Career Advice Tuesday– “Managing Compensation Risk”
October 16, 2012
Currently I am employed as an information security consultant with a large entity. As part of my compensation program, I earn a quarterly bonus based upon the achievement of utilization targets and billable hours. Our company has done well over the past five years, and my bonus has become quite predictable. Over the course of the year, it amounts to about 30% of my base salary and close to 20% of my overall compensation.
About a year ago, one of my peers left the company to strike out on his own. During that time, he has grown a small boutique consulting company that specializes in my area of expertise, GRC product implementation. While I am familiar and comfortable with the person as a peer, I am not fully comfortable with him as a business owner. He has recently made me an offer to join his team.
The position comes with a little more authority than I currently have, alone with a flashier title (From reading the blog, I know how much weight you put on this.) The salary is a small increase from my current salary, but the bonus appears to be more substantial. He has told me that, based on the corporate formula that they utilize, it could equate to about 50% of my base salary. This would be a sizeable increase, and potentially give me additional freedoms.
There is one problem that I have; I do not fully trust that this money is going to be there. I base this on the fact that I do not know what kind of businessperson he is and do not know if I can rely on the bonus to be there. If it does not materialize as promised, I will be taking about a 10-15% decrease in earnings, and I risk leaving a safe and comfortable situation.
Any advice would be appreciated?
While your question appears to be complex, fortunately, the answers are quite simple. By asking your potential new employer a few key questions, you will be able to figure out your answers about his business ethics, believability, and the health of the company.
Here are some easy simple steps:
1) Before accepting the position, ask the new employer if you can speak to some of your potential peers who have been working with the company for at least three months. During these discussions, ask these folks how their bonus has been, has it been paid, has it been paid on time, and if it was paid as stated in their offer.
This is your first line of defense. It will provide you with at least some history in seeing if your new employer is true to his word.
2) If this checks out, then I would want you to call your new employer directly before accepting the offer. When you speak with them, I want you to ask them to guarantee the bonus for the first six months of employment at the target rate. In essence, I want you to ask him to treat it as salary. Anyone in business who is adding additional people to their services team should have at least six months of visibility into their revenue stream and client base. He should not hesitate to honor this request. If he does, my antennae would go up.
You are entitled to request this based on the following factors that apply to your situation:
1) You are a known commodity. The employer sought you out. Knows your work, and knows what they are getting. There is huge value in this to them.
2) The business is a small business and it is their responsibility to help you manage your risk – since you are the one that is taking a chance on them. (As a side note, a company that has been in business for a while would not do this, and should not be expected to.)
3) They are recruiting you. You have a good job where you are content. You have some leverage in this situation so use it. All you are asking is for them to guarantee their promise. It should be a simple request.
(Note: As the audience reads this, understand all three factors need to apply. Do not think you can require this of a large fortune sized entity, an established security consultancy, or a stable security product vendor.)
In closing, my best advice is to trust your gut instincts. After these discussions, if there is something telling you not to trust the new entity, stay put. Tell the employer you would like to revisit the opportunity in 3-6 months. I am pretty confident that if this particular opportunity is indeed a good one, it will still be good six months from now.
Hope this helps.