Congratulations! After much blood, sweat and tears, you’ve finally received a job offer!
The job is right, the location, the culture…they’re everything you want. The salary is pretty darn good.
The employer even offers an annual “bonus”. Sounds great! But what does that mean? How much more $$$ is really going to land in your wallet?
The answer is “it depends”.
To help you assess the offer, here are a few basic questions you might want to ask about that annual bonus:
- What is the annual bonus target? (Targets are often stated as a % of your salary; e.g. “Your target is 10% of your salary.”)
- What is getting measured to decide how much/if bonuses will be paid? (Many bonus programs are based on a combination of individual, team and company performance against defined goals. For example, “The company must meet its profit goals, your team must meet productivity goals, and you must meet your individual performance goals for the bonus to pay out fully.”)
- If only part of the goals are met, does the bonus program allow for partial payouts? (Some scale awards based on the degree to which goals are met. Some are all-or-nothing.)
- Does the annual bonus actually pay out every year? (If the bonus program exists but it never pays out, it’s of no value to you.)
- What percent of target does the bonus program usually pay out? (Let’s say your salary is $100K and the bonus target is 10%. Your potential gross is $110k. But if the bonus program typically only pays out 25% of target, your gross is now only $102,500.)
Bonus programs vary widely and can get complex quickly.
There are a gazillion more questions you might ask but these few will definitely help you make a better decision as you consider that bright shiny new job offer!
