Are You’re Undervaluing Yourself? How to Figure Out What Your Total Compensation Really Is.
Whether you’re talking to friends, a significant other or a potential employer, money is one of the topics of conversation everyone avoids because it’s awkward and uncomfortable to discuss.
But when it comes to your job compensation, being uncomfortable with what you’re being paid is far worse than an awkward conversation.
Unfortunately, most job seekers don’t negotiate their salary. Even worse, when they do negotiate they undervalue themselves and don’t get a salary that’s truly commensurate with their experience. So how do you get paid what you’re worth? A good way to start is by understanding your total compensation.
Let’s say, for example, you’re currently being paid $50,000. You decide when you start interviewing you should ask for $5,000 more than you’re making. So when the potential employer asks what your desired salary is you should tell them $55,000, right?
The answer is NO.
Now I’m sure you’re thinking to yourself...but going from $50,000 to $55,000 is a $5,000 raise.
There’s one problem...
It’s not just about your salary.
Your total compensation includes all the other benefits you get as well. Benefits like insurance, paid time off (PTO), vacation time, cell phone reimbursement and 401(k) matching.
Your total compensation is your base salary PLUS all the other benefits.
Let’s go back to the example where you’re making $50,000 at your current job for a minute.
Now that you know you need to include all the other benefits in your compensation calculation, you find out your total compensation is actually closer to $60,000.
If you tell a potential employer that you want $55,000
You’ve undervalued yourself by at least $5,000.
That’s definitely not what you want to happen.
So when it comes to negotiating your salary, don’t be afraid to include the value of other benefits as well. It’s all part of your compensation and CAN be negotiated.
Tip #1: Before you start the process of negotiating your salary, make sure to assign a dollar amount to each of your current benefits. For example, if you get 2 weeks of vacation and make $52,000 a year your vacation is valued at $2,000. Add up all of your individual benefits to get your total compensation value.
Tip #2: When asked about your current salary in a job interview, reply by saying “My total compensation is $xx,xxx.” Include your base salary + all your benefits added together.
Now that you have a total compensation number, when the potential employer asks about your salary requirements you will present a starting number that’s much higher than your current base salary alone. Using this method of negotiating will help you significantly increase your compensation. Just be sure to always reply with “My total compensation” so you’re not being misleading.
Here’s how the new conversation may sound:
Employer: “What are your salary requirements?”
You: “My current total compensation is $60,000. I would like a starting salary range of $65,000 - $70,000.”
Isn’t that much better than $55,000?
Keep in mind…if you don’t ask for a salary you deserve from the beginning, it’s very difficult to get a significant raise once you’ve been hired. The average pay raise is 3% annually. So if you get hired making $55,000 that’s an increase annually of $1,650. It will take you almost 7 years to make a salary of $65,000.
The most important thing to remember any time you’re discussing compensation is to think about the base salary in addition to all the other benefits you’re receiving. Even if your new employer offers a comparable benefits package, you still want to use the value of your current benefits as a negotiation tactic.
Always remember you’re valuable and worth every bit of what you’re asking for.