Job offer - should I be concerned about lower salary + higher bonus than discussed?

Question

I'm a long-time freelancer, about to convert in a contract-to-hire scenario. Salary talks went as follows:

• Company offers $X salary
• I counter with $X + $5k
• Company offers $X + $5k "with bonus included"

I gave my preliminary (unofficial) acceptance, and when I received the official offer letter, it listed a salary of $X - $3k with bonus of $8k (so, same total, but more heavily skewed toward the bonus).

(I came by the position via a recruitment agency, so my best guess is that this is an attempt on the company's part to reduce the agency fee they'll pay for me.)

My primary worry is that I know bonuses aren't necessarily static from year to year - so this effectively lowers my "guaranteed" take-home. Of somewhat less concern, it would be nice to have a higher "previous salary" number to take into salary negotiations for hypothetical future jobs.

Is it worth raising this issue and trying to redress before I formally accept the offer? Or are my concerns about these potential issues overblown?

Answer 1

My biggest concern would be that the place that you're going to work seems to think it's ok to renege on an offer made. Unless you have misunderstood the offer made, either the company has gone back on their word, or your recruiter has.

Companies are formed of people. If the people in the company feel that it's all right to go back on their word, then you have to decide whether you want to work with people whose integrity can't be trusted. That goes for both the recruiter and the company.

I can't tell you what I think you should do, because I don't know your personal situation. But I, personally, would try to figure out who is trying to back out of the deal, the recruiter or the company. Then I would either never work with the recruiter again or turn down the offer and any subsequent offers from the company. I can't see my way to working for people whose word can't be trusted.

Answer 2

Is it worth raising this issue and trying to redress before I formally accept the offer?

You basically got a counter-offer that came out differently than you expected. The "worth" of raising this issue is something only you can decide.

Reducing the base and increasing the bonus increases the risk that you won't end up with $X + $5k at the end of the year. You have to hit 100% of your proposed bonus to make this possible.

If it were up to me, I'd want to find out how the bonuses are calculated. In some shops you are completely in control of your bonus. The payout is based solely on your individual performance. But in many other companies, the bonus is based partly on individual performance, partly on team performance, and partly on company performance. That means your bonus depends in part on things that are likely completely out of your control. I'd want to discuss that with the hiring manager, and hear how that worked out over the past few years, before I made my decision.

In a few companies where I have worked, it was possible to attain more than 100% of your bonus. If it were me, I'd want to ask about that, and about how often that has actually happened in recent year. That could tip the balance of "worth".

You need to consider how confident you are in your own abilities, and thus your ability to hit your bonus targets.

You may also want to consider (assuming bonuses are only paid annually) if getting paid $X - $3k spread out over each paycheck is workable for you, or if your cashflow needs really require $X.

So you get to decide if it's "worth" raising the issue before you formally accept the offer or not. But if you do decide it's worth raising, I hope I've given you a few things to consider.

Answer 3

First, you say "My primary worry is that I know bonuses aren't necessarily static from year to year". Are you sure? Ask them more details on the bonus structure and how bonuses are awarded. Different companies structure bonuses differently. At some companies, unless layoffs are happening, the bonus is guaranteed and unrelated to performance (i.e. they cut the bonus instead of more staff). In some places I know, bonuses are automatic and unrelated to the budget or performance; employment is tied to performance and thus they save the bonus when they fire any under-performing workers.

Assuming the bonus is somewhat arbitrary and there is a human you can have a dialog with, express this concern (that you prefer a more static salary) and ask for X plus 5K bonus. Assuming X >> 3, they should agree to this and I'd worry about a company (and the bonus structure) if they don't.

Second, you say "it would be nice to have a higher 'previous salary' number to take into salary negotiations for hypothetical future jobs." Unless $X is small, 3K wouldn't affect this. One rounds numbers or gives ranges.