When to Discuss 5 Common Compensation Components

My ongoing series of blog posts on “Compensation During the Interview Process” continues here by focusing on the common compensation components and when to bring them up during your interview process. If you haven’t been reading from the start, the other posts are Talking Compensation During the Interview Process and How Much Does This Job Pay?

I know it’s basic, but in my experience compensation is one of the main reason company’s mess up the hiring process. The blog posts mentioned above provide tips to candidates going through the hiring process and will save you time so that when you get to the negotiation stage there won’t be any major surprises. Below are the five most common compensation components and when they should be brought up in the process.

The Five Common Compensation Components

Base Salary: As a candidate, you should have a conversation about the range no later than the second conversation, ideally the first.

Bonus or Incentive: This should also be no later than second round but ideally the first and should include these questions from the candidate:

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Is it a percentage of annual salary? If no, how is it based?
How is it determined?
What is the history of bonus payout for this level role in the company?

The goal of these questions is to determine if the bonus is real cash you will recognize or is it a “nice to have if we have a good year.” Unfortunately, in my experience, both scenarios most certainly exist. The conversation on how you will be measured and what objectives you must attain to receive this compensation element should take place late in the interview process with the person responsible for allocating the bonus.

Long Term Incentive (LTI): This would include, but not be limited to: equity, stock options, pensions, or shares. It is important to know what you currently have that is of actual cash value, what will vest or mature and when. In the interview process, this question is appropriate to ask when you are nearing the final stages, especially if you have any amount of compensation that you would be walking away from. The hiring company doesn’t want to extend you an offer and then hear from you that you have a $100 thousand cash delta that needs to be addressed.

Just as the company owes it to you to share what the cash compensation is early in the process, you owe it to the company to provide them with this information so they aren’t surprised. And it could keep you from having an offer rescinded.

Vacation: This is also something that should be discussed when nearing final stages. The company should share their policy and you should share your current vacation allotment. This isn’t the time to negotiate, but it is time to share the information. The time to negotiate this is during the offer stage.

Perks: For example: parking, gym memberships, cell phone allotment, car allowance, and home office allowance are all items to negotiate at time of offer.

These components are all part of the most common components package. Depending on the candidate and company, they hold a different weight from one opportunity to the next. In my next blog post, I’ll outline some ways to offset any “gaps” when negotiating your offer.

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When to Discuss 5 Common Compensation Components