! Stop looking at the annual salary and start paying attention to how much less you get at one company or another because of the healthcare coverage provided. I learned this lesson at my first company out of college. I only paid $20 a month for healthcare, but it covered virtually nothing. The first major surgery I ever needed cost me $10,000 out of pocket. I’d rather make a few thousand less at another company to avoid a bill of that size. Especially since it was paid with after-tax dollars.
I probably took this benefit for granted the longest. When I started my career I just assumed that social security would be around, and that I would somehow magically save enough money for retirement one day. I didn’t have a plan, only assumptions. My first company provide a 4% dollar-for-dollar match. I didn’t really care since it wasn’t even a slight determinant in taking the job. In fact, I didn’t contribute a dime the first couple years I worked, if I had I would have thousands of dollars more money saved up all these years later. Yes, time passes whether you want it to or not. My second company matched 50% of my contributions up to 6% of my salary…i.e. they contributed 3% of my salary if I met that required contribution. My next company paid out a lump sum of 10% one time a year, which meant if I left (or got fired) prior to that point then I would receive nothing…which happened. Not to mention you miss out on the monthly contributions which provide the benefit of dollar cost averaging and compounding returns. My current company actually contributes 10% of my salary each paycheck. This is a benefit that I haven’t found at many places, and one I no longer take for granted. A 401k is often times the only retirement vehicle a person has, yet it is often considered when thinking about where to work. Say you have a choice between company A that will pay you $50,000 a year with a 2% 401k contribution. That means they are willing to contribute a $1,000 per year to your 401k plan. Company B is offering a salary of $47,000 a year but with a 401k contribution of 10%. That means company B is willing to contribute $4,700 to your 401k account each year. That is total compensation of $51,000 from company A, and $51,700 from Company B…see the difference? Without getting too technical it’s actual even a bigger difference because 401k contributions are all pre-tax income, which means for now you owe the IRS less money as well.
The moral of the story is that there is more to choosing a job than the salary. Some has to do with compensation and some has to do with being able to have a life. It’s taken me 10 years (post college) to realize all of this, hopefully all of you learned it much sooner.