9 Steps in Evaluating a Job Offer

By Published On: August 9, 2018

During a job search, it’s common to spend weeks or even months researching career opportunities, sending out resumes and going on interviews. When you finally receive a viable job offer, there are typically feelings of anxiety when it comes to evaluating the opportunity and especially negotiating and making a final decision.
How will you evaluate the job offer in supply chain discipline and if necessary, counter and negotiate? In the excitement of receiving an offer, don’t forget to use sound judgment because accepting a new job with a new company can and typically is a “life-changing event”.  
Here are 9 steps to take for evaluating a job offer and making a well-balanced decision:

Step 1: Understand Your Financial Baseline

Start by calculating the minimum salary you need to survive and thrive. This includes bills, saving, retirement investments, healthcare costs, and anything else you consider essential to maintaining your lifestyle.
This figure will serve as your baseline and it’s very important to target opportunities that offer compensation at or above this figure. Settling for anything less is risky business, and should only be considered if you’re in a good place financially, plus the opportunity provides a significant upside, such as an equity stake in a growth-oriented company.

Step 2: Investigate the Marketplace

If you are an experienced supply chain professional, you might already know the going pay for your profession within your local market. However, it’s always a good idea to research average salaries for your role, especially if you haven’t been in job search mode for a while. In addition, many jobs within the field of supply chain management have seen steady compensation growth in recent years, which is another great reason for conducting ample salary research when evaluating job offers.
Online salary calculators, such as Payscale and Salary.com are a great place to start. Be sure to calculate cost of living as well, especially if you are looking to relocate for the job. You can’t expect to make the same salary in Albany, GA as you would in New York City, NY.

Step 3: Analyze the Offer 

Take the time to read your offer package or letter thoroughly, noting any questions that come up, especially regarding cash compensation, short-term and long-term incentives, healthcare costs, retirement plan(s), bonus payout dates, etc.  For example, sometimes bonuses can pay out at more than 100% (for exceeding performance expectations, for instance). Clarify any questionable details with the company before beginning any negotiations.
It’s also critical that you don’t make the mistake of only considering cash compensation. Too many professionals discount the importance of the actual day-to-day work; the organization, its financial stability and culture; the person you would directly report to; benefits; and especially opportunities for advancement, learning and development.
In addition to the numbers, be sure to ask yourself the following questions:

  • Does the job entail work that I really enjoy doing and am good at?
  • Is the company growing at a good rate, and is it financially stable?
  • Does the business have a culture that I will thrive in and a good reputation within the marketplace?
  • Does the person to whom I’ll be reporting seem like a great leader?
  • Is the benefits package fair and reasonable for the industry?
  • How will the position positively impact my knowledge, skills, experience and marketability?
  • What are the opportunities for career advancement?

While it’s unlikely that any job offer and company will be a 100% match, it’s very important that the opportunity checks a majority of the boxes, especially those that you deem most important to you.

Step 4: Healthcare & Benefits 

Health insurance is expensive these days, which can make having a good employer healthcare plan a necessity for you and your family.  Evaluate your benefits package as carefully as the cash compensation portions, paying attention to employee costs for health insurance premiums, copays and deductibles.
It may be beneficial to calculate what you are currently paying or receiving in benefits to compare how much of a difference this new opportunity could save or cost you in that area.

Step 5: Short-term Incentives

Many offers include a short-term incentive, typically an annual bonus that is based on a percentage of the base salary, or a discretionary bonus. Some companies offer a one-time sign-on bonus as well. Regardless of the bonus type, it’s very important to find out how the bonus is measured, when it’s paid out, and ideally the history of the bonus payout for the role you are vying for.  Most annual bonuses are tied to individual performance and/or company performance. If it’s weighted more heavily on the company performance, obviously you’ll want to understand how well the company has performed in the past and how well they’re expecting to perform going forward.
Lastly, you’ll want to understand if you have the ability to exceed the target of the bonus. For example, if your bonus target is 15% of salary and this is based on “meeting expectations”, would you be eligible to receive a higher bonus i.e. over 100% of the bonus target if you “exceed expectations”.

Step 6: Long-term Incentives / Equity

Long-term incentives are sometimes provided and there are several types of incentive plans that employers have to choose from, such as stock option grants, restricted stock units, performance shares and many others. These incentive plans can be one of the most lucrative components of a compensation package and are designed to reward and retain key employees for achievement against the company’s core objectives that will maximize shareholder value.
The performance period for long-term incentives, commonly referred to as the “vesting schedule”, typically spans between three to five years. For example, if you receive 1,000 restricted stock units (RSUs), and the company has a 3-year vesting schedule, you would not be eligible to fully exercise or “cash in” on the award until the performance period expires.
The most important aspects for you to understand when evaluating long-term incentives are the type of incentive, when it’s awarded, the vesting schedule, and most importantly, the financial performance of the company, both historically and the projected outlook. If you’re not well versed in this area, it’s best to reach out to your financial advisor and potentially a CPA to fully understand the pros, cons and most importantly, the range of value that you could achieve on an annual basis.

Step 7: Company Reputation

Yelp and Glassdoor are great online resources for researching a company’s reputation. While these platforms provide good data points, we suggest that you exercise caution when reading through company reviews as it’s human nature for disgruntled employees to write negative reviews, whereas happy employees may not think to write anything at all.
You can also contact friends or relatives with connections at your target company, in efforts to discover what it’s really like to work there.  A great compensation package won’t make up for a horrible work environment, unethical business practices, or high employee turnover.

Step 8: Calculate Earnings Potential & Overall Offer Value

The easiest way to evaluate and calculate your earnings potential is to use a tool like Microsoft Excel. Enter all cash compensation variables, benefit costs, and values of the short and long-term incentives. Then, run a few different scenarios to calculate the minimum, average and maximum target bonuses. You can input additional benefits such as vacation, holidays and tuition reimbursement on a separate worksheet, assigning values to each according to their importance to you.

Step 9: Make a Final Decision 

Now there’s nothing left to do except make your decision. If you find the work interesting and are happy with the balance of cash compensation, benefits, growth potential and the person you would work for, then don’t let anything stop you from accepting the job offer in supply chain discipline.  If you feel that there’s room for improvement, then it’s time to start negotiating. We’ve put together a list of quick tips to consider if you do find yourself in offer negotiation.