All of us go through different job changes throughout our working careers, some by choice and others that just happen as a result of something else. It could be different roles within the same company, changing companies in the same industry or making a total career change. Whatever the case may be, these changes can be full of stress and excitement, so it can be beneficial to take a step back and evaluate all the factors to consider before making the leap. A lot depends on your career goals, and what things you value when weighing your options. You might be ok with changing jobs a little more frequently to move up the chain faster, or maybe it’s more important to find a really great cultural fit with work you enjoy. No matter what things you prioritize in a job, it’s important to align them with your values because a full-time worker is dedicating a minimum of 33% of their waking hours to their job. If you have a new job opportunity available, where do you start with deciding what to do?
The base salary of a job is always the first thing we look at when comparing different options. It’s definitely not the only factor, but it sets a good starting point for consideration before looking at everything else. Changing positions can lead to big jumps in base pay that look enticing, so what other direct financial factors need to be thought through? If a big relocation is ever under consideration, then cost of living in the new area needs to be determined. What seems like a big bump in pay for the Des Moines area won’t go nearly as far in large coastal cities. Any incentive pay is also important because many positions have defined structure around how much bonus or performance-based pay is possible. Two jobs can have a similar base salary, but if one offers a much more generous bonus possibility, it can make a huge difference in the total take-home pay for the year. On the other hand, it can be risky to have too much of your pay dependent on incentives because factors outside of your control can play a big part in how much you earn.
The last thing I like to consider as a direct financial factor can also be hard to know for sure before starting a new job: how much will you be working? Let’s say you currently have a pretty easy-going position, working a standard 40-hour week and earning $60,000. If you get offered a new position earning $72,000 it sounds pretty good, right? But what if this new job is more intense, with the expectation of longer workdays or after-hours support averaging a total of 50 hours per week? Now we’re looking at a 20% pay raise and a 25% increase in work time, so all of a sudden it doesn’t seem so great and the pay per hour has actually decreased. Our time has value, and there’s an opportunity cost to those 10 extra hours. This is also why some people choose to take a pay cut or go part-time for better work/life balance. These decisions can’t be boiled down to a direct dollar value, so what other non-salary related factors need to be considered?
While not strictly monetary, the benefit package your employer provides can have a huge impact on your bottom line and needs to be broken down to compare its value. One of the primary categories is retirement and savings benefits, such as 401k matching, pensions, HSAs and others. The number of these different options that are available, combined with how much the employer helps fund them can be a huge chunk of the overall benefit package. As an example, let’s consider a $60,000 salary where one employer does 4% matching in the 401k and the other does 6% matching plus a 2% pension contribution. It might not seem like a ton, but the extra retirement contributions from the second employer adds on $2,400 a year to the job in comparison to the first employer. Another point when considering a job change is that most employer contributions are subject to a vesting schedule where you need to stay for a certain amount of time to earn them. If you’re on the verge of being fully vested it might make sense to stick it out and receive those funds. The employer contributions are nice, but the more tax-advantaged accounts you have available means more potential tax savings you can get as well. Insurance benefits are another huge area of employee compensation, but they can be a little trickier to know the full picture prior to beginning a job. Health, dental and eye insurances can be full or partially covered by employers, and are even more critical if you have family that needs coverage as well. In addition, it’s important to have short and long-term disability coverage and possibly a group term life insurance offering.
I’ve saved this category for last because these factors are impossible to quantify, but in a lot of ways they’re the most important. There are a lot of non-monetary things that directly impact happiness and shape how we feel about our time. Starting off with stress, while it can be good to have work that challenges us and gives a sense of accomplishment, nonstop stress or a toxic work environment can be terrible to deal with. For some people there’s no amount of money that will make it worth the costs of living through that all the time. Apart from the actual stress of the job, the location and commute to get there are important to think about. If a new job will add 15 minutes each way, that extra half hour per day adds up to an additional 110-130 hours per year depending on the number of days you travel into work. This can be counted as time spent at work, along with the time it took to get ready, which makes an 8-hour day look more like 10 for most people. That leads into the next huge factor: flexibility. Does the employer offer any work from home opportunities? Will you be able to work around other appointments and things that need to be taken care of in your personal life? How much time off will you get, and is it broken into different buckets or all just flexible time you can use according to your needs? All these flexibility factors added up can be huge and make a big difference in how much time you’re committing to a job. The last thing that has surfaced even more this year is stability. This can be hard to predict sometimes, but you don’t want to constantly be wondering if your company is going to make it. Not only is this tough to think about all the time, but it could lead to future pay or benefit cuts if a company continues to struggle.
What things are most important to you when considering a job or career change? If you need help prioritizing or comparing different pay and benefit packages, schedule a complimentary intro meeting to talk through your situation.