Salary Evaluation

David McMahon ‘69Associate Director

Career Center, Texas A&M University

Types of Employees Regular

Full-time Part-time

Contingent Temporaries Contract Workers Consultants Co-ops/Interns

Compensation Package

Pay Benefits Intangibles

Types of Pay

Starting Salary Salary Hourly Commission Fee Signing Bonus

Career Salary COLA Increase Merit Increase

vs. Merit Bonus Profit Sharing Stock Options

Benefits

Insurance – Health, Life, Disability Retirement and/or Savings Plans Vacation and Holidays Education Tuition Assistance Expense Account, Company Vehicle Professional Organization Memberships

Intangibles

Location Industry Outlook Promotion Opportunities Responsibilities/Challenge Travel Life-Work Balance

Savings & Retirement

Pension Plan 401K (or T.S.A.) Stock Options

Questions to ask employers about their 401(K)

Do you have one? Do you have a pension plan? Do you contribute (match)? How much? How long you have to work here in order to

participate? What are the “vesting rights” ? Do you have choices of investments? (Beware

company stock only)?

Power of Compounding (I)

Age Invest Value 23 $5,000 $5,000 30 $0 $10,039 37 $0 $20,158 44 $0 $40,477 51 $0 $81,274 58 $0 $163,193 65 $0 $327,679

A 10% return on investment will double initial investment approximately every 7 years. Compound interest is added to the principle 12 times annually.

Power of Compounding (II)

Age Invest Value 23 $5,000 $5,000 30 $0 $8,150 37 $0 $13,284 44 $0 $21,654 51 $0 $35,295 58 $0 $57,531 65 $0 $93,775

Values are calculated every 7 years at a 7% return rate. Compound interest is added to the principle 12 times annually.

Invest Early

$35,000 $160,000

Lifestyle Matters

A 45-year-old making $100,000 today plans to retire at age 65. Depending on his lifestyle in retirement, here’s how much he’ll need.

% ofPre-retirement Nest eggIncome desired necessary atIn retirement retirement

60% $1.96 million80% $2.61 million100% $3.27 million

Assumptions: Life expectancy is 90 years, no pension or Social Security; annual salary increases and inflation average 3%.

Evaluate Two Entry-level Offers

Company A Company B

Base Salary $30,000 Base Salary $35,000Medical 0 Medical (840)Parking 0 Parking (912)401(K) Match 1,500 401(K) Match 0 (10% contribution, match first 5%) (10% contribution, no match)

Perks 2,000 Perks 0 (car, tuition, etc.)

Taxes (7,290) Taxes (8,505) (27% of taxable income) (27% of taxable income)

Actual Compensation $26,210 Actual Compensation $24,743

The Six Secrets of Salary Negotiation

Never discuss salary until the end of the interviewing process, when they have definitely said they want you.

The purpose of salary negotiation is to uncover the most that an employer is willing to pay to get you.

During the salary discussion, try never to be the first one to mention a salary figure.

Before you go to the interview, do some careful research on typical salaries for your field and/or that organization.

Define a range that the employer has in mind, and then define an inter-related range for yourself.

Know how to bring the salary negotiation to a close. Don’t leave it “just hanging”.

Source: 2008 What Color is Your Parachute? Chapter 7 (p.115) by Richard N. Bolles

Points of Negotiation

Competing Offers Salary Surveys/Information Strong Relevant Experience (e.g. Co-op) Extra-ordinary Skills (e.g. bilingual, technical, etc.) Unusually high GPR Cost of Living Adjustments Consider a Signing Bonus Supply/Demand

Bachelor’s Degree CandidatesBy Curriculum And Employer

YOU

employer

$45K$42K

$40K$35K

Points of Negotiation

Competing Offers Salary Surveys/Information Strong Relevant Experience (e.g. Co-op) Extra-ordinary Skills (e.g. bilingual, technical, etc.) Unusually high GPR Cost of Living Adjustments Consider a Signing Bonus Supply/Demand

Salary Information

TAMU Salary Survey NACE Salary Survey Professional Associations Cost of Living Index Talk to People!

Questions???