If you’ve been paying attention to the news the last few months, you know there’s a huge labor shortage hitting businesses hard all across the country.
What does that mean for you? It means you are a hot commodity and need to be strategic when you accept your next job. Sure, a $3 per hour pay increase sounds great, but you must also evaluate the rest of the compensation package to determine if the offer really matches your needs. In today’s article, we’ll look at some of the most important components of total compensation and rewards.
What are Total Compensation and Total Rewards?
“Total compensation” refers to the monetary pay bonuses, and incentives you’ll receive with the job. Think of “total rewards” as a broader term that includes benefits and other non-monetary rewards (like health insurance and PTO you earn per year). We don’t tend to think about total rewards as often as our base compensation, but it is certainly just as important.
Components of Total Compensation
Let’s talk first about total compensation. What types of factors should you consider as part of a job offer?
- Hourly pay: Most of us are familiar with an hourly pay rate. It’s usually the first thing to catch your eye when considering a new job offer! Be sure you’ve done your research and the pay you’re being offered is similar to what other companies pay for the same work. As with any job offer, also consider your own credentials and level of experience to determine whether the hourly pay rate is acceptable.
- Overtime pay: Almost as important as your hourly pay rate is the potential for overtime pay. In many project-based or field labor roles, overtime pay makes up a significant portion of overall income. If you’re accepting an hourly, non-exempt position, be sure to ask the person extending the offer about your potential for overtime earnings.
- Bonuses and incentives: Because of the project-based nature of the environmental services industry, many organizations have plans for project-based bonuses, in addition to merit or performance-based pay increases. Before accepting an offer, ask questions about what bonuses, incentives or merit-based increases the company typically offers to employees. When it comes to incentives, you might also receive money for obtaining certain licenses or credentials. Understanding the company’s bonus and incentive structure will help you fully grasp total compensation.
- Perks: Company perks can be monetary or non-monetary. Some of the more common perks found in the drilling industry include company-provided trucks, cell phones or cell phone allowances, commuting allowances, a per diem for traveling expenses, company-paid hotels, and company-paid training. If your new position will require extensive travel, be sure to ask what perks the company provides to help offset those travel costs. Keep in mind that not all companies offer the same perks, so when you’re comparing your new job offer to your existing position, remember to evaluate any added perks!
Components of Total Rewards
Total rewards can change the value proposition for any position. A position that might pay less could actually end up a better fit if total rewards make up the difference.
Insurance and support: When we think about employee benefits, we typically consider the basics like medical, vision and dental. However, your new employer may have many creative benefit options. Look for other common plans, such as life insurance, accidental death insurance, and short- and long-term disability insurance. Some of these options may seem unimportant to you now, but may be critical benefits to have later on. Equally important is retirement planning. Does the organization have a 401(k) match program or is there a benefit that provides financial planning and support for retirement?
Less common but still helpful are employee assistance programs (EAPs) that may provide legal aid, help with substance abuse and mental health counseling services. Many employers provide these benefits for both employees and dependents, and some even offer them at zero cost to the employee. When evaluating insurance and support options, keep in mind the future and the financial implications that these costs might have on you and your family.
- Education and training: Paid training has grown more common in the environmental drilling industry. Many organizations provide opportunities to earn OSHA 40 and other industry standard trainings at no expense. If your new job offer doesn’t disclose any provided education and training, ask if you’ll be expected to obtain this training on your own dime.
- Vacation time: A total rewards package isn’t complete without paid time off! Ask about provided vacation days and compare that to your current employer. Will the company provide paid sick time? Will you have paid holidays off to spend with your family? These are important questions to ask that help determine the total value of your new employment offer.
You’ve got a lot to consider when making the decision to accept a job, and the biggest mistake you can make is focusing only on an hourly rate. By examining total compensation and rewards, you can ensure that the next offer you accept will be the right one!