Question

 

Forgoing a Benefits Package

As you consider how to move ahead in your career, it seems like a good time to explore other job opportunities. You generally like your current job but feel that your future opportunities are limited within your company. You are fortunate that your skill set is in demand and you have already received a couple of offers, but you are surprised by the variation of the compensation in the offers. You know that, as you consider an offer, you should consider both the salary and the value of the benefits. As you compare the offers, you start to consider what you really value in compensation. The most recent offer you received is a surprising, yet tempting, offer. The job is a step up for you from a career-growth perspective, and while most of the jobs you have interviewed for have offered a 5 to 10 percent increase over your current pay, this job is offering you a 30 percent increase over your current pay. However, the job offers no benefits beyond a basic paid time-off allowance. Therefore, if you want health insurance coverage or retirement savings set aside, you will have to pay for both on your own. The extra cash appeals to you as you think about your needs. You consider yourself to be fairly healthy and so you think that finding a health insurance plan with minimum coverage would not be a significant expense for you. You are also confident in your ability to invest savings for your retirement. You already have an Independent Retirement Account (IRA) set up and contribute some of your current earnings to the account. You consider yourself disciplined and think that you could easily set aside some of your monthly pay for your retirement savings. You’ve discussed the offer with some friends and family and have been cautioned that it might be better to pursue an offer that includes health insurance and retirement benefits. They have suggested that it is difficult to find affordable health insurance on your own, and that it is easy to be distracted by other needs and fail to save for your retirement. However, you know that employer-sponsored health insurance in particular is not always guaranteed. You know of many friends who have faced cuts in their health insurance benefit that are explained by higher premium rates that are passed along to employees. You think that if you could end up paying more for health insurance from an employer anyway, maybe you should just pay for it yourself. On the other hand, you know that the increase in the availability of cash may tempt you to spend the money on things other than your retirement savings. As you consider the offer, you are getting excited about the position, but you just aren’t sure about the compensation.

Copy each question and provide your answer below it in one to two paragraphs.

1. Why would a company offer salary with no benefits?

2. Do you think the offer without benefits is worth pursuing?

3. Which would you prefer and why?

1. High salary with few benefits
2. Average salary and benefits
3. Lower salary and excellent benefits

Answer 1

1. Why would a company offer salary with no benefits?

✓ a company would offer salary without any benefits if it is running a small business. If they offer benefits like health coverage, retirement plans, etc they will incur heavy costs. If the company requirements are only for contract workers or freelancers they won't be bothering about any benefits because, a good pay for work as a salary or wage will be enough for them.

2. Do you think the offer without benefits is worth pursuing?

✓ I don't think any offer without benefits is worth pursuing because, pay package involves a good basic pay, benefits and additional perks or variable pay. That are necessary to stay engaged with the job. Performance of an employee can bring good benefits for him when he outperform his job, team work bonuses and additional benefits also motivates workforce. Benefits such as, healthcare coverage, insurance, retirement plans, etc are very helpful to overcome any misfortune in life. Therefore, benefits along with salary is necessary to be satisfied in the firm.

3. Which would you prefer and why?

1. High salary with few benefits
2. Average salary and benefits
3. Lower salary and excellent benefits

✓ I would prefer

1) high salary with few benefits.

A good pay rate keeps me motivated and with few important benefits will enhance my work engagement and also keep me satisfied with the job. I feel my work is rewarded with a high salary and to support me those few benefits will be more than enough. Average salary and benefits would be preferable if those benefits are enough to meet the requirements and can balance the salary need. I won't prefer low salary with excellent benefits, because, there will be no demand for my work when I switch to any other company or higher positions.