Evaluating a Job Offer: Is it Art or Science?
Steve Miller, C.P.M., CTM
Steve Miller, C.P.M., CTM, Director, Supply Management, California Amplifier, Camarillo, CA 93012, 805-987-9000, firstname.lastname@example.org
86th Annual International Conference Proceedings - 2001
Abstract. Unemployment is at a 30 year low. It's a job-seekers market! But, many workers are untrained in job searching and offer evaluation. Job offer evaluation is the least written about, but may be the most important in today's market. Read on to learn the basics of evaluating a job offer.
What is the "Big" deal about job offers? The U.S. Labor Department states the average college graduate will change jobs 10 times in his/her career. For most people, this is more frequent than taking a two-week vacation, buying a computer or even a new car. Yet, many of us will spend far more time studying and gaining knowledge to make a decision on topics that have much less impact than changing jobs. Many psychological studies cite changing jobs as one of the top stress incidents that people are subject to. But, how many professionals are really prepared to make these critical decisions that can affect them emotionally, physically and financially, not to mention the affect on their families? The truth is, most of us get by on "gut instinct" or subjective judgment. If this is the case, then it makes sense to spend some time learning a few techniques that will benefit you many times during your career.
Why do professionals change jobs? Gone are the days when it was possible (favorable?) to work at one company for your whole career. It has not been that many years since changing jobs was considered taboo. "Rightsizing" has changed everything. Interestingly though, the underlying reasons why people change jobs has not changed all that much. Understanding the "why" is a good place to start in learning how to evaluate a job offer.
In anyone's book, leaving a job on your own terms is more desirable than on your employer's terms. Often though, the underlying reason(s) for voluntary or involuntary termination are the same. Sometimes reality is tough to swallow; studies show that most adult workers lose at least one job involuntarily. As painful as it is to lose a job, a real professional turns it into something positive, or in different words, a growth experience. Understanding someone else's perspective of how they see you, is an important, maturing fact-of-life.
Here is a true story about my first opportunity to "see myself" through someone else's eyes. Years ago I had just returned to the United States after a two-year foreign assignment. After two weeks stateside, an opportunity arose to interview for a customer-sensitive field assignment. The interview progressed well until the manager asked if I knew a fellow named "George" from my last assignment. I indicated that not only did I know George, we were actually pretty good friends. The manager proceeded to tell me that when George returned stateside, he came to work for him and was the new site supervisor at the customer location where I was being considered. The manager decided to get George on the telephone to discuss my candidacy! There was one proviso, however; I was asked not to speak when George was put on the speakerphone. What transpired next was a complete shock. George heaped high praise on my energy, enthusiasm and solid potential for greatness. The manager probed for my weaknesses and George told him that I was "A real hot head. One time Steve got so angry during a potluck dinner, that he threw a frying pan across the room." The hiring manager gave me a quizzical look, as I explored my mind to recall the frying pan incident. Well, you can imagine the final result: I did not get the job. I was really angry with George for what seemed at the time as a "grand selling-out." Later, I realized that George had done me a favor by allowing me to see myself in someone else's eyes. That opportunity allowed me to avoid many mistakes over the years, by regularly looking at myself from another person's perspective. Try it; you will be amazed at what you see.
Relating this to changing jobs, it is vital when you leave a job, voluntarily or involuntarily, that you know why you are leaving. All the fancy analysis in the world is useless if you repeat the same poor performance or take a job that has the same "problems" with it as the last job.
Step One: Take a look at yourself in relation to your last job.
Whether you already have a job offer, or are just starting to look, do a self-evaluation. Remember the story from above; it is better to do some introspection while you have the chance. Often times, an attractive offer is accepted that does not address latent problems with your last position. It is easy to get caught-up in the euphoria of big salaries, fancy titles and such, only to start work and realize you made a mistake. Determine what you liked about your last job, what you did not like, what you performed well and what areas you need to improve. To avoid rationalizing your thoughts later, write down the key points. Before you get into the specifics of a job offer, be sure the intangibles that only you can judge, are compatible with the points you have identified. As was stated in the first paragraph, many people use subjective judgment to evaluate a job offer. If you faithfully perform Step One, you are on your way to making an objective, quantifiable decision.
Step Two: Do your "homework" regarding the new employer.
How many people, regardless the salary and prestige, would have taken the position of Captain on the Titanic, if they knew what we know now? Too often, a job offer is too good to be true. Is the position a new one, or replacing someone else? If you are a replacement, find out the history and length of stay of your predecessors. How well does the employer articulate the duties of the position? Is there a job description? It is a sure bet that if there is not a job description and the duties can only be described in rough form, you may end-up doing much more than meets the eye, possibly tasks you have no desire to perform. Another factor in doing your "homework" is the company's business condition. Learn as much about the company as you can. Get sales brochures; read employee handbooks; check out their website; pull a 10-K report from the SEC (if publicly held) and obtain a copy of their Dun & Bradstreet credit report. Business information is good for anyone to look into, but is critical for anyone considering a management position. As a manager, the new employer may have the idea that you are going to be a "key" element in fixing the unmentioned business ills. The old theory of "The higher you go, the farther it is to fall," holds true most of the time. By not checking out the business conditions before accepting a management position, you could be a casualty of "the fall" in a year or less. Everyone likes a challenge, but nobody wants to be the Captain of the Titanic.
Step Three: Do you and the new boss "Wear the same size?"
All the money in the world and the most prestigious title goes right down the drain if you and your new boss do not "Wear the same size." Talk about the feeling of being trapped! If you and your new boss are incompatible, it is like wearing a sweater that is two sizes too small. Chances are, you are not going to change him/her and if you try defiance, you will probably be gone before they are! Carefully evaluate your new boss at each meeting prior to accepting the job. Although this sort of evaluation can be subjective, there are many things you can look for objectively. Do they have a gender bias? Use excessive foul language? Prone to embellishment? Poor listening skills? Overly authoritarian? A good boss can make a bad situation tolerable and a good situation, great. Make sure you "Wear the same size."
Step Four: Evaluate the intrinsic job motivators.
Frederick Herzberg defined intrinsic and extrinsic job motivators in his "Motivation-Hygiene Theory." Herzberg states that intrinsic factors such as, recognition, job enhancement, promotion and increased responsibility are major factors to retaining an employee long-term. Extrinsic factors such as, co-worker relations, job titles, opportunity to travel and salary, are extrinsic. Herzberg's research showed that extrinsic factors can only motivate someone to a level that will remove dissatisfaction, but will not create a high level of satisfaction, leading to high achievement. When evaluating a job offer, you need to initially look past the obvious facets of the job, such as salary, benefits and so on. Look deeper into future advancement potential, opportunities to do new things and how employees are recognized for high achievement.
Step Five: Evaluate the extrinsic job motivators.
If an offer still looks good thus far, it is time to look at the things most people tend to incorrectly focus on. You can believe it: It is difficult to avoid dropping directly to Step Five when a prospective employer offers you a 40% increase in pay! For that much money, you would be willing to work for the most obtuse and negative person you have ever met. But, will it last? Take the time and effort to go through steps one through four, first.
So, steps one through four did not scare you away, huh? Step Five is broken down into the following four sub-routines, in order:
- Evaluate the "Family Factor." If your spouse and kids are not 100% behind you on this decision, then do not proceed! If you are not sure at this point, re-read the last sentence. It is a good chance that if you have to convince your family that it is the right decision, then you will probably have to continue to play cheerleader everyday of your life until you move again. It is vitally important for you to be successful in your new job and you will not be able to achieve this if you are constantly battling the homefront. If the new position requires relocation, avoid going to work for a company that will not pay all of your relocation expenses, and will not offer an expense paid trip for you and your spouse to go house hunting. Also, one subtlety to the "family factor" is the "you-are-always-gone" syndrome. Evaluate the amount of travel involved, late work hours and even the distance to and from work. If you have to wake-up at 4:30 am, drive 90 minutes to work, then work 10 hours and drive 90 minutes home, how good of a deal is it really? Your family and your own body will let you know very quickly.
- Evaluate the benefits package. This is a corollary to the "family factor." Often times, being the one who is at work all the time, you do not see the "bad" side of poor benefits. Compare insurance packages. Can you keep your same doctor? Will there be more out-of-pocket expenses? How does vacation accrue? Will you receive a paid pension plan? Does the new employer have stock options/purchase plans, a 401-K, direct payroll deposit and so on? Another intangible is the bonus plan. Most reputable, upward-moving companies have some sort of bonus plan. Evaluate the bonus plan to be sure the percentage is proper and if it actually gets paid-out per the guidelines, including the promise date.
- Evaluate the job and the title. Be sure you are clear on what it is you will be doing, the breadth of your responsibility, people leadership duties, etc. Are these compatible with your career goals? The money may be great, but will your new duties require lesser skills that you left behind years ago? Whether anyone likes it or not, titles can be a major hang-up for people. There are companies who advertise for a manager's position, then when the offer is made, the title changes to project leader. When queried about this, the employer says they have a modernistic view of the workplace and do not want managers, they want leaders. So be it; but would you not have preferred to know that upfront? Each of us places our ability and standing in the business community at a certain level. No one wants to enter the game at a position that does not seem to be in keeping with the level you see yourself.
- "Show me the money." This comes last. If everything looks good thus far, then the financial package is next. As a general rule-of-thumb for a lateral position, do not accept less than a 10% increase in pay. The 10% increase is net of any higher out-of-pocket expenses (i.e.; insurance premiums, transportation costs, etc.). If you are a good worker, then there must be an inducement by the new employer to get you to leave your current job. Unless you have a strong desire to leave your old job, or you feel sure that the new position is a short stepping-stone to something bigger, then do not sell-out for the same money. If you are unsure if the salary offered is proper for the region or position, you can contact your local NAPM affiliate or Purchasing Magazine to get salary comparison data. Be sure to determine when the next salary review is, too.
When dealing with salary concerns, watch for the practice of "managed compensation growth," which is routinely used by many companies. The philosophy of managed compensation growth encourages companies to pay new employees based on three factors:
- The new employee's education level and skills;
- The company's own internal pay scale, and;
- The new employee's compensation history.
Items 1 & 2 are expected; however, item 3 catches many candidates off-guard. Even if you are qualified for a job that has a higher pay scale, many companies prefer to pay you closer to the level of your compensation history. This can be upsetting because you feel your pay should be based on the higher levels of money available. Conversely, if your salary history is much higher than the scale of the position you are being considered for, a company practicing managed compensation growth may decline to offer you a job. Managed compensation growth is designed to accomplish two things:
- Stabilize a company's salary base to prevent large variations in employee compensation and;
- Discourage creating disgruntled employees because they were offered compensation below their salary history, or inflate their compensation growth beyond a reasonable level, such that they become over-valued in relation to market wages and their experience level.
Managed compensation growth has its merits. You may not like it when it comes to your own compensation, but it does help with the two issues just identified. If you cannot get the compensation package you want from a prospective employer, they may be practicing managed compensation growth. You can try to negotiate a better deal, but ultimately you will probably have to settle for what is offered or look for another job.
Step Six: Negotiating the offer.
This is a two-step process. First, seek clarification on all points in question. Be careful to note any questions that get evasive answers or answers that do not meet your requirements. If you still have major, unresolved issues in steps one through four after a serious Q & A session, you may want to try one more round of clarification. If you still have major issues, then the warning bell is telling you to pass it up and look for another opportunity. If you feel good about one through four, then go to work negotiating your concerns from Step Five. One clarification: Negotiate with your prospective employer, not your family! Here is where many candidates fail the test: They are unwilling to pursue their desires upfront, thinking they can get things turned around once they are on the payroll. WRONG! Once you start collecting a check, you lose all your leverage and if you push too hard, it could be misconstrued as insubordination. Write down a list of your needs that are "musts," and those items that would be nice to have, but you would be willing to give-up. Be reasonable in your requests, but firm. If they ultimately cannot meet your needs or withdraw the offer, then the opportunity is not a loss for you; it just was not the right one.
Step Seven: Handling a counteroffer from your current employer.
If you accept an offer for another job, be sure you accept it with the full intent of leaving your current job. It is a dangerous practice to use a job offer to leverage a better deal from your current employer. First, they may call your bluff and let you leave without a counteroffer. Second, you may receive a counteroffer (usually in the form of more money) that may not address the real reason(s) you want to leave. Maybe you do not like your boss, or you are experiencing some on-the-job harassment. More money will not fix these problems. Employment experts will tell you that many people who accept counteroffers from their employer, end-up leaving within a year or two anyway. Before you accept an offer to go to another company, consider in advance whether you might receive a counteroffer. If you got one, would you really want to stay or would you be compromising due to the emotional pressure? If you think this through beforehand, and then it occurs, you will make a more objective decision.