In the March 19, 2019 Ask The Headhunter Newsletter a reader asks whether a big salary increase is enough reason to accept a job offer.
A rival company has offered me a job with a 30% salary increase. I know there are other things to consider, but it’s such a big pay bump that I think it may be sufficient reason to move. Should I accept it?
Only if money is your prime motivator. If it is, go for it. Of course, without any other information, I can’t really give you very thoughtful advice. But in general, this is a scenario that people sometimes face, so let’s deal with it generally.
No matter how big it is, I look at three things when a job candidate receives an offer, in addition to the money. If I were you, I’d compare the new company to your current employer on these factors, in this order of importance:
- The people
- The products
- The company’s reputation
- The company’s prospects
- The company’s finances
Whose are better? Try to put a value on each of those factors, then include them in your analysis.
It’s the people, Stupid
I’d give the most weight to the people you’ll be working with. Are they smart? Highly skilled? Dedicated to their work and the company? Do they demonstrate high integrity? Are they a tight-knit group that works well together? Do they mentor and help one another?
This matters especially with regard to the company’s management, of course.
Even if the company doesn’t score tops on the other four factors, a great team can compensate and drive the company to success. On the other hand, if the people aren’t great, it doesn’t matter how good the products, reputation, future prospects are finances are. That old saw is true: It’s the people, Stupid. You’re (hopefully) going to be living with them a long time.
What the world sees
The next three factors are intertwined. A company’s products, and new products it’s got coming down the pipeline, affect its reputation and future prospects.
Pay close attention not only to how the company’s customers regard the company, but also to how it is viewed by the business community, the business media, its competitors and its market.
You may have found a good job and great money, but the financial gain from that big salary bump may be very short-lived if those other factors aren’t strong.
Is the business sound financially?
Few job hunters consider the financial aspects of a job beyond the pay. That’s foolish. I’ve never accepted a job without first meeting with the Chief Financial Officer. I want to know about receivables and payables, sources of funding for operations and growth, and — if it is publicly traded — how the company’s stock has performed. Believe it or not, I worry more about whether a company is responsive to its employees than I am about how it responds to its investors — but how investors judge a company matters greatly. I also want to know how the company treats its vendors — does it pay them on time?
If a company isn’t sound financially, you’re probably not going to have that job very long, no matter what it pays.
Is it all real?
I’ve seen people move for money or other factors, only to regret it after they realized the image they had of the new company didn’t match the reality. It’s common for an employer to present a great image to job applicants. But it’s up to you to look under the hood of this machine!
Here’s my advice. Once you have a bona fide job offer, tell the company you’d like to come in for a day to shadow your new boss and the team you’d be working on. This is proper due diligence. (See How can I find the truth about a company?)
Ask to meet people upstream and downstream from your job. That is, other employees whose work product will affect your ability to do your work successfully, and employees whose work on what you produce will impact your success. For example, if you work in engineering, you need to know who is conceiving the products you will have to design and whether the sales team is competent to actually get customers to buy them.
Follow the money
Ask to meet the head of the finance department. That’s right — you may know nothing about finance, but you should have this meeting anyway. Check my comments above for some ideas about what to ask in that meeting. Even if the company is privately held, the finance officer should acknowledge your interest in your new employer’s financial state and philosophy. (The first time I did this, the V.P. of Finance was pleasantly surprised to see that a new employee cared about the finances — he loved it. Throughout my time at the company, I had a friend in a high place!)
Interview the company
When the company is done interviewing you and makes a commitment by extending a written offer, that’s the time to seriously interview the company.
A section of this article suggests how to check several key factors about an offer: 13 lies employers tell about job offers.
There’s a section about Due Diligence in one of my Fearless Job Hunting books that you may find helpful, too: Ask The Headhunter Store.
It’ll cost you about a day to do these meetings, but it may save you a lot of heartache. If the company declines to let you come back in, I’d refuse the job offer, no matter how great the money is.
A company that welcomes your interest in learning more before you make a commitment reveals something you can’t learn in a normal job interview — that it really respects its employees. The added bonus is that all the people you talk to during this extra day of meetings — if you take the job — will take you all the more seriously as a co-worker.
I wish you the best.
What factors do you consider when evaluating a job offer? Is a big raise ever enough reason to change employers? (This is not a loaded question: It actually might be.) What other factors would you add to my list above?
A couple of other factors; first taxes. A large percentage of the 30% increase is going to Uncle Sam. Just like winning the lotto . . . Uncle Sam is taking his portion right off the top. Second is satisfaction – money only satisfies to a point. After that it’s all about what Nick wrote and more. Think of all the starving artists out there who are happy doing what they love. Love what you are doing first, the money will follow.
Strategy: where are you in your career? All factors above being equal, moving to the right place early in the career can be a career boost, fun and an adventure. Those in mid- to late-career, other factors come into play, like spouses, families, etc. If you are single and everyone is married with three kids, you might not fit the local culture.
If you can, go there for a weekend or a work week. Rent an Airbnb. Walk around. See if you are comfortable. Also there are maps that geographically call out crime rates and type of crime. All this especially important for women.
I knew a Manhattanite who moved to Chicago for major money and personal reasons. She barely drove and would have to 1) buy a car and 2) drive. A lot. It didn’t work.
If you are moving to an area with a lower cost of living, reasonable housing prices, low to no state income taxes, and lower real estate taxes, all winners.
Big negative: if you lose the job, can you easily find another? Can you sell that house if you move again?
No mention of a relocation package, which is curious. That 30%, depending on the base, might get wiped out year one.
Watch out for jobs which are kind of in the metro area but on the fringes–they actually are 2 hour commutes with no relocation. To save any semblance of a life, you have to move–often to a less desirable or more expensive area.
Another thing to consider is the future potential for promotion and advancement. If it’s a dead end job that 30% might represent the top range of salary.
Don’t over look the products as well. I walked away from a good offer with a medical diagnostic device maker. Their product, although glitzy FDA approved tech, did not provide meaningful results to the clinician in the treatment of disease. It’s stock was at $20 at it’s peak, now trading at $2.75 range.
I took a job and moved with my family for a 66% increase. While I no longer work at that job (the company is very slowly failing), it was a good boost in my career. In addition, a close friend also still works at that company. It was that close friend that made the difference – I would never have accepted otherwise. My previous manager said to me, “That’s the kind of job offer you can’t reject.” Some aspects of this change were a lot harder than I thought – the year was 2013, and we were in Dayton, Ohio where the real estate market collapsed. We ended up selling our house in a short sale with a 60% loss. Leaving that town (the home of the Wright Brothers) ended up being a good thing.
@Kevin: Although you clearly didn’t take a 66% increase just for the money, this raises a point I only alluded to in my column.
Is it EVER a good idea to take big money just for the money? It can be — though you must proceed with eyes wide open. A huge salary increase can re-set your perceived value in the market in a huge way, and it can carry forward for a long time — whether the job/company is a good one or not. That’s just the reality. A 66% (for example) increase today will likely mean a much higher base from which to negotiate your next job in a few years, and the ones after that, if you can live with the job/company.
Does anybody buy that? Is this ever a good thing to do?
If moving, you need to consider the cost of living there as well. A recruiter contacted me about a job just south of San Francisco. The cost of living there is >3 times Cleveland.
It is not likely that they are going to pay you 30% more to do the job you are doing now. You need to consider how you would like to do the job they hired you into. More responsibility, more stress, more (hours, travel?)…Compare that to how you like doing the job you have.
You should consider the fact your 30% job could be outsourced tomorrow morning. Then what?
This bit of advice comes from one of the Disney employees who lost their job to H1-B labor.
@Dale: Cost of living is a big factor in my book, but that can also cut both ways. A move to an area with a lower cost of living amounts to tax free “income.” On the other hand, areas with lower costs of living may be that way for a reason and that can reflect a less vibrant (or stagnant or declining) economy where there fewer job prospects if the job doesn’t work out.
I made that mistake, relocating to Toledo. The cost of living is incredibly low, but I was snookered by a real scalawag (and nincompoop) of a boss and the job didn’t last long and there are very, very few other opportunities here in my field. Some locations can be real dead ends, either in general or for a given industry or field.
@Bob: There could be other ways a job could turn south other than being laid off. Even with all of the extensive due diligence that Nick recommended, a company’s culture can change over time. What if HR seizes more control and proceeds to destroy everything and create a toxic work environment. In that case, the location better afford other opportunities for you, or else you find yourself needing to relocate again (and many employers won’t even look at somebody who is not local).
Another factor not mentioned in the previous posts is the company pay and grading structure. Most large publicly owned companies have grade levels similar to the federal government. Each level has a pay range, and there can be a significant overlap in pay between adjacent levels. It’s very important to know where you stand in the grade level you are hiring into. If the new salary is in the top end of the pay range for that grade, your chances of advancement will be dependent on factors beyond your control as the number of “bumps” is limited and subject to intense politicking among the managers. Being new you are better off on the lower end of the pay spread for that position since getting raises will not be subject to the constraints of crossing into higher grade.
There actually is a third thing to consider, especially if moving into another city and especially if moving to another state: minimum wage increases.
Now, if you are making decent money already, it may not hit as hard. However, if you are making, say, $20/hr as entry level (a $3/hr increase over $17/hr entry level in another area), if that state suddenly raises the minimum wage to $15/hr or so, then, soon, your effective advantage of taking that job, over, say, a less stressful job that paid $15-17 hr in that area would go down.
Same thing would be true if you were in a field that required certification. To take an example I’m seeing in state legislation, say you were in child care in one state and moved to another for a pay increase. Suddenly that state passes a bill requiring more strict certification, etc and suddenly you have to pay more out of pocket every few years to remain certified and in your field. Now it’s not as worth if as if you’d stayed in the less regulated state with the cheaper certification costs.
I am in agreement with everyone – there’s more context needed to this question to give a simple yes or no answer.
There are some jobs I would not do at almost any salary.
There are other jobs I would do, even if it meant I took a cut in salary.
@David: There’s no question that good advice on this topic requires more details. As I noted, my intent was to discuss it generally and try to focus on factors a job seeker should consider along with the bigger bucks (which, as someone else noted, after taxes may not really be so big!).
All good points about relo’s If one is involved the “Due Diligence” part needs to embrace that aspect. For example, for a # of years I lived in worked in S California. I got there via a transfer. Then as now cost of living particularly housing was a character building exercise to deal with. Yet one constantly ran across people who jumped to what appeared to be lucrative pay raises, yet did NO simple research on what it would cost to buy a comparable home as well as the commute times to try & cope. Chewed up the raise & then some.
Assuming no commute, the people and/or due diligence points could include putting yourself in the offering company’s shoes and ask yourself “why 30%”. Rivalry was noted implying similar or same product/services offerings. Likely you could be known by the offering company. For what? Product knowledge? market development for a product(s) per se…or for a particular product? Say for example you have a rep for app development per se…or do you have a rep for and are linked to, app X. And app X is a big winner in the marketplace. If the job is to broadly help develop new apps in a wide ranging space, and you believe they will pump more $ into so doing, and more $ they you’re current company…fine that may be a great opportunity…But if you think the job really is to provide them their version of App X…you’re likely to run right into non-compete issues. If you never signed a non compete..perhaps…likewise if you’re that kick ass sales person who took many bites out of their sales when you went head to head…you still need to be careful if you had insights to your current companies product pipeline. Any signs that you’re simply booty of a talent raid, and not being recruited for “people” team building beware.
And also make an effort to find out if you are replacing someone (why is there a replacement) or an incremental hire. Makes a difference. 30% attached to a replacement infers some desperation & haste, whereas incremental infers deliberation and perhaps willingness to pay for a good addition to a team.
“30% attached to a replacement infers some desperation & haste”. Exactly right. You could be walking into a buzzsaw. What is the normal salary range for this position and location?
Another strong ally is the head of Marketing.
I am an Electrical Engineer, been in management most of my life in Manufacturing Operations and Quality (VP).
My strongest supporters have been VP’s of Finance and Marketing.
Both are looking at increasing companies worth (faster, better, cheaper), either by efficient use of the companies resources, or the support to make products that they can sell (easy to fix, strong customer service, easy returns / replacement). Not mutually exclusive issues in most cases.
So if you have these people on your side, in the hierarchy of the company they tend to be the two the CEO will listen to first.
Early on using LinkedIn, I could find finance and marketing individuals who would Link In and then, with some work, meet me.They did because they were not threatened, and they saw I could be worthwhile to them
Because of this, I found 2 jobs. In both cases these guys called the President (or CEO) to recommend me.