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Cash Components

19 January, 2016 - 17:43
  • Base salary. You get paid your base salary on a regular basis, which will be weekly, twice a month, or monthly.

Consider what the future salary potential could be and understand the timing. For example, most companies review performance and salary increases once per year, while others may review this twice per year.

  • Bonus. Several bonus options could be available, depending on the company and opportunity. If you are not eligible for a bonus, ask if it would be possible to receive one in the future, if your performance goes above and beyond what is expected. Ensure you know the timing of each bonus that could be available to you.
  • Sign-on bonus. Larger companies may pay sign-on bonuses, which were originally given out to reimburse students for moving expenses when they lived a certain distance away from their new work address. Corporations decided to streamline the process, and relabeled this a sign-on bonus, giving it to all candidates.
  • Quarterly or year-end bonus. Some companies allot for a quarterly bonus and a year-end bonus, both of which are paid based on individual performance and, of course, company performance (which could result in huge percentage swings either way). It’s important to understand how these bonuses are calculated and exactly what you are eligible for in advance.
  • Commission. Salespeople have a great opportunity to make commission, which is a percentage of the sales they make. This is a great opportunity, but you should also exercise caution. Understand the commission structure clearly. What happens if you do not sell anything for the first two or three months?

Do you receive a base salary, or is it full commission? Is commission paid on gross sales or net profit? Do you get a draw that you will then have to pay back?

Explore all of these details so you are clear on the entire structure.

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Figure 10.4