Which 3 Critical Factors Contribute to Your Compensation Offer?

Perhaps you’re waiting to receive a job offer and salary package. Or maybe you already have and are puzzling over what the company offered you. It’s helpful to understand the drivers behind what goes into a compensation package.

Putting some parameters around how companies evaluate candidates and structure their compensation strategies is useful in assessing whether the company is paying you what you’re worth. So, what are those 3 critical factors?

Your level in the organization

Before receiving an offer, ask the hiring manager to be clear about the company’s leveling process. Be sure to understand where you’ll be entering relative to other employees. Companies generally practice leveling to standardize compensation, so it’s definitely fair to ask about their approach to both.

Important questions related to leveling include:

  1. How often does the company re-level employees?
  2. Which criteria do they use to evaluate these decisions?
  3. How do compensation and promotions apply to these levels?

Understanding your career growth prospects is just as important as knowing which level you’ll enter once you join the company. This 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, they may quickly move you up within the organization.

This could be even more attractive than a fancy title, for instance, if you’ll be stuck in the same position indefinitely. In sum, account for the role you’ll join with and your career growth prospects in the future.

Your work experience

It’s seemingly obvious a company would base compensation offers on work experience. Yet, it can be easy to forget 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, companies have very little with which to evaluate candidates and potential hires. Therefore, 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 from work experience. Tie them to industry benchmarks for the role you’re considering. Help the hiring manager better understand why you’re better qualified for the job than other candidates. That way 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. 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. Therefore, it’s important to adjust your expectations accordingly.

Keep in mind: more strategic leadership positions involving more accountability will generally command higher salaries than individual contributor (IC) roles. However, it’s worth noting that some highly talented ICs (particularly within engineering organizations) receive salaries at levels rivaling their peers in management. But don’t count on this always being the case.

Related: Engineering Manager or IC? Which Tech Career is Best for Me? (Video)

If you’re looking for management experience to boost your credentials when you move to the next job, seek out less traditional activities providing the opportunity to showcase your abilities. Within the workplace, propose hiring an intern who would report to you. You can also 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.

So, how do you position yourself to land the salary you deserve? Our Salary Negotiation Guide has everything you need.

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About the Author

Napala Pratini

Napala is a consultant to early-stage technology companies. Prior to going independent, Napala led marketing initiatives across both consumer and B2B fintech for employers including NerdWallet and Earnest. In past lives she was a ballet dancer and a cancer researcher.