Dec 14, 2017
My granny often cautioned me: “Child, the devil sits in the details. Whenever you are faced with a decision in life, make sure you did your homework, gathered all the relevant facts and compared apples to apples.”
As a talent professional these words haunted me many a time, when I had to deal with candidates in despair after receiving offers lower than their current earnings or significantly below their expectations, sometimes without consideration for pending bonus pay-outs and potential losses of shares and incentives. Unfortunately, the blame cannot be passed to the company extending the offer, but is rather a cause of the candidate’s failure to present proper details regarding their salary structure and all quantifiable benefits forming part of their employment contract at their current organisation. Furthermore, applicants have unrealistic perceptions of standard increases provided by their specific industry, resulting in impractical expectations of 20%-40% package increases when changing jobs.
A critical aspect of your job seeking journey revolves around numbers: current package details and candidate expectations versus actual offer values received in the end.
ONCE UPON A TIME, NOT ENDING IN HAPPY EVER AFTER
Have a look at the following candidate stories taken from real incidents that transpired during previous offer processes:
- Sally earned R34 000 per month. In her interview, she stated this figure as her total monthly salary and Company X offered her R37 000 per month. In the end, Sally decided not to take the offer, as the nett salary in her bank account with Company X was going to be far less than the R34 000 she is receiving now.
What happened here? Sally provided her current nett salary of R34 000 in the interview without clarifying that this was the amount she receives in her bank account at the end of the month and Company X assumed she was referring to her Total Cost to Company being R34 000.
- Nico was on a Total Cost to Company of R 700 000 per annum, which he stated as his current remuneration figure during the interview. Company Z offered him a package of R 800 000, but when Nico inspected the dummy payslip, he realised that his indicated take-home pay, should he accept the offer, would be less than what he is currently receiving in his bank account.
What happened here? Nico was on a “Benefit Light” package where he did not receive any company benefits apart from a Medical Aid. Company Z has a well-structured “Benefit Heavy” offering, which includes Medical Aid, Pension Fund, Provident Fund and Group Life Benefits, which forms part of the Total Cost to Company Figure. Due to these added benefits in the new package, the proposed Basic Salary turned out to be considerably less than Nico’s current Basic Salary.
- Mohamed worked for a Bank and earned R 800 000 per annum as his Total Cost to Company He received an offer from Company Y in the manufacturing industry for R 1 000 000 per annum, which on the surface, seemed like an excellent package increase of 20%. However, Mohamed turned the package down after discovering that he will lose his Staff Rate perks if he left the Bank.
What happened here? Mohamed had a home loan, as well as vehicle finance at the Bank he was employed by, which entailed considerable interest savings on his two loans to the value of R 200 000 per annum. If Mohamed decided to leave the Bank, his Staff Rates would have been forfeited resulting in the R 200 000 per annum interest saving being added as an additional expense to be paid from his Nett Salary, effecting decreased Nett Gain of R 200 000 per annum.
- Charlene earned R 20 000 per month Total Cost to Company. In her interview, she was asked about her Total Cost to Company Package per annum, and she calculated the annual value as R 120 000. Company A offered her a package of R 140 000 per annum, but when she crunched the numbers from the Dummy Payslip, she realised that there was, in fact, no increase and she declined the offer.
What happened here? Charlene forgot to inform Company A that she received a guaranteed 13th Cheque which then increased her package to R 140 000 per annum, the same amount as the offer extended to her.
- Sipho worked for Company B, a large mining conglomerate and earns R 50 000 per month Total Cost to Company as indicated on his payslip. He sent the payslip to Company B after his interview process and assessments concluded, and Company B extended an offer of R 60 000 per month, Total Cost to Company. Sipho worked in a remote area at that stage and for the new role he needed relocate his family to the city. On the surface, it appeared as a great offer with an increase of 17% in total earnings, but Sipho made the decision not to accept the opportunity.
What happened here? On closer inspection of the Letter of Employment and corresponding Dummy Payslip, Sipho realised that Company B did not offer any housing. The organisation he worked for provided free accommodation for him and his family. If Sipho accepted the offer and moved to the city, he would be required to rent a house at the cost of R 12 000. That extra expense of R 12 000 would have decreased his Nett Gain, as he would have to pay rent from his Nett Salary going forward.
Many a job offer has gone pear-shaped due to a lack of clarification when discussing salary numbers with a hiring manager or the fact that applicants are unaware of all the components forming part of their salary packages.
SPANNERS IN THE WORKS
Understanding the full scope of your remuneration package is of utmost importance when engaging with a prospective organization in an interview process. Furthermore, you should be aware of the timing issues around resignation periods, which could impact on certain payments or benefits being forfeited. As an example, very few companies will pay out bonuses due during a resignation period, and shares and retention payments are voided automatically, when you leave the organization.
Another hurdle to consider is payback amounts for exams or professional subscriptions covered by your organization on your behalf. Review your contract carefully regarding these issues, as you will be held liable to reimburse the organization for these funds upon leaving their employment.
Be mindful of the type of remuneration package you are currently on and the variance in benefit offerings between your current package and the new offer. A “Benefit Light” structure where only one benefit exists like for instance a medical aid is very different to a “Benefit Heavy” format, consisting of multiple benefits like medical aid, pension fund, and group life insurance. The most significant impact between these two is the Nett Value paid into your bank account. With a similar or even higher Total Cost to Company, a “Benefit Heavy” package may result in a lesser Nett Salary than a “Benefit Light” structure.
GETTING TO KNOW YOUR NUMBERS
Total Cost to Company, Gross Salary, Nett Package, Nett Gain, Company Benefits! Are you confused right now? What are you really earning? The degree of variance in Payslips from one company to the next is substantial and often difficult to understand.
Look out for our next blog where we will be discussing the various remuneration components reflecting on payslips, hidden quantifiable earnings as part of an employment contract, as well as once off and infrequent payments not reflecting on your payslip every month. We will also then tackle the issue around salary expectations and provide guidelines on the realistic calculation thereof.
Once you know the intricate details of your Payslip and Employment Contract, deriving expectations becomes a lot simpler and the ride on the Remuneration Rollercoaster much easier to stomach.
Dec 7, 2017
JOB HUNTING IN ERA THE FOURTH INDUSTRIAL REVOLUTION
We find ourselves in the era commonly referred to as the Fourth Industrial Revolution. The way we conduct our lives has become faster, increasingly automated and digitized. The world we live in has evolved into an instantly smart environment, and in this generation, there is an “app” or a “bot” for anything and everything. Technology innovation is soaring, and communication is instant and permanent. Within this digitized environment, looking for a new job can be one of the most challenging projects to take on, whether you are a bright-eyed, bushy-tailed graduate looking for your first rodeo in the corporate sector or a tenured professional with many years of experience on your career belt.
Research has shown that changing employment or pursuing your first job, is the third most life-changing/stressful event one can experience, after losing a life partner or relocating. This can be a difficult and emotional time for you, where you may have doubts creeping in about your competencies, skills, and value-adding benefits.
- Do you stare longingly at the buildings with shiny corporate names, while stuck in traffic every morning?
- Is the monthly braai with friends a torture session where your happy peers discuss their exciting, challenging careers?
- Do you have a little voice in your head reiterating the high level of employment in South Africa?
- Does your parents’ advice on “the grass is not always greener on the other side,” resonate through your mind as soon as you start contemplating changing jobs?
When one is pushed beyond a comfort zone, it is always easier to stay with what is known, as opposed to what is best. On the flip side of this coin, are you a 100% convinced that the position you are in now, is not in fact where you should remain?
WHY AM I LOOKING?
Prior to uttering the statement: “I am in the market” to yourself and others, dusting off that resume or frantically scrutinizing the job boards and social media platforms, perhaps first take a step back. Ensure that you clear about your motivations for moving to a different company, or as a graduate, firstly assess your internal requirements, pertaining to the most suitable first job of your career.
There are six main types of motivations to consider, and the trick is to evaluate your own personal reasons for moving in comparison to these categories before commencing search for new career opportunities. We refer to this as the SACRED Model of Job Moving Motivations which include the following categories: Stimulation, Assurance, Crowd, Remuneration, Elevation, and Domain.
1) Stimulation refers to the level of challenge pertinent in your current role, or learning curve required for your first position.
Employees leave their jobs out of boredom and mundane activities or because of overwhelming expectations they are unable to attain, due to increasing workload demands. Certain lifestyle events may contribute to a need for more stimulation like with someone who just completed an MBA, whereas a newly divorced mom who acts as the primary caregiver may want to opt for a less challenging role, to be available for her children during certain hours of the day.
- How important is the level of job stimulation to you?
2) Assurance describes the perceived stability that a company may offer to employees.
A young graduate may feel comfortable to take a risk with a start-up organization, whereas the breadwinner of a family would rather work for a large company, which is well known for longevity in terms of brand and product offering. People are inherently fearful of change, and issues like publicised retrenchments or broadcasts of pending takeovers may influence them in a decision to seek alternative opportunities. How secure someone feels at their company and in their position day in and day out, can be a contributing factor when considering a change.
- How important is company stability for you at this stage?
3) Crowd motivating factors refers to the people dynamics of the organization, company culture, and employee satisfaction levels.
A toxic working environment is one of the leading contributing catalysts of resignations in companies. This can manifest in a constrained relationship with the direct manager, the overall direction of the organization which does not reflect sustainability or even conflict with a peer level co-worker.
- How do you feel about the current working environment you find yourself in presently?
People also differ regarding the type of working environment they prefer. Not everyone is comfortable in a cut-throat corporate realm, and for others, the family orientated approach may seem quite appalling instead of appealing.
- Are you from the champagne and caviar league or the beer and biltong brigade?
4) Remuneration issues. Often salary seems like a legitimate reason for moving, but be reminded that an increase in salary will not guarantee job satisfaction or career progress. One needs to cautiously tread around the perception of what a market-related salary entails. Furthermore, unless you are earning a salary below market average, you should not make a significant increase your only priority during the job hunting process. The average increase is usually between 10% – 12%, and if you are expecting more than this, you have probably been misinformed or being unrealistic with your assumptions.
- Are you satisfied with your current salary package?
- Is a salary immediately salary increase more important to you than long-term career growth?
5) Elevation required for self-actualization. During this process of thought, your aspirations for promotion, career growth, and increased responsibility should be articulated. Candidates usually pursue alternative opportunities when they are unable to reach a higher job level within their current organization, due to opportunities not becoming vacant or where the timeframe to reach the next step in a company seems to be too lengthy. Most employees highlight this issue as the instigating factor to start looking for other positions. However, their expectations regarding timelines for advancement are often completely unrealistic. Thus, they tend to apply to positions way beyond their level of expertise and experience without any success.
- Do you know what your growth prospects are within your current company?
- How realistic are your expectations regarding elevation and promotion?
6) Domain and physical environment is the final factor to ponder on and refers to location or area of the workplace. Individuals may consider changing positions, because of extensive commuting to and from work, without the means or willingness to relocate closer to their office. Other influencing matters may include the physical location of their place of work, perhaps in a dangerous area or even just the nature of their job requiring too much travel. If Domain is one of your primary motivators for moving, you should investigate whether similar opportunities are in fact available in the locations of your preference. Agreed that 2 hours of the day in traffic is surely not the ideal, but depending on your area of specialisation, is there an investment bank, mining head office or manufacturing plant 10 minutes from your house?
- Is location more important than career opportunities at this stage?
GET YOUR PRIORITIES STRAIGHT
Remember there is no right or wrong answer. The reason for this exercise is to identify the motivating factors most vital to you, before commencing with any job hunting activities. Once your specific reasons for changing jobs has been determined, the next step is to prioritize them in order of importance from 1 to 6, where one is most vital, and six is least crucial. Your top three motivating factors should form the hard boundaries of your search criteria and also impact your decisions on whether to apply for an opportunity or not.
YOUR JOB SEEKING JOURNEY IS ABOUT TO START…HAPPY HUNTING!!!
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