Job seekers rarely give enough thought to how much they are worth before applying for a new job. Of course, most job adverts focus purely on salary. It’s, therefore, only natural for candidates to use this as a benchmark when searching for their ideal future position.
However, while you may focus on searching for the salary you deserve, have you ever stopped to consider how much better or worse off you might be by switching jobs? This article explains how to calculate how much you are worth in your current situation. Knowing this will put you in a better position to understand whether or not it’s worth submitting applications to advertised vacancies.
Job hunting can be a time consuming and stressful process. From the first thought of leaving, through trawling the job boards, to submitting an application and attending interviews. How would you feel after going through all that, only to discover that you’re actually worse off in your new role than you were in your previous one?
Even understanding what your total benefits package is worth is only part of the picture. Additionally, there are costs associated with being in employment, such as travel, clothing and sustenance. You should also consider the value of your work-life balance. Having an understanding of what all these things are worth can paint a clearer picture of how much better off you might be by accepting an offer of employment elsewhere.
Three Steps to Calculating What You’re Worth
Unfortunately, the above scenario is one with which we are all too familiar. Therefore, we wrote this article to help you gain a better understanding of the factors to consider when looking for a new job, including:
- Understand the value of your total benefits package
- Estimate the costs associated with your job
- Calculate what your work-life balance is worth
Understanding Your Total Benefits Package
Your total compensation package consists of your salary along with any bonuses or benefits made available to you by your employer.
UK Employee’s Basic Entitlement
As a minimum, a basic UK employee benefits package for full-time employees must include:
- Base Salary
- Statutory Sick Pay
- Statutory Maternity Pay (or paternity/adoption pay)
- Protection against unfair dismissal
- The right to request flexible working
- Time off for emergencies
- Statutory Redundancy Pay
- 28 days holiday (including bank holidays)
- Workplace pension (3% paid by the employer, 5% payable by employee)
- Maximum working time regulations of 48 hours (Working Time Directive)
In the past, the majority of employers only offered this basic package. However, over the years, skills have become scarce. It has, therefore, become more prevalent in recent years for employers to offer enhanced remuneration packages to attract the best candidates.
Additional Discretionary Benefits
In addition to your basic package, an employer can choose to offer the following benefits. While these benefits are not mandatory, they are government-approved. Therefore, employees do not have to pay tax on these following items:
- Free or subsidised staff canteen meals
- In-house sports facilities
- Counselling services to redundant employees
- Childcare vouchers
- Bus services to transport employees to and from the workplace
- Cycle to work schemes
- Relocation expenses if your job has to move
- Gifts to celebrate significant life events such as wedding or retirement gifts
- Equipment which enables disabled people to carry out their role effectively
- Enhanced retirement plan or pension
Enhanced Employee Benefits Packages
There are other benefits employers may commonly offer which enhance their benefits plans. Where these benefits result in employees earning extra income, they are taxable. Such as:
- Additional vacation time/holiday pay
- Overtime pay/bonuses
- Extended sick pay
- Performance-related bonuses
- Commission paid for hitting sales targets
- Profit-share schemes
- Health insurance/Dental insurance/cash health plans
- Life insurance/Critical illness cover or long term disability insurance
- Tuition assistance or training allowance
- Gym memberships
- Employee assistance programs providing counselling, legal advice and other services
Any benefits your employer offers over and above the basic requirements are discretionary and may only be available to employees once the business has employed them for a period of time.
On the other hand, some employers make all benefits optional to all employees. In this case, employees receive a cash amount paid into a flexible spending account. It is then up to individuals to decide whether they would like the extra cash or use it to take advantage of the benefits that are most applicable to them.
For example, the father of a young family may be more interested in childcare vouchers than health insurance. However, that could very well change as he gets older. A flexible spending account gives him the freedom to switch.
Unexpected Costs to Consider When Leaving Your Job
It is not uncommon for employees to forget about any clauses in their contract concerning deductions to be made from their salary upon leaving.
A typical example of this is where an employer has contributed towards tuition fees. In this situation, the employer amends the employee’s contract to include a clause stating that they must remain an employee of the business for an agreed period. Of course, the employee may choose to leave within that time but will have to repay a proportion of the value, which usually decreases over time.
Although these tuition fees are repayable upon leaving, when calculating what you are worth, the amount left outstanding should be counted as a benefit.
How to Calculate What You Are Worth – 3 Scenarios
There are so many financial pros and cons to consider when switching jobs, which can seem quite overwhelming.
To make it easier to understand, here are three different scenarios to consider. In each situation, we look at:
- How much it looks like you’re worth at first glance – based on your gross salary divided by the number of hours in a working year
- What you’re worth per hour including your total benefits package, minus expenses
- The value of your work-life balance
Scenario 1 – Current Job
Current salary £60,000
Dress code – smart office attire
35 days holiday (7 weeks off including bank holidays)
40 hour week with 1 hour for lunch
20-mile round trip commute, which takes about an hour each way during rush hour
Two days working from home
Tuition fees, of which £500 will be payable if you leave now
Free gym membership
Scenario 2 – New Job Option 1
Advertised salary £65,000
Casual dress code
Standard minimum entitlement of 28 days holiday (5.6 weeks off including bank holidays)
37.5 hour week with 30 minutes for lunch
Short commute which is easily doable by bike
Two days working from home
Cycle to work scheme
Free drinks from ‘high street’ style coffee bar & healthy snacks
Scenario 3 – New Job Option 2
Advertised salary £70,000
Smart office dress code
40 days holiday per year (8 weeks off including bank holidays)
Officially, 40 hour weeks with 1 hour for lunch. Although this would be a considerable step up with more responsibility. You, therefore, anticipate working an extra hour per day with no home working
This job also comes with an hour commute. Although the traffic is not as bad as it is en route to your current place of work, the mileage would be 50miles round trip per day
Additionally, this job is in the city; you would, therefore, have to pay £5 per day parking fees
Comparison of the Three Job Options
Firstly, let’s compare the two new job options with your current one based on salary alone. Based on this information, it looks as though option two would be the obvious choice.
However, after taking the benefits offered and the costs involved in working for these two employers, it’s clear to see that is not the case. Option two offers considerably fewer benefits than option one. Furthermore, you would be working much longer hours. So despite the higher salary, option two would find you worse off.
However, there are other things to take into account between these two job options. The first is with a much smaller company where you would have considerably more creative freedom and autonomy. Option two, on the other hand, is a much bigger company where you would have more managerial responsibility.
The final decider then, is what is worth more to you? Option one offers the opportunity to express your creativity, in a relaxed environment while maintaining a good work-life balance. However, if your ultimate ambition is to one day achieve senior management status, you might be prepared to accept being slightly worse off in the short term. Or maybe an employer might make such an offer to test your negotiating skills?
The Devil is in the Details
Job adverts rarely provide us with enough information to calculate exactly how much better or worse off we might be if applying for the role. But there is nothing worse than putting all your effort into the interview process, only to find out that the subsequent offer of employment leaves you worse off.
Negotiating an overall package which meets your needs is just one example of where applying for jobs via a recruitment consultant has the advantage over submitting direct applications. Reputable consultants will always discuss your current benefits package and what’s most important to you in a future role.
Going into the intricate details of their personal circumstances can sometimes make candidates feel uncomfortable. However, the reason consultants ask such probing questions is to make sure that they only submit a candidate’s CV to jobs which will put them in a better position.
We hope that after reading this article, you feel better equipped to calculate what you’re worth and only submit applications for positions worthy of your attention. If you need any additional advice on this topic, please don’t hesitate to give our team a call. They will be happy to discuss your future career aspirations.
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