Thursday, July 31, 2008

Interview Suit Advice

Earlier I blogged about my recommendation to wear a suit to interviews. However, not everyone may be familiar with the intricacies of wearing suits, especially since most of us technical folks rarely have occasion to dress up in our daily lives. So if you do decide to get all decked out, how can you best dazzle the interviewer with your keen fashion sense? Well, to keep you from having to pick up a copy of GQ, here is my “Interview Suit” advice. Of course, if such metrosexual topics don’t interest you, or if you just don’t’ believe in wearing suits to interviews, feel free to skip this blog post.

As I noted earlier most of us wear suits only to interviews, weddings, and funerals. This means you really only need one suit. Or possibly two, if you do lots of interviews or go to lots of weddings (but hopefully not lots of funerals).

Your suit(s) should be dark. Black, dark blue/navy, and charcoal gray are good options. These colors are the most traditional and most reliable. Avoid bold pinstripes and loud patterns.

The jacket should have a conservative cut with two or three buttons. Three is typically considered more traditional and two more stylish. The fashion industry seems to go back and forth over time on the two vs. three button question, but you really can’t miss with either.

I prefer no vents in the jacket but some people prefer a single center back vent. No problem either way. Just don’t go for two side vents; that just screams, “Bond, James Bond”.

The suit material should be wool. No polyester or other man made fabrics. The difference is obvious in the drape, the way the garment hangs. And besides, wool garments last much longer than synthetics.

No matter where you buy your suit you should have it altered to fit. Not just the sleeve length and pant hems, but the jacket itself as well. A lot of young people tend to be lean (yes, even engineers), but jackets are generally cut fuller to accommodate a variety of body types. You should have the jacket taken in so it doesn’t look like a tent hanging from your shoulders.

Here is a page with some good advice on how to select a suit for your body type:
http://www.ev-said.com/2007/08/men-suit-your-shape.html

Now here’s the important part. If at all possible, don’t buy your suit off the rack! Considering that your suit (or suits) is an important investment, you should consider getting a custom tailored suit. Not bespoke, necessarily, but custom tailored (aka “made to order”).

What’s the difference between the two? Well, a bespoke suit involves a tailor who takes your measurements, cuts custom paper patterns, and brings you back for one or two fittings where the suit is tweaked to perfection. Such a process results in a wonderful suit, but it also costs about $4,000 and up, which few people can afford.

The alternative is to go to a tailor who will take your measurements and send them off to lower cost cutters and tailors in Hong Kong, who then assemble the suit to your dimensions. The intermediate fittings are skipped, and you get back a ready made suit in a couple of months. The fit won’t be as perfect as with a bespoke suit, but it will still be far better than anything off the rack, even those that have been altered for you.

These (semi) custom made suits will cost in the neighborhood of $1000, which is within reach for a lot more people. And $1000 is really not that bad for a suit, especially if you are only going to have just one or two made. These suits will last you for years, possibly decades, so you can consider them an investment rather than an expense. And remember, for comparison there are some off the rack designer suits that can cost $2000-3000 or more.

One last piece of advice – if you do decide to shell out $1000 or more for a suit, be sure to keep it stored in a tightly sealed garment bag. Otherwise the moths might decide to feast on the fine wool (which they love), and you’ll be left crying over the newly found holes in your most expensive garment.

Wednesday, July 30, 2008

Blogs I Read

Here are some blogs I read for my own edification, inspiration, or just plain amusement. This is not an endorsement of the points of view on these blogs; I just find myself reading them regularly.

Joel On Software: http://www.joelonsoftware.com

Hiring Technical People: http://www.jrothman.com/blog/htp

Recruiting Blogosphere: http://www.ere.net/blogs/recruiting_blogosphere

Manager Tools http://www.manager-tools.com

Mini-Microsoft: http://minimsft.blogspot.com

High Scalability: http://highscalability.com

TechCrunch: http://www.techcrunch.com

The Old New Thing: http://blogs.msdn.com/oldnewthing

The Dilbert Blog: http://dilbertblog.typepad.com

Tuesday, July 29, 2008

Why I Blog

I see plenty of blogs by recruiters and HR, but I have not seen many blogs that represent the hiring manager’s point of view -- or the candidate’s for that matter. I have been both a hiring manager and a job candidate many times, so my goal is to share my war stories and lessons learned for the benefit of others.

Having said that, I don’t want to completely give away all the secrets of the hiring manager’s trade. I won’t say what I think a fair wage is for an X, Y, or Z position, as that information is highly subjective and dependent on many factors. I also try to avoid naming specific companies I’ve worked for or recruiters that I’ve worked with. Although, depending on how you got to this blog you may have figured out much of that information anyway.

Still, if you’d like to read about specific topics I haven’t covered, or want me to go into more depth on a topic I have discussed in passing, please let me know.

Monday, July 28, 2008

Just What Does HR Do, Anyway?

Someone who has been waiting anxiously for an answer after an interview might be justified in wondering what exactly it is that HR people do all day. After all, how long can it take them to make a decision and process the paperwork? For that matter, is it even in HR’s hands at this point? Probably not.

In most cases HR is only a conduit, a partner with the hiring manager. They may do some light screening of resumes, schedule the interviews, and yes, handle paperwork. And if you do not hear back from the company, it’s most likely because of corporate policy and not the fault of an individual HR person.

I’ve said earlier that if you don’t hear back from a company it’s not because they’ve forgotten about you. Some individuals claim that such things do indeed happen, and that it has happened to them. I won’t dispute that; I can imagine that key people might go on vacation or leave the company, and paperwork might get lost. But I would say that if a company is careless enough to let an applicant fall through the cracks, chances are the candidate is not at the top of the “must hire” list anyway.

Some people have a dismissive attitude towards HR. They consider HR to be clueless gatekeepers who stand in the way of your getting to the hiring manager. And this attitude is seen in both candidates and outside recruiters. This is unfortunate and an unrealistic view of most companies.

At most tech companies HR generally does not consist of technical people. Some of them may have a technical degree, but most are far removed from technology. Still, they are not drones; they are key resources critical for implementing and managing the company’s strategy, work environment, and internal policies. They are often called “HR Business Partners” for good reason; they help technical managers navigate the often treacherous waters of hiring and managing employees.

Friday, July 25, 2008

Not Hearing Back After An Interview

Sadly this practice is becoming more and more commonplace. It used to be in the old days that you would actually get written rejection letter from companies; back when I was in school we’d almost proudly show off the “Ding Letters” as badges of honor. Alas, most companies no longer send even an e-mail rejection letter.

There are two primary reasons companies do not get back to candidates. One is simply that it’s uncomfortable to tell someone they didn’t make the grade (although this was apparently not a problem in the past); another is potential liability. Personally I’ve never heard of a company being sued specifically for sending a candidate a rejection letter, but in our litigious society it’s easy to imagine it happening. People feel aggrieved and victimized for all sorts of reasons, and based on the wording of the rejection letter some candidates may see themselves as victims of discrimination.

My rule of thumb is that if a week goes by after your last interview and you haven’t heard anything back from the company, you should write them off. It might make sense to stretch this to two weeks if you know they are interviewing lots of candidates.

Waiting much longer than a couple of weeks to hear back is fruitless and likely to give you an ulcer. If that much time has gone by and you haven’t heard a peep, they’ve most likely decided to pass on you. If they had been interested in keeping you in the running they probably would have e-mailed you with some apology about the process taking so long.

Some people wonder whether it’s okay to contact the company if they do not hear back after an interview. Generally it’s fine to do this, but I’d predict that 99% of the time you’re not going to like the answer you get.

Thursday, July 24, 2008

Signing Documents Before Starting Work

Most companies will require you to sign various agreements before you start work. Before you blindly scribble your John Hancock on anything put in front of you, you should take a moment to see what you’re signing and what rights you’re giving up. And don’t forget, INAL – so this advice is worth precisely what you are paying for it.

Non-compete clauses are a silly business, especially since they’re generally not enforceable -- at least in California. Generally they are only meant to scare employees away from running into the arms of a competitor. Still, if non-competes concern you, you should ask at the time of the offer whether you’ll have to sign any such forms to work there.

Intellectual Property Protection is where you promise you will not take IP from the company when you leave. The IP can include source code, designs, specifications, and any other documents that may reveal the company’s secrets. This should be reasonable enough; the general understanding between companies is that departing employees can walk out the door with only what’s in their heads.

The Company will also likely want ownership of all your work while you are employed. Beware this can also include your side projects if they are relevant to your company’s field. So for instance if you work for a pest control firm and you design a better mousetrap on your own time, hoping to strike it out on your own and make it big – well, that design may actually belong to the company.

Many companies also forbid working on other for-profit ventures while you are employed with them. This may include consulting gigs on the side, running a micro-ISV (Independent Software Vendor), or serving on boards of directors. However, most will accommodate you and grandfather in any side ventures you already had before joining the company.

Finally, while this is not specifically a document to sign, some companies will ask you to submit to a drug test. This is a sensitive topic, and one that some people have strong feelings about. Personally I’ve worked at a couple of such companies and done drug tests for both of them, so my view should be clear: I wouldn’t let a drug test keep me from taking a job with an otherwise great company. Others may disagree, and I respect their views. But this being a free country, companies are free to test for illegal substances, just as candidates are free to walk away from nosy companies.

Wednesday, July 23, 2008

The Exit Interview

Some companies conduct exit interviews and some don’t. Some do it purely as an exercise. Some do it religiously but only to cover the logistical details, such as ensuring that all company property has been turned in, that they have the person’s mailing address, etc. In all of these cases the companies are missing out on some useful information.

In my experience it’s not at all uncommon for departing employees to hold a grudge against their former employer. Perhaps it’s even the norm at some companies. It would behoove those employers to find out what’s eating away at these employees, as excess turnover is expensive and disruptive.

Some companies have the departing employees do the exit interview with their managers, which defeats the entire purpose of the exercise. The employees really need to have such discussions with HR or some other third party to ensure that they can be forthright and candid about their experiences.

As a departing employee, what should you say or not say in an exit interview? Well, there’s really not a whole lot of damage you can do at this point since you’re already leaving the company. Of course there is a slight possibility that you might return to work there again someday, but that’s not likely for most people. Still, you should remember what I’ve said about burning bridges. What you say to HR seemingly in confidence may very well get back to your manager, so avoid the temptation to incinerate that bridge, no matter how strong the urge.

If you really must get some things off your chest, I’d recommend that you genericise your complaints and not associate them with people, especially your old boss. Refer to them as organizational issues that should be addressed, not personal faults to be thrown back in the face of your superiors. You want your parting comments to sound like constructive feedback for the company, not the mad ventings of a disgruntled troublemaker.

Tuesday, July 22, 2008

The Good-Bye e-mail

When you do leave your job it’s customary to send out a good-bye e-mail. I’d recommend that you trim the distribution list to just the people you know personally. And be sure to BCC: everyone instead of listing out their names so as to avoid any whiff of politics or favoritism. Keep the letter professional, thank everyone for all their help, and provide a permanent e-mail address where people can contact you.

Keep in mind that just because you’re providing your contact information it doesn’t mean you’re offering to answer people’s incessant questions or provide free consulting. It may be courteous of you to answer some basic queries, but don’t feel bad about turning down any requests for extended help.

One thing the good-bye e-mail should not contain is a list of grievances. If you have to things to get off your chest, leave that for an exit interview.

I once had a colleague who wrote us a classic goodbye e-mail, although it’s not one you should necessarily emulate. It went something like this:

“When I left my last job, my teammates gave me as a parting gift a bowling pin with the label ‘AMF’ on it. They told me the letter ‘A’ stood for ‘Adios’, but wouldn’t tell me what the ‘MF’ stood for.”

“I wish I had a bowling pin for each of you.”

Monday, July 21, 2008

Giving Notice & Burning Bridges

I recommend people not give notice at their current employer until they have a written offer in hand from the new company. This may seem a bit silly, since 1) In most cases a verbal offer should be sufficient, and 2) Even with a written offer the new company can terminate your employment at any time, at least in an Employment At-Will state. Heck, they can even withdraw the offer before you start; it’s been known to happen in cases where companies suddenly engage in belt tightening. Still, having a written offer in hand can give you the confidence to psychologically break with your current employer.

Once you give notice it’s natural to mentally check out of your job. However, it’s important to stay focused on your responsibilities during the transition process. Your boss will likely want you to do a brain dump to fellow employees, or perhaps document everything you know.

It may be tempting at this point to thumb your nose at your employer, particularly if you feel like you have been mistreated in the past. However, it’s important to not burn bridges. And this applies not just to your boss but also to the colleagues you work with. Even if you only have light contact with a coworker they may still remember you when you cross paths again in the future. And you want them to recall you in a positive light.

Not burning bridges also applies outside of the resignation scenario. In this industry it’s not uncommon for someone who reports to you to one day to later become your boss, or vice versa. At one job I had a fellow team member who was a sort of my mentor, then became my subordinate, and later became my boss. It’s important to keep on good terms with as many of your co-workers as possible. Or at the very least, don’t piss them off.

Friday, July 18, 2008

Having Second Thoughts

I’ve discussed in the past what a bad idea it is to renege on an offer or accept a counter-offer from your current employer. However, people do sometimes still have second thoughts. And as flaky as people can be (especially here in California), I’ve seen candidates slip away even after accepting an offer. Hence the hiring manager cannot rest easy with a new hire until they actually start on day one.

Speaking from the hiring manager’s perspective here is a list of things candidates can do, ranging from merely annoying to the most truly obnoxious:
  1. Trying to start a bidding war (before accepting an offer)
  2. Trying to renegotiate the salary after accepting
  3. Reneging on the offer for a better offer
  4. Reneging on the offer for other reasons (e.g., didn’t want to relocate after all)
  5. Accepting a counteroffer from their current employer
  6. No-show on the start date – yes, I’ve had this happen!
Some of these actions, especially the ones lower down on the list, are likely to ruin any chance you might have of being hired at the company again in the future.

Thursday, July 17, 2008

The Counter-Offer

If you are at all valuable to your company they will most likely try to keep you onboard by making a counter-offer. However, career advisors are nearly unanimous in that you should never accept a counter-offer. It won’t change the things you were unhappy about at your old company, unless the source of that unhappiness was your salary.

And even if money was the issue, and even if it’s addressed by the counter-offer, your boss will immediately start looking for a replacement for you. Make no mistake about it, you have been tagged as disgruntled, disloyal, and unreliable, and you are living on borrowed time. Your employer just wants to keep you on to reduce any disruptions until they can find someone else to fill your shoes.

The fact is, you will most likely be out of that job within six months one way or another. That’s how it is with most people who accept counter-offers. Even if you think the company won’t hold a grudge, chances are you’re less likely to get promotions and big raises in the future, which will only cause you to start looking again.

Wednesday, July 16, 2008

Accepting the Offer

Most companies these days will give you a day or two at most to accept an offer, or perhaps the weekend. They generally will not give you much more than that out of fear you may shop the offer around.

So what do you do if you a better offer comes in after you’ve accepted? That decision is up to you. There are no hard and fast rules about reneging on an offer. Obviously it doesn’t look good, and it reflects poorly upon your character. Most likely you can kiss any possible future employment at that company goodbye. You will also embarrass and alienate your recruiter as well, if you worked through one. Only you can determine whether such ostracism is a cost worth bearing.

Contrary to what some people in tin foil hats believe though, there is no industry blacklist that companies share about people who have reneged on offers. Some recruiters might keep track of such things internally, but most companies have better things to do than to maintain such lists. So I wouldn’t worry about word spreading too wide about your ill behavior. Still, the more often you pull such this type of stunt the more people are likely to hear about it. Consider it a cumulative stain on your reputation.

In any event, when push comes to shove I would not recommend reneging on an offer unless there is something clearly superior about another offer. If the two are similar except for a few thousand $$ in pay I’d say it’s not worth it, especially since things will generally even out in the long run. But if you are genuinely excited about the second offer and really dreading reporting to work at the first company, then you may just have to go with your gut.

So here’s another scenario; what if you are in the process of interviewing at another company when an offer comes in? Assume that the offer is okay, but you’re really more interested in the other company that has not yet made a decision. You can try asking the offering company to give you a week or two to decide, but most likely they’ll balk at that idea.

In this case (and I’m ABSOLUTELY NOT ENDORSNIG THIS IDEA) you might accept the offer and ask for a delayed start date. This will give you time to complete the interviewing process with the other company, and if you ABSOLUTELY have to, you can accept the other offer if it comes in and renege on the first offer. However, this would be VERY BAD behavior, and one I would not expect the readers of this blog to engage in – right?

Tuesday, July 15, 2008

The Background Check

If you are fortunate enough to earn an offer many companies will make you a verbal offer first, contingent on a background check.

Along with reference checks, companies are increasingly relying on background checks. Usually this is contracted out to a third party; they will check things like your employment history, education, criminal background, and less commonly, your credit history and salary history.

In my company’s case our candidates are told up front they will be put through a background check. They also have to sign a consent form that outlines just what will be checked, and I believe that includes salary history. That may or may be sufficient to extract salary information from previous companies - I don't know since INAL (I’m Not A Lawyer). However, people can't say that they haven't been warned. They are free to decline the verbal offer before the background check begins.

Some might claim this is a violation of privacy, but I don't think it's any worse than Intellectual Property Agreements, Non-Compete clauses, or even affidavits that you are a non-smoker (for insurance reasons). These are all things that many companies require you to sign before you can work there.

And besides, if you really want to talk about a violation of privacy consider that some companies expect you to take a drug test before you start. Fortunately for the 420-friendly readers out there drug tests are becoming less and less common amongst employers.

In any event, the increasing use of background checks means that you can no longer blatantly lie on your resume or exaggerate your salary. This may seem Big Brother-ish, but it should really be seen as a good thing -- at least for those who are trying to stay honest.

Monday, July 14, 2008

References

More and more companies are doing reference checks these days, and it’s a cause of nervousness for some. Still, you should not be too worried about this.

For one thing, companies will generally not contact your references until they are ready to extend an offer. So your references won’t be bothered until the very last stage.

One exception is if recruiters ask for references up front. They have no business doing this, and often they do it to go fishing for new candidates and leads. In those cases you can simply tell them that you can provide references when you get to the offer stage.

Another thing to keep in mind is that reference checking is in most cases a mere formality. Companies do it just to cover their behinds (aka “Due Diligence”), and will usually ask very little of substance to the reference they’re contacting. They might ask how they know the candidate, the candidate’s dates of employment, etc. But if they try to ask about the candidate’s performance, most companies will stonewall the questioner out for fear of liability. In fact, many companies have a policy of referring reference requests directly to HR, who will in turn only confirm things like dates of employment.

So if you are asked for references, who can you turn to? Obviously you wouldn’t want to ask your current boss (although I’ve actually heard of that happening, believe it or not). I’d instead recommend looking to a trusted colleague, or else seeking out a boss from a previous job, one you’re still on good terms with. Generally the hiring companies will not accept your brother, pastor, or drinking buddy as legitimate references – how annoying.

Friday, July 11, 2008

Cost of Living Adjustments for Relocation

I often get candidates from low costs states who insist that the higher cost of living in Southern California warrants a 40% increase in salary. Clearly that’s not practical, or even justified in most cases.

When people talk of a higher cost of living some think that most every purchase will carry a higher price, but that is not so. When comparing the cost of living between two areas, the biggest element by far is the cost of housing. And in that respect, living in SoCal is undoubtedly expensive. Even with the housing bubble bursting around us and a recession in progress, houses here are still far more expensive than in the rest of the country.

Still, the majority of candidates will likely rent instead of buy, at least initially, and apartment prices here are not quite as outrageous, relatively speaking, as housing prices. You should be able to rent a 1-bedroom in most decent parts of SoCal for $1000-1500, which may seem like a lot but is still modest compared to what a mortgage would go for.

So if you are considering relocating to SoCal, or any other region for that matter, I recommend you check Craigslist to get a feel for housing prices in the area before you accept an offer.

Thursday, July 10, 2008

Life Insurance and Long-Term Disability

Many companies offer Life Insurance and Long-Term disability (aka LTD) as benefits. However, in most cases you’ll likely get only bare minimum Life Insurance coverage by default, and LTD may be something you have to pay for out of pocket. So is LTD and additional life insurance worth it? You might think, “I’m young, I’m healthy - nothing could possibly happen to me. Why waste the money?”

I actually got my first management job many years ago when my own manager went on Long-Term disability for Carpal Tunnel Syndrome. It turned into a permanent disability, alas, and I was promoted into that management position. And not only that, another person from that company later went on LTD for the same Carpal Tunnel issue. So it just goes to show, you don’t have to be a skydiver to be at risk of an LTD.

BTW, that company had provided free LTD insurance until then, but as soon as my manager started collecting benefits the premiums for the company apparently shot up, and we had to start paying out of pocket for the coverage.

The same goes for Life Insurance. You may not lead a risky lifestyle, but as they say you never know when you might get hit by a bus. If you are single with no dependents you might think that life insurance is superfluous. However, your parents might have sunk a ton of money into your college education and might be expecting a return on that investment in their old age – so don’t’ forget about them. And of course if you are married or have other dependents, adequate life insurance should be a no brainer.

Wednesday, July 9, 2008

401K Plans

Personally I think the 401K is the greatest thing since sliced bread. It’s one of the few legitimate ways you can reduce the taxman’s bite. And yet many people still don’t participate. Why is that?

Participating in a 401K allows you to defer taxes on your contributions. Even better, many companies will match some portion of your contributions, typically up to about 3-6% of your pay. That’s free money you’re throwing away if you don’t participate. Some companies will make a small contribution on your behalf even if you don’t participate, but even then you’re still missing out on most of the employer match.

Some people claim that putting your money into a (Roth) IRA is a better investment than a 401K. But there’s no reason you can’t do both; first put enough money into your 401K to get the full company match, then put the rest into a (Roth) IRA.

For instance, say your employer matches 50% of your contributions up to 6% of your salary. In that case you should contribute at a 6% rate to get the full 3% company match, then start putting any extra money you have left over into your IRA. And remember, you can always roll your 401K over to an IRA when you leave you current company.

Another anti-401K argument is that when you start drawing on a 401k in retirement you’ll pay taxes on your withdrawals at regular income tax rates (perhaps 28% or so), whereas if you invest in a taxable mutual fund instead, you might only pay 15% on long term capital gains over the years and nothing on the withdrawals. But this argument ignores the tax-free compounding aspect of a 401K. Also, if you put money in a mutual fund you’re paying taxes twice: first in your regular payroll taxes, and then again in the 15% capital gains taxes.

Given these benefits of 401Ks then you can see why I’m amazed that some people still don’t participate. Certain companies have taken the initiative to automatically sign up new employees for 401Ks without requesting their permission. But while I’m a big supporter of 401Ks, I have a hard time agreeing with this approach. It smells too much like Big Brother to me.

Tuesday, July 8, 2008

Relocation Costs

If the company offers you relocation assistance it may be a in the form of a lump sum payment or a selective reimbursement. There are tax differences for the two approaches; you (probably) won’t be taxed on reimbursed moving expenses, but a lump-sum relocation payment will most likely be taxable, though many moving expenses can be deducted from your taxes. But keep in mind, INATA (I’m Not A Tax Attorney).

If you have to sell your house the company may also offer to pay for closing costs, or in a poor market they may even buy your house outright. This is a significant benefit that may be worth tens of thousands of dollars in many cases. However, this type of benefit is more the exception than the norm unless you are an executive level candidate.

You should be aware that the costs for transporting household items can be outrageous, especially for heavy items like furniture. It can easily cost thousands of $ to move a few rooms of furniture across the country. Hence unless you have high quality furniture it may be better to sell it before you move and buy new furniture at your destination.

Finally, keep in mind there are many other costs involved in moving that might not be obvious at first. You should account for these things when considering relocation.
  • House / apartment hunting trips
  • Temporary housing while you find a new home
  • Security deposit and first & last month’s rent at new apartment
  • New furnishings at new home
  • Lost / broken items during the move
  • Lost income while your spouse finds a new job

Monday, July 7, 2008

Other Benefits

Continuing on my previous post, I want to discuss a couple of other non-salary components of the offer.

First, the medical plan. If you are young, single and healthy, you might not care much about medical coverage. If you have a choice you could select the cheapest option (which is always the HMO) and be done with it.

For anyone else, and especially those with families or dependents, I recommend a PPO. Sometimes you might have a choice of two or more PPOs, in which case you should examine the plan details:

  • Medical Premiums. Often it’s $X for an individual, 1.5 - 2X with a dependent, and 3X for a family.
  • Deductibles – Typically you’ll pay around $250-500 each year before insurance kicks in.
  • Coinsurance rate – i.e., the percentage of the insurance covers after the deductible. Typically 80%, or 90% with the better plans.
  • Doctor visit co-pays – The better plans have a fixed amount you pay out of pocket for each visit to a doctor for basic outpatient services. Other plans cover at the standard rate (e.g., 80%).
  • Prescription Drug Coverage – Some plans charge you a fixed amount, as in $15 for generics and $30 for name brands. Others charge a percentage, as in 10% of the total cost for generic s and 20% for name brands.
  • Out of pocket limit – this caps the amount you have to pay out of pocket in a given year; after that the insurance picks up 100% of covered expenses.
Dental and vision plans are usually simpler, and you typically won’t have a choice in those plans – although some companies also offer a dental HMO, which I have never tried.

You may also want to check whether the company offers medical coverage for domestic partners. Plans may also have varying coverage for things like mental health and acupuncture.

Secondly, you should examine the company’s Paid Time Off policy. Many companies still provide unlimited sick leave, but some combine vacation days with sick days. For instance, company A might give you two weeks of vacation and unlimited sick days, and company B might give you 15 days of PTO (Paid Time Off) which you can use as either vacation or as sick days. Hence if you exceed 5 days of sick leave, you’d be better off with the unlimited sick leave option; however, if you rarely take sick days, the combined PTO option would let you take the unused days as vacation time.

Finally, a vanishing breed is something called ”Comp Time” or “Time In Lieu Of”. This is more common at non-tech shops, and it means that for each hour (or two) that you work overtime, you’ll get an hour of vacation time. Alas, in the tech world this benefit is now as elusive as the abominable snowman.

In reality you won’t be able to negotiate the details of most of these benefits since it will be the same package for everyone. But in some cases you might be able to negotiate for more vacation or PTO time.

Thursday, July 3, 2008

Evaluating the Stock Option Package

How should you value stock options that are dangled as part of an offer? To a large part it depends on whether the company is an established public corporation vs. a pre-IPO startup.

If the offer is from an established corporation, you’re not likely to be offered very many options unless you’re an executive. So going in as an engineer you might be offered a token amount, perhaps a couple of thousand shares. And given that an established company’s stock is generally not likely to shoot up like a rocket, the value of those options is likely to be modest at best.

If the offer is from an early stage startup (i.e., pre-IPO), you should value the options differently. You should look at the potential size of the company if it’s successful, and the likelihood that it will go public (or be sold). This of course is very difficult to judge, especially for an early stage startup. Hence you may want to pull some numbers out of thin air (that’s what I usually do).

Consider that a hypothetical situation where you are granted 5,000 stock options with a strike price of 10 cents. Such a grant would not be out of line for a midlevel engineer joining a pre-IPO startup.

Say that after four years your options have vested and the company has gone public at $10 a share. Your capital gain on each option would be roughly $10, for a total of $50,000. After capital gains taxes and state taxes your net take might be $40,000. That’s about $10,000 per year for four years of work, which is a nice bonus but not enough to change your life. And it’s certainly not enough compensation if you had to work like a dog for those four years.

And remember, this is in the case of a positive outcome for the company. There are many companies that burn out spectacularly, and many more that just quietly fold.

My conclusion? Consider stock options to be a perk and not an essential part of the pay package. The only exception is if you come in at the executive level and are offered hundreds of thousands of options.

Wednesday, July 2, 2008

Non-Salary Components of the Offer

An offer is more than just the salary. It may also include the following:
  • Bonus or Profit Sharing plan
  • Stock Options
  • Discounted Stock Plan / ESOP (Employee Stock Ownership Plan)
  • 401K with matching employer contribution
  • Medical Insurance
  • Dental Insurance
  • Vision Coverage
  • Relocation
  • Vacation
  • Holidays & Floating Holidays
  • Sick Leave / PTO
  • Educational Reimbursement / Training
  • Gym / Health Club benefits
  • Free or discounted meals
  • Commuting allowance or discount

A few of these items may seem frivolous, but others are significant and merit additional attention. Don’t be afraid to ask HR for more detail before you accept an offer.

For instance, regarding the Profit Sharing or Bonus, you might want to know the following:

  • When the bonus is paid? Is the payout fixed or is it variable?
  • Is payout based on individual or company performance?
  • What is the historical payout rate?

Likewise, you should get details about the stock option plan if they have one:

  • The total # of shares - and for a startup, the % ownership the stocks represent
  • The vesting schedule for the options (typically 4 years)
  • Any selling restrictions (e.g., a “freeze period” after an IPO).

For a 401K, you should look at the following:

  • What percentage of your contributions will the company match, if any? Some companies will contribute a certain amount even if you don’t’ contribute anything.
  • What is the vesting schedule for the company’s match?
  • What is the maximum % of your pay you can put into a 401K? Some companies limit this to 10% or so.

Tuesday, July 1, 2008

Receiving an Offer On The Spot

Surely all of us have imagined scenarios where we so impress our interviewers that they flat out offer us the job right then and there. But it never happens. Or at least I’ve never seen it happen in any company I’ve worked at.

I have heard of situations where a candidate is told up front (and I was told this myself once) that they might be offered a job at the end of the in-person interview, but then they’d have to accept it or reject it right then and there. That’s a terribly unfair situation to put the person in. Usually the practice is to give a candidate a day or two, or possibly the weekend to accept an offer.

Sometimes the interviewers will say things to make you think you’ve landed the job. But don’t be fooled. They may indeed be impressed with your qualifications, but they will most likely interview multiple candidates, and the next person to sit in your cahir may impress them even more.

My advice? Never assume you have an offer until you have it in writing. Definitely do not stop interviewing elsewhere just because you think you aced an interview, or worse, because you were sweet-talked to by an interviewer.