3 Critical Factors that Contribute to Your Compensation Offer

3 Critical Factors that Contribute to Your Compensation Offer

If you’re waiting to receive a job offer and salary package—or perhaps having already gotten it and are puzzling over what you’ve been offered—if can be helpful to understand the drivers behind what goes into a compensation package. To be sure, it’s not rocket science, but putting some parameters around how companies evaluate candidates and structure their compensation strategies can play an important role in helping you assess whether you’re being paid what you’re worth.

Your level in the organization

Before receiving an offer, ask the hiring manager to be clear about the company’s leveling process, and be sure to understand where you’ll be entering relative to other employees. Companies generally practice leveling in order to standardize compensation, so it’s definitely fair for you to ask about their approach to both. Important questions related to leveling include how often the company re-levels employees, which criteria they use to evaluate these decisions, and how compensation and promotions apply to these levels.

Just as important as knowing at which level you’ll enter is understanding your career growth prospects once you’ve joined the company, which can significantly impact the attractiveness of an offer. For example, a company might offer a lower level at entry because they want to first evaluate your performance and cultural fit—then quickly move you up within the organization. This could potentially be even more attractive than an offer of a fancy title, for example, if you’ll be stuck in the same position indefinitely. In sum, be sure to account for not just the role you’ll join the company with, but also your career growth prospects with the organization in the near and longer-term.

Your work experience

While it’s seemingly obvious that a company would base compensation offers on work experience, it can be easy to forget that hard skills and real experiences can play an important role—particularly if you’ve been moving up in your old company for a while. Remember that companies have very little with which to evaluate candidates and potential hires, so a large portion of their offer will be based on your past experiences—and how well you recount them.

If you decide to negotiate your offer, focus on specific skills and qualifications you’ve gained as a result of your work experience, tieing them to industry benchmarks for the role you’re considering. By helping the hiring manager better understand why you’re better-qualified for the job than other candidates, you’ll put them in a better place to advocate for hiring you—and offering an attractive compensation package.

Your management responsibilities

In general, compensation tends to increase as you manage larger and more strategic teams, so you can expect your offer to reflect this. Whether you’ll be managing a team, how big it will be, and how much management experience you bring can all impact salary offers—so it’s important to adjust your expectations accordingly. Keep in mind that more strategic leadership positions that carry more accountability will generally command higher salaries than individual contributor (IC) roles with small teams under them. However, it’s important to note that some highly talented ICs (particularly within engineering organizations) receive salaries at levels that rival their peers in management—but don’t count on this always being the case.

If you’re looking for management experience to boost your credentials when you move to the next job, seek out less traditional activities that provide the opportunity to showcase your abilities. Within the workplace, propose hiring an intern who would report to you, or make an explicit effort to laterally manage your peers more effectively. Outside of the office, seek management opportunities through volunteer work, or even by getting involved with alumni associations. Regardless of your tactic, if your goal is to manage teams, make that clear to your manager—but also be proactive to gain managerial experience from a variety of activities.

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