Imagine this: you are a recent graduate, and your hard work has paid off by receiving two job offers. The first offer has a $5,000 higher annual salary than the second offer. Should the second job offer even be considered?

When starting your career, it may be tempting to select the organization with the highest salary. This decision seems logical because it would allow you to earn thousands more over the course of your career. That notion, however, is based on the idea of remaining at the same job level within your career instead of progressing to more senior and higher-compensated positions. This predicament is where evaluating total compensation is important.

What is total compensation?

Total compensation includes all the monetary benefits a person receives in relation to their role with the organization. Salary is only one component of total compensation, and others may include bonuses, health and wellness benefits, paid time off (vacation days, sick days, etc.), company-matched retirement plans, company vehicles allowed for personal use, company cell phones allowed for personal use, and education assistance programs, such as paying for a CPA designation.

Another important item to consider in total compensation is hourly rate. A $60,000 role working 2,400 hours in a year earns $25 per hour, whereas a $52,000 role working a standard 2,080 hours also earns $25 per hour yet works significantly less. Hourly rate is important in determining if you are truly being compensated fairly for your time.

What is the value of benefits outside of a salary?

All non-salary benefits should aid you in performing your best in your role both short and long term. Bonuses, for example, should incentivize you to reach your goals and reward you for doing so. Wellness benefits should help you take care of your physical and mental health, increasing your productivity and reducing your absenteeism. Always ask your employer or potential employer for clarification if you do not understand the value of a benefit!

What should a student look for?

Look at total rewards, which are the non-monetary benefits in addition to total compensation, which encompasses only monetary benefits. Non-monetary benefits can include formal mentoring, training programs, exposure to new projects, corporate culture, organizational reputation, and flexible working arrangements. I’d argue non-monetary benefits are equally as, if not more, important when a person is starting their career due to the potential for higher compensation in the long term. This statement especially holds true for those looking to advance to higher positions later in their career.

Students should seek roles that will provide them the experiences and opportunities needed to advance in their career. For example, a person starting their career articling in a large firm may be exposed to a single industry and size of client, which they might prefer. Someone starting in a small- or medium-sized firm, however, would likely be exposed to multiple industries and client sizes. Before accepting any role, ask yourself, “How does this role fit into my long-term career aspirations?”