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Jargon Buster: Salary, Benefits, and Incentives
Don’t let yourself be confused when employers start throwing out terms like sabbaticals, golden hello, and pension plan!
Aside from the usual salary, most companies and organisations have a variety of other packages and benefits to reward their employees as well, and it’s important for graduates to recognise the varieties of compensation if they were to negotiate their hiring package successfully.
Find out what differs between a bonus and a golden hello, the true value of a getting a company car or mobile phone, and what else you can request for if your employer is flexible. These are also good bargaining chips if you want to negotiate for alternatives in the case of a lower-than-expected pay.
These are extra payments that the company gives you, usually once at the end of the year. These periodic sums are often awarded based on the company’s yearly performance, but it can also be given as a reward for individual excellence as well, especially for employees who have greatly exceeded their KPIs (Key Performance Indicators). There are also occasion-specific bonuses, such as Christmas bonuses, but these are rarely definite. Typically, bonuses is a very effective motivational tool, but always remember to ask about the structure of payment because some companies may choose to stretch the payment throughout the year in order to keep their employees with them.
This form of incentive plan is normally associated with sales positions, where you earn a percentage from each sales that you make, on top of your basic salary. Commission payments can be a lucrative form of income, which makes it a very powerful motivator for salespersons. Be sure to ask about the percentage that you’re given and other terms and conditions that apply to it even though they tend to remain fairly consistent from year to year.
Some companies will provide their employees – usually salespersons – with a car in order to assist them with their work, but as grand as that sounds, there are financial implications. Once you take on the company’s offer to loan you a car, you’ll be responsible for its taxes, refuels, and maintenance, so be sure to weigh the benefits that you can get to what you need to pay. Some companies can also quite strict with their personal mileage policy, and this may be a make-or-break factor for many people. Alternatively, ask if you would be entitled to car allowances instead if you decide not to take the company up on its offer as this can be a more economical option if you’re not travelling too far.
Some graduates put a lot of importance on the opportunity to educate themselves on the job, such as obtaining professional qualifications or postgraduate courses. Most companies do offer such opportunities and benefits, funding their employees’ education, but will usually require that they “repay” the company by being bound to the company for a certain period of time. Always check to see if the period of being bound is worth the opportunity!
Golden hellos are financial incentives awarded to newcomers of a company as a form of encouragement, and are also known as signing bonuses. Graduates often misunderstand that golden hellos are offered only to high-ranking executives, but some companies and organisations also offer them to graduate employees, especially if your new job requires you to move from your current place to a new area or to spend a large amount to prepare for the position. Golden hellos are also sometimes extended to highly sought-after graduates to sweeten the deal made by the recruiting company.
Most hiring companies make it a point to provide their employees with private health insurance, which lets you go for health consultations, tests, and operations without having to worry about payment. Some companies may also extend the policy to include your immediate family as well, but again, take care to clarify regarding tax matters and additional expenses that you must bear, as well as the maximum amount that you can reimburse in any situation. Large organisations may also provide you with other forms of insurance packages as well, such as dental, life, disability, and vision.
If your work requires you to travel out of office often or make a lot of calls, then your company may provide you with a mobile phone for work purposes. Most phones are exclusively for work-related calls, but some companies will also allocate some allowance for personal calls as well.
Most companies are required, by law, to pay a certain amount to a social security institution for their employees’ provident/retirement fund. However, some organisations may take the initiative to provide their own workplace pension scheme as well, especially large companies. These programmes are typically optional, but points to the company’s goodwill and generosity to its employee. That said, always check the terms and conditions that accompany these schemes, such as the form of payout and hidden charges.
Some large companies may also offer compensation in the form of sabbaticals – career break that can last from two months to a year after you’ve worked a certain period of time with the company. This is turning out to be an attractive form of benefit for many young graduates as it takes into account the possibility of a burnout and gives employees the option of taking an extended break to help them re-energise without having to worry about not having a job to return to. Depending on the company’s policy, the sabbaticals may be paid or unpaid.
This is one of the rarer forms of benefits offered, but can be a plausible option if a company is just starting up and is courting a highly-sought graduate. The most common form of proposal for this type of compensation will require you to work a certain period of time with the company or hit an agreed-upon target before they confer a percentage of the company’s stock to you as your reward. There are risks and advantages to this category of incentives, and you will have to evaluate the worth of it before you sign your agreement.