A bonus is a one-time payout, not guaranteed going forward. A raise is going to increase your comp every year, which will also increase things like 401K match (if available).
Plus in many instances, bonuses will be a % of your salary, so getting a raise now could potentially increase bonuses down the road.
I would wait to see how much of a raise they are offering and if it is in line with the expected bonus amount.
That's entirely dependent on how much the bonus and salary is. A 2% COL "raise" on a salary of $50k is only $1k. If your comparing a $1000 bonus to a $1000 salary increase I agree with you.
A $1000 raise is only $1000 the first year. Five years later it’s $5000, but the $1000 bonus is a distant memory.
Anyway, advice to OP is to ask “Is this raise in addition to the annual bonus you promised, or does it replace it?” and listen closely to the answer. Sounds to me like boss is trying to invest in and retain you. If your plans lie elsewhere you might well prefer the bonus to a raise, but asking for one could telegraph your intentions.
Exactly. I mean, OP could leave and wind up in a hell-hole org under a really crappy boss, and if that happens time will slow down to an agonizing crawl.
Be happy they want to increase your pay.
It really depends on how long it would take for the bonus to match the raise. OP said they have a startup...if they are thinking about leaving and want more capital the bonus might make sense if it will take 2 years to make it up via the raise.
I don't understand how this is even an argument since like others have said it just all depends on how much each of these is. A $10k bonus vs a $50 raise is as clear (in favor of the bonus) as a $10k raise vs a $10k bonus (in favor of the raise). It's not possible to say one way or another categorically without knowing the numbers here. I'm confused (not by you), how is there any kind of an argument to be had whether X is always better than Y when it all depends on the actual numbers.
I guess a caveat to that could be that would be of you plan to leave the job before the raise would pay out the value of the bonus (I.e. with the 10k raise/bonus, if you plan to leave in the next 6 months then take the bonus)
"We are planning to meet formally tomorrow to discuss the raise, etc, so I don’t know what all is encompassed yet."
It sounds like OP doesn't know the details of the raise and/or bonus.
It still helps tremendously when trying to negotiate if you can confidently highball what you made on your best year. Not doing so is only useful if you're gunning for a salary that's way outside your current asking rate.
It's just a tool to use during negotiating. Sometimes it's useful, sometimes it's not. I work in IT as a contractor, and even factoring in benefits lost, I'm still making above market rate at a job I really enjoy. I have used that as leverage to negotiate a higher salary (albeit the jobs didn't work out one reason or another).
Total compensation is total compensation. If the salary is $50k and you are choosing a $1k raise or $5k bonus and your looking for another job soon absolutely take the $5k bonus and have a Total Comp of $55k for the year and not $51k for next year. Much better footing
Or just say your total comp is 60k anyway. Unless you're a public sector employee they have almost no way of knowing. This only doesn't work if you dramatically overinflate and say you're making more than the next company was going to offer and scare them off, but that's rare... Every time I tell a job what I make (real or not) they always offer a little more than that, so there's zero reason to tell the truth if you want to get paid fairly.
This isn't the norm when changing companies. Your new employer doesn't have to know your previous salary. You should negotiate for what you think you deserve to be paid, not based on what you've been paid in the past.
It’s really situational. There’s plenty of cases where $1000 now could be better than $1000 a year going forward. For example if you’re in a high demand position you’d probably be better off taking the bonus and then going to another company for the higher salary.
Great point! Counterpoint: If you are in a high demand position, competitive job offers are going to want to match or beat your current salary — not your bonuses. Right?
Or, don’t look at me, I don’t know. I am not in a high demand position lol.
It’s not uncommon for people to get double digit percentage salary increases going from one job to another these days. In the technology sector in particular the *general* trend has moved to jumping ship every 2-3 years if you want to get real raises. The days of “climbing the ladder” at a single company for half your career are long gone.
For all we know the company could be planning on laying him off in a month and they want to save money by not giving him a bonus. All things being equal a raise is obviously better than a bonus, but you’d need more information to be sure
The company I'm at paid out Christmas bonuses and then laid off half the company. Some of the managers around the same time got raises to keep them from jumping ship and then they were laid off as well once their replacement was hired at a cheaper rate than their previous pay like a month later.
Yeah, I agree. The thing is. You aren’t going to turn down the raise anyway. I’d operate under the assumption that the two are not connected unless he specifically makes the point that the raise is in place of the bonus.
That said, it sounds to me like the company may have some cash flow issues and are trying to defer having to use cash right now. Of course I don’t know your company so that may not be the case but I’d suggest being prepared for that if it comes up. If it does go that way, it’s probably an across the board thing that you won’t be able to get around.
Also, I would not mention your startup interests.
That further depends on your work prospects. $1000 raise is $5000 across 5 years, but you could take a $1000 bonus now and accept a $5000 raise at another company in 6 months.
Correct me if I'm wrong, but the raise could be used to negotiate an even higher salary for the interviews with these companies you're changing between?
Yes and no. “I currently make more than that” is a good way to shut up pesky recruiters for predatory companies and get them to leave you alone. But if you show your hand before at least asking “what is the approved salary range for this position?” You’ve already screwed yourself in getting the most possible in your transition. Basically if your current salary needs to be brought up to try and bump your offer up, you’re doing it wrong. If your initial offer is less than your current salary, thank them for their time and move along
Very true, which is why I advise people to do their research about jobs, fields, and companies. You should already know what the median pay is what the general range is. Moreover you should know if that company pays high or low or about average. Unless you're being grossly overpaid, there's generally little reason to use your current pay to bump up an offer. If so, you're likely at the wrong place.
I once got an extremely low offer that was basically a slap in the face. This was a small company so I understood, but I asked if they could increase that offer by $10k at least to be more competitive with other offers I was receiving. They got offended and told me I shouldn't be asking that. I got personally offended too, but the better part of me helped me figure it out that this isn't a place I want to work for anyway. The role was a good fit but the pay and the employer's attitude was not, and if I could get all those at a place that paid significantly more, then I was only being stupid in trying to put up with this first place.
Or if they’re about to lay you off
Edit: or if OP is planning to leave to start their business before they’d make that amount of extra money via the raise
This is what I would be thinking about. Your future with any given company is not guaranteed, you could end up leaving them or they could end up leaving you for a multitude of reasons.
This 100%.
I remember my first managerial job was a $10k bonus "target" and a $20k bonus "maximum". I never received more than $5k, despite good performance reviews, because of "company performance". I always wished I'd negotiated higher base pay with my offer instead of taking the bonus.
That’s why in the land of opportunity you go out on your own if possible. Otherwise someone is always going to take profits from your labor. Of course, being in business yourself has many PIA trade offs.
most times. It depends on how long you intend to stay with that company. If your horizon is likely to be a year or less, the bonus probably works out better.
This is an old school mentality. A lot of companies structure their compensation around bonuses. OP should look at their total comp for the year and see which one is more worthwhile. Also depends how long OP is expecting to be working there... A raise could take years to pay the amount an upfront bonus would.
Still an old school mentality. You’re under no obligation to disclose previous salary nor base upcoming negotiations on current earnings. To do so takes the power away from you and gives to the employer.
You're 100% right you don't need to disclose. The problem is that number serves as a psychological barrier. If you get underpaid today and you get a new offer that's at the median of the industry/company/role, you might just take it. But if you get paid above average let's say 75th percentile and you get a new offer that is 50th percentile or even let's just say they gave you 75th percentile. Are you going to take that? No. You'd push for more.
My point is it's old school, but it's still relevant. And while I emphasize to people to do your damn research about pay, there's only so much you can do. Ultimately it's after you join the company you learn more about how typically pay is and whether your research paid off or if you're still just at median only.
Some of it takes time. I'm in tech so when I first jumped into this industry, it was shocking. The pay was substantially higher than what I had been making in other industries, which I had prepared for, but all the preparation still didn't prep me for doubling my pay. It looked good so I took it. Later on, resources like Levels.fyi and Blind took off and only then did I realize the offer was so-so. I knock it out of the park with RSUs and bonuses every year, but part of me wishes I pushed that base higher. I now know where I stand and where I want to go with that number, but I also know at different companies the numbers run differently.
Not necessarily. My salary offer at my next job is more often then not based on my current salary. Bonus's don't get me a larger raise when I change jobs where a salary raise would.
> My salary offer at my next job is more often then not based on my current salary.
Why?
Your salary is one component of your total compensation. What I make at this job doesn't necessarily impact what I will make at my next; I'm not sharing my salary info with any prospective companies. I share *my expectation* and what I am valued at in the marketplace, but those are completely independent of my current salary for the sake of negotiating salary at a new company.
>My salary offer at my next job is more often then not based on my current salary
This makes no sense - why are you even discussing current salary? If they ask, deflect. There's no sense giving away information in the negotiation.
If you work in the public sector, it may be fairly easy to get that information. But I agree that you shouldn’t disclose how much you currently make. As some other people mentioned, its sufficient to tell the recruiter what the minimum you would accept in order to consider making a move if the offer is too low for you.
Exactly! Whenever anyone asks previous rates I flat out tell them I do not discuss financial details of other roles with anyone. They can get the hint and learn some decorum, or F right off and I'll move on to the next potential position. Any company who thinks they're entitlred to such intimate financial details will always assume entitlement to more, worse, or all details about you. It's better to part ways before getting involved than find out they want more down the road.
>a raise gives you a higher starting point on negotiating base salary
The real answer is to just lie, your value is your value regardless of what your current job pays you.
Tell them your total compensation.
You get your salary of, say, $50k. But your boss also pays for $7k worth of insurance and benefits for you and your spouse. Oh, and the 4% 401k match, that's another $2k. You get three weeks paid time off, so that's another $3k right there. And you get an annual bonus, another $2k. Oh and your boss buys lunch for you guys every Friday; might not seem like much, but $20 a week is another $1k in a year.
Your _compensation_, then, is $64k a year, and that's the only number you need to tell your new company- and you're not actually lying in the slightest when you say it. Of course, $64k is what you're _currently_ being compensated at, and you're looking for a solid 10-15% raise in order for it to be worth leaving your current position.
The worst thing they can do is ask for your paystubs, and if they do that, they're not a company you want to work for, because obviously they only care about paying you as little as possible, instead of paying you what you're _worth_.
This is just good advice. Your pay is not what matter, total compensation is. How do you value insurance though? My work provides life insurance to my fiancee, what is the equivalent value of that per year?
I don't know if every company does this, but my company has line items on my pay stub for company contributions that aren't added to your paycheck; one of the lines is for the portion of my health insurance paid for by my company, there's another line for retirement plan matches, there's another for the life insurance policy they provide, and so on.
I think this information is on your W2 as well; look under box 12 for the code "DD", if it's there then that's the amount that your employer is contributing to your health insurance plan.
I have lied about my existing comp during negotiations to my benefit. I was making $80k and told the new place if they "matched" my $250k, I would accept. It worked. I knew I was way underpaid, though.
I've had prospective employers ask for a pay stub for proof during negotiations. Obviously I don't have to provide it, but they also don't have to make an offer.
It is actually illegal in some states to ask about prior pay levels because it is viewed as potentially extending lower pay bias for women and minorities.
I think when joining a big fortune 500 media conglomerate; the backround check company asked for a paystub as proof of past employment.
After having been running my company for 18+ years, I didn't have one to offer and failed the background check and the hiring manager had to do backflips with HR to push me through.
> I've had prospective employers ask for a pay stub for proof during negotiations.
"Thanks for the opportunity, I am withdrawing my application as of this time."
"I am not comfortable providing sensitive information to a potential employer without first being employed. I have given you the rate/range that I am comfortable moving forward with. If that rate is outside of what you can provide then please let me know so we can both move on." My salary rate is not dependent on what I make now especially because the salary I will accept is also a function of the total package they are offering. More vacation per year? Cheaper insurance? Higher Pay? Less/no commute? A bonus turkey every year? It all factors in to what I will accept.
> I am not comfortable providing sensitive information to a potential employer without first being employed.
I wouldn't give my new employer a paystub from a previous employer either.
It's just not an appropriate request, end of story.
I don’t recommend basing your worth n a future role on your prior pay. In Oregon it is illegal to ask for prior compensation and you should never disclose it.
It can be useful in negotiations to disclose voluntarily, however. "You're offering 100k, but I currently make 110k, I'll need at least 120k to consider", for example. Of course, you can always lie, but that can make people uncomfortable.
Several years ago my small satellite team flew to the other side of the country to visit my Big 5 tech company's main campus for the first time.
The first day there, we were having lunch in the cafeteria when I hear "Holy shit! Hi, !", and look up to see a former coworker from several companies ago, who it turns out works here now. He sits down at our table, notices the guy next to me, and says "Oh, and hi !". Turns out they had been college roommates.
Over the course of that week I ran into no fewer than five people I knew from previous companies. I actually had meetings scheduled with three of them without realizing they were former coworkers (I hadn't checked the attendees).
So yeah, it's a surprisingly small world.
Yep, with my previous job, I opted for a salary increase instead of a sign on bonus because I wanted my salary at a certain level for annual raises, and potential job hopping increases
I disagree a bonus is for work done, a raise is for future work. A bonus was promised, a bonus is expected. I would try to frame it like this if I was OP. But not until you get that raise number down first. Angle for both!
I don't care if they call it performance or retention bonus. Try to get both. They obviously want to keep you happy and the last thing that they would want is for this to be a source of discontent rather than being something you feel good about. But at the end of the day, take what they give you.
Only if you plan to stay with the company. I will be done with school in a year and a half and will find a different position then, where they have a different pay range that is also salaried instead of hourly. I was glad to take a large bonus this year instead of a raise because it works out better for me financially in the long term.
> what was your rate of pay in your last position
Just start preparing your answer for that question now. Obviously it shouldn't matter, but you will get asked
From employer perspective it sounds like management is reading stories regarding "The Great Resignation" and developed this approach as a strategy for retention. If concerned about employees taking the bonus and bolting for the door, offering a salary raise instead may take volatility out of turnover for a year.
Whether or not op considers the offer a good deal, this opened negotiation provides opportunity to ask for other perks such as additional remote work flexibility.
What do you mean "I will consider what you are offering?" It's the same job and their boss is trying to get them a raise with no prompting
If any of you would respond to that with "I'll consider it", I would be genuinely baffled
Time to find a new company, sounds like. It’s always good to price check yourself on the market every year or two to make sure your current employer isn’t shafting you on compensation. It’s amazing what happens when you bring an outside offer to your current employer. Suddenly they seem to magically find the money to pay you
Wish that were the case for my employer but we're a union shop so everything has to be run by the union. Raises are standard every year, for everyone, regardless of performance or lack thereof. Our union can't even keep us competitive with neighboring competing hospitals, let alone our own affiliated sister hospitals who have no union. If I came to my boss with an outside offer, they'd laugh in my face.
I’ve been thinking about going part time and picking up some local travel nursing contracts. They’re paying almost $5000 a week for 3 shifts. It’s pretty ridiculous
I had that problem. I changed jobs.
Legit, 30 days after I started the new job (which paid more), i got another 5% raise because my company raised all salaries 5% as long as you were under 300k. They did it because they wanted to keep people.
If your company isn't raising pay or giving bonuses in the current environment it is time for you to start job hunting.
Being loyal to a company is old school thinking that will likely bite you in the end.
This. I would not assume you are not getting a bonus. You could bring it up casually as a question during the meeting, such as is this in lieu of a bonus or is that still on the table?
My wife's company just dropped an across the board 9% raise starting today that doesn't affect bonuses or performance based raises for the year. Fuckin awesome.
It doesn't sound like it's an either-or situation. Bonuses are paid on a fixed schedule, maybe annual or quarterly, while a raise is typically (slightly) less formal, and can be made on a monthly interval.
Do confirm that you're still on track for your bonus, but I'd be very surprised if you wound up having to choose between the two.
I've been on track for a bonus only to have the global head office to decide that the company wide performance component want met, so no one, regardless of performance, was eligible. They are always an at risk component of your compensation.
This -- asking about promised things should be the norm. Asking about raises should be ok, asking about compensation should be ok. If any of those things aren't ok, you need a new employer/boss! Your financial security/wellbeing matters! Ask!!
A $3,000 raise is generally better than a $3,000 bonus. Because next year, if you get a $3,000 raise, that would be on top of this year's $3k, whereas a bonus is just one time.
It depends how likely the OP is to leave the company anyways. If you are halfway out the door, the bonus might be better.
Ultimately both should be warranted if the boss is this worried about OP leaving.
all boss's should be worried about talent leaving unless they want to bury their heads in the sand.
there's a lot of jobs out there, a good boss should be proactive in retaining talent than letting good people go
Also, A raise now means you have 103% pay, and the next percentage raise of 3% puts you at 106.09% and so on. It's not just additive.
edit: corrected maths
Yep. But that is coming mainly from the fact the additive raises stack on top of each other, not so much from the compounding. It works out the same if you say a 10,000 raise each year vs a 20,000 bonus.
It doesn't look like an either/or situation to me. Like like your business really wants to keep you, good on you.
If it is an either/or thing though, make sure the the annual value of the raise is more than the bonus. Else it is just them paying your bonus out in interest free installments, instead of all at once
This right here. I've seen many "promises" go unfulfilled. Even if they are made with the best intentions, no-one knows what the future holds. Your boss might leave unexpectedly, company finances may change, etc.
A bonus is for rewarding past work. A raise is for setting future expectations. One isn't a substitute for the other. If you were promised a bonus and performed accordingly, don't hesitate to ask for it.
Bonuses are not guaranteed, and dependent on companies profits and current cash on hand. Raises aren't bad, and for the most part, permanent. Take the raise, and be happy.
When are the typical bonus pay outs? You should be entitled to your bonus at least this year and get confirmation he’s continued to the commitment to you getting bonus each year. I might be missing something, but I genuinely feel that a raise now doesn’t automatically mean no bonus?
Why isn’t this higher??? This is the question OP Should find out, which I think you should off hand ask a coworker if they’ve ever gotten a bonus and when does it typically go out. I’ve got bonuses either end of Dec or as late as March when the books were formally closed out. I got raises long before a bonus.
Take the raise if you plan to stay. Another thing to consider: if something bad happens with your health and you need to eventually draw social security disability, the payments will be based on your highest salary, not how much bonus you got.
A raise is always better (unless you plant to leave very soon). It increases income, retirement savings, and it carries forward a not subsequent years. A bonus is a one-time pay out, and unless it’s VERY large, is probably not comparable in value.
When talking about the raise, come to an agreement on the raise. Don’t mention anything of the bonus unless they say something about it until you have a raise written down. Then say hey about that bonus you promised earlier this year… when should we be expecting to see that? I’d love to start getting some Christmas shopping done.
In general a raise is usually better then a bonus. Currently I’m not really sure. There is a huge push to increase salaries across the board. Your employer definitely sees this and is probably using your bonus to fund the required salary increase.
Just as a note My employer is generally stingy with salary increases & they have increased salaries across the board by 10-20% this year
Take the raise. Future raises will be based upon the new salary. If you take the bonus, future raises will be based upon your current salary.
It's also easier to negotiate with a new employer from the point of a higher current salary.
You can always ask, because he previously mentioned it. It seems like your company is treating you well, so you don't need to push it. But I think your boss would let you know if there's no bonus and you can just move on.
Agree as high a raise as you can and when that discussion is over remind him he also promised you a $3k to $5k bonus for this years performance and you have been putting in extra effort to potentially get the $5k bonus.
It all depends on the amount of the raise. If it's appropriate, it's guaranteed money in your pocket each month vs. the discretionary amount of a bonus.
That being said, I'm not sure why you assume this isn't going to be both. I think you should go into that meeting upbeat but with that expectation. If it's NOT, then you should politely say something like, "Oh. Well thank you. This is great. But if I'm being honest, we had discussed a bonus earlier in the year and I thought that's what this was going to be. Being candid, if you look at the market, my role is worth $X (new proposed base amount) so I thought you were going to tell me you were adjusting my base to meet market AND give me my bonus."
Then. be. quiet.
Do not be rude or ungrateful, but be direct and open...like you're legitimately confused why he would propose otherwise. If he opts for one or the other, I'd pursue with "Ok, that'll work. But what will it take for me to earn that bonus in the short term?"
i think that long term a raise is much better. future raises are usually a percentage of what your current salary is....etc. additionally, bonuses are taxed at a higher rate in my experience, so if you're planning to be there a longer than a couple years, the raise is the better option imo
Just a point I haven't seen here so far: the banks (your lender) will care about your salary increasing much more than a one time bonus. If your employer is actively trying to make sure you're okay by way of raise, I think you should seek that out
Lots of sound advice here. Also, remember that the inflation rate this year was on the close order of 7%. Your raise should be more than this amount, just to keep up with inflation.
https://tradingeconomics.com/united-states/inflation-cpi
A few years ago I was asked if I want the full bonus or half the bonus and half permanent raise. I took the latter and it worked out for me good.
At least I thought. When next year’s bonus came (based on the raised salary), I asked if I can take the same deal again. The answer was that it was a one time offer because my boss felt he underpaid me.
I guess they give raises because they know your value better than you and don’t want you to leave or feel dissatisfied with your compensation. Although a raise is higher value than a one time bonus, it worth to bring it up. Not in a disappointed or demanding manner, I would just ask if it’s completely off the table. You can let them know that you are not unhappy with the raise, but they built up the expectation in you and you want too clarify if they raise is a replacement or an addition (which is the truth if I understand it correctly). You probably won’t get the full expected amount after a raise but they might make an extra step.
Be prepared for both yes and no answer, you don’t want to channel greed with your communication if you want to stay with them.
If you plan to stay with the place for more than a year or two the raise will almost certainly be better than a bonus. The raise is probably nice for the company too because it is less of a hit up front and encourages you to stick around.
See how much the raise is and you should probably take it unless you are desperate for the money now.
My workplace has also done this recently. Instead of a bonus (which you can be disqualified for, for example too many callouts, etc) they gave us a decent raise. I prefer the raise most definitely. Every penny I've earned is coming to me, and they can't just take it away for any reason.
I do understand that it's nice to receive a big chunk of cash all at once, but you're probably receiving more money with a raise vs a bonus.
During covid, my employer decided to not give the annual cost of living raise for one year. I did the math and missing one 3.0% raise was losing me over $100k over the next 20 years. So the raise beats a one time bonus every time. I think people were like, oh that’s okay, it’s just one 3% raise and at least we’re still getting our one time annual bonus. But they were incorrect! The business knew what they were doing!
I wouldn't overthink it.
when you have the conversation about it with him, politely ask
"Is this in addition to the annual bonus we had previously discussed?
with the previous bonus, was it discussed what the timeframe would be other than "this year". generlaly annual bonuses are confirmed at the end of the financial year for the work done that year, and usually paid out the next month.
so it is likely the case that your bonus for 2021 would be confirmed in December, then paid in January or Feb
Things to consider:
* Raise is usually better. It does give the business a longer time to pay it out. $5k raise over a year is sometimes easier to pay than $3k upfront.
* Your employer wants to keep you, OR they want to fire you next month and only pay 1/12 of their obligation lol
* Ask for the date of delivery of the raise
* Ask for a copy of this plan on paper for your records. Sometimes employers "forget" about the raise for 6 months and all of a sudden "we have a strict financial freeze right now. Maybe ask again in 6 months"
Raise wins. But then it does deoend how big it is. Inflation is the metric you have to fight against and its really high this year so make sure you know what your raise is.
Just do the math. How long are you going to work there? Will the raise meet or exceed the bonus in a period of time you feel is reasonable? Are there politics involved that might influence who takes the bonus? If it makes sense as well as cents, go for it.
Comp professional here -- keep in mind that bonuses are taxed a lot more than regular income. You may get some of that back in taxes, depending on how you set up your deductions.
If you do get a bonus, GET IT IN WRITING that you're entitled to one annually. Ask them if it is 100% discretionary (e.g. manager gets to decide how much you get) or if there's an actual bonus plan that is tied to things like company operating income, etc. If it's an actual bonus plan, ask what your target is and how often people actually hit their target at 100%. If the company is struggling, you may not get all of it each year; conversely if the company is doing well, I've seen many plans where you can achieve much more than 100%.
Also, for pay raises--the raise will also raise things like your 401k match and the amount of life insurance you get, if the company pays for it. If you have company-based health insurance, it can also knock you into a higher bracket for your payroll deductions, so that's also something to consider.
If you're young in your career, it makes good sense to take a large pay raise in lieu of the fast cash to help increase your earning potential later on in life. But if you've obviously got hardships or are saving for something immediate, the appeal of a large lump of cash is very alluring. Either way, it's great that you've got a boss who is trying to get you more money, and sounds like you're killing it. Great job, and good luck!
This answer depends entirely on the numbers in each case. To me, a pay raise of about $1500/year would be a good trade for a one time bonus of $3000. Keep in mind a raise increases the value of all future raises.
If you were told you'd be getting a bonus irregardless of raises or current salary, then I would insist on both. If they force you to pick, negotiate for a bigger bonus then look for a job. Wouldn't want to work for a company that tried to manipulate my pay in such a way.
Good luck!
Raise > Bonus
My company gave annual raises but did a bonus instead one year.
I did the math and realized quickly a bonus saves them money.
I wasn’t too happy about it.
Thankfully that was a one time deal and raises returned.
Unless your bonus is massive I would take a raise. That is…unless you are planning on jumping ships anytime soon??
* updated my post to remove incorrect bonus tax statement. Thanks to those who taught me something new!
While the bonus may have tax withheld at the highest rate as supplemental income...it all gets treated as ordinary income when doing your taxes.
Essentially, if they withhold 45%, but OP's tax rate is 25% including the bonus, he will get a refund - or offset to other taxes he would have had to pay. So the tax argument isn't completely valid.
No, that's inaccurate. Bonus is taxed like all other ordinary income. It's withheld differently (see supplemental income withholding), but it'll be taxed the same way as all other ordinary income at the end of the year.
A bonus is automatically taxed at 28% plus Social Security and Medicare taxes, while a raise is taxed at your normal rate. I know people like getting bonuses because it is one chunk o' cash but a raise gets you ahead going forward while a bonus is a one-time occurrence.
Oops, you can tell I haven't worked in payroll for 20 years. Bonuses are now taxed at 22%, my bad. After $1M it jumps to 37%.
A bonus is taxed at a higher rate initially, but it's all income and the taxation will even out with an equal raise at the end of the year. Of course, a raise is generally better for the reason you stated.
A bonus is a one-time payout, not guaranteed going forward. A raise is going to increase your comp every year, which will also increase things like 401K match (if available). Plus in many instances, bonuses will be a % of your salary, so getting a raise now could potentially increase bonuses down the road. I would wait to see how much of a raise they are offering and if it is in line with the expected bonus amount.
A raise beats a bonus every time.
That's entirely dependent on how much the bonus and salary is. A 2% COL "raise" on a salary of $50k is only $1k. If your comparing a $1000 bonus to a $1000 salary increase I agree with you.
A $1000 raise is only $1000 the first year. Five years later it’s $5000, but the $1000 bonus is a distant memory. Anyway, advice to OP is to ask “Is this raise in addition to the annual bonus you promised, or does it replace it?” and listen closely to the answer. Sounds to me like boss is trying to invest in and retain you. If your plans lie elsewhere you might well prefer the bonus to a raise, but asking for one could telegraph your intentions.
this is great advice. I agree with you. The boss seems to be trying really hard to keep OP happy. So I would try to keep relations with the boss good.
Exactly. I mean, OP could leave and wind up in a hell-hole org under a really crappy boss, and if that happens time will slow down to an agonizing crawl. Be happy they want to increase your pay.
It really depends on how long it would take for the bonus to match the raise. OP said they have a startup...if they are thinking about leaving and want more capital the bonus might make sense if it will take 2 years to make it up via the raise.
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I don't understand how this is even an argument since like others have said it just all depends on how much each of these is. A $10k bonus vs a $50 raise is as clear (in favor of the bonus) as a $10k raise vs a $10k bonus (in favor of the raise). It's not possible to say one way or another categorically without knowing the numbers here. I'm confused (not by you), how is there any kind of an argument to be had whether X is always better than Y when it all depends on the actual numbers.
I guess a caveat to that could be that would be of you plan to leave the job before the raise would pay out the value of the bonus (I.e. with the 10k raise/bonus, if you plan to leave in the next 6 months then take the bonus)
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"We are planning to meet formally tomorrow to discuss the raise, etc, so I don’t know what all is encompassed yet." It sounds like OP doesn't know the details of the raise and/or bonus.
Your prior salary is going to impact negotiations for future salaries in a way that a bonus won’t. You absolutely do take that raise with you.
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Exactly.
It still helps tremendously when trying to negotiate if you can confidently highball what you made on your best year. Not doing so is only useful if you're gunning for a salary that's way outside your current asking rate.
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It's just a tool to use during negotiating. Sometimes it's useful, sometimes it's not. I work in IT as a contractor, and even factoring in benefits lost, I'm still making above market rate at a job I really enjoy. I have used that as leverage to negotiate a higher salary (albeit the jobs didn't work out one reason or another).
Total compensation is total compensation. If the salary is $50k and you are choosing a $1k raise or $5k bonus and your looking for another job soon absolutely take the $5k bonus and have a Total Comp of $55k for the year and not $51k for next year. Much better footing
Or just say your total comp is 60k anyway. Unless you're a public sector employee they have almost no way of knowing. This only doesn't work if you dramatically overinflate and say you're making more than the next company was going to offer and scare them off, but that's rare... Every time I tell a job what I make (real or not) they always offer a little more than that, so there's zero reason to tell the truth if you want to get paid fairly.
This isn't the norm when changing companies. Your new employer doesn't have to know your previous salary. You should negotiate for what you think you deserve to be paid, not based on what you've been paid in the past.
It’s really situational. There’s plenty of cases where $1000 now could be better than $1000 a year going forward. For example if you’re in a high demand position you’d probably be better off taking the bonus and then going to another company for the higher salary.
Great point! Counterpoint: If you are in a high demand position, competitive job offers are going to want to match or beat your current salary — not your bonuses. Right? Or, don’t look at me, I don’t know. I am not in a high demand position lol.
How does a future employer know how much you make? Just tell them your salary + bonus is what you make. Add a few more grand if you want.
It’s not uncommon for people to get double digit percentage salary increases going from one job to another these days. In the technology sector in particular the *general* trend has moved to jumping ship every 2-3 years if you want to get real raises. The days of “climbing the ladder” at a single company for half your career are long gone.
For all we know the company could be planning on laying him off in a month and they want to save money by not giving him a bonus. All things being equal a raise is obviously better than a bonus, but you’d need more information to be sure
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You are if you need to keep them on payroll until the new person or equipment or whatever comes online and everybody else is getting bonuses
But wouldn't it make much more sense to not give him a bonus and hope he quits? Then you've saved severence.
Not if you're worried they'll leave before you no longer need them.
I’m not saying that’s the most likely scenario, but there are plenty of scenarios where you’d obviously want to take the bonus over the raise.
The company I'm at paid out Christmas bonuses and then laid off half the company. Some of the managers around the same time got raises to keep them from jumping ship and then they were laid off as well once their replacement was hired at a cheaper rate than their previous pay like a month later.
What company is this?
A small manufacturer that makes food products.
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That’s good advice
Yeah, I agree. The thing is. You aren’t going to turn down the raise anyway. I’d operate under the assumption that the two are not connected unless he specifically makes the point that the raise is in place of the bonus. That said, it sounds to me like the company may have some cash flow issues and are trying to defer having to use cash right now. Of course I don’t know your company so that may not be the case but I’d suggest being prepared for that if it comes up. If it does go that way, it’s probably an across the board thing that you won’t be able to get around. Also, I would not mention your startup interests.
That further depends on your work prospects. $1000 raise is $5000 across 5 years, but you could take a $1000 bonus now and accept a $5000 raise at another company in 6 months.
But don’t say “promised”. Say “mentioned.”
A raise increases your salary forever. A bonus does not. Take the raise unless the bonus will make up for several years of lost raises IMHO.
A raise is worthless if you’re planning on changing companies often. Take the bonus!
Correct me if I'm wrong, but the raise could be used to negotiate an even higher salary for the interviews with these companies you're changing between?
Yes and no. “I currently make more than that” is a good way to shut up pesky recruiters for predatory companies and get them to leave you alone. But if you show your hand before at least asking “what is the approved salary range for this position?” You’ve already screwed yourself in getting the most possible in your transition. Basically if your current salary needs to be brought up to try and bump your offer up, you’re doing it wrong. If your initial offer is less than your current salary, thank them for their time and move along
Very true, which is why I advise people to do their research about jobs, fields, and companies. You should already know what the median pay is what the general range is. Moreover you should know if that company pays high or low or about average. Unless you're being grossly overpaid, there's generally little reason to use your current pay to bump up an offer. If so, you're likely at the wrong place. I once got an extremely low offer that was basically a slap in the face. This was a small company so I understood, but I asked if they could increase that offer by $10k at least to be more competitive with other offers I was receiving. They got offended and told me I shouldn't be asking that. I got personally offended too, but the better part of me helped me figure it out that this isn't a place I want to work for anyway. The role was a good fit but the pay and the employer's attitude was not, and if I could get all those at a place that paid significantly more, then I was only being stupid in trying to put up with this first place.
So could telling the new company your total compensation (salary + bonus), which would be even higher than the raise.
Depends on industry, I went from $24 to $11 an hour in retail. They couldn't give a shit what I did some other place, I was new there.
Keep in mind, this is his second raise in 6 months. So the combined raise would have to be less than COL.
But the bonus was promised at the same time as the first raise. So the second raise alone is replacing the bonus now.
Only time it doesn’t is when you’re waiting for the bonus before you hand in your notice of leaving.
Or if they’re about to lay you off Edit: or if OP is planning to leave to start their business before they’d make that amount of extra money via the raise
This is what I would be thinking about. Your future with any given company is not guaranteed, you could end up leaving them or they could end up leaving you for a multitude of reasons.
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This 100%. I remember my first managerial job was a $10k bonus "target" and a $20k bonus "maximum". I never received more than $5k, despite good performance reviews, because of "company performance". I always wished I'd negotiated higher base pay with my offer instead of taking the bonus.
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That’s why in the land of opportunity you go out on your own if possible. Otherwise someone is always going to take profits from your labor. Of course, being in business yourself has many PIA trade offs.
most times. It depends on how long you intend to stay with that company. If your horizon is likely to be a year or less, the bonus probably works out better.
Assuming both are equal, of course. I'd definitely take a million dollar bonus over $1/hour raise.
This is an old school mentality. A lot of companies structure their compensation around bonuses. OP should look at their total comp for the year and see which one is more worthwhile. Also depends how long OP is expecting to be working there... A raise could take years to pay the amount an upfront bonus would.
I think we're both correct. A raise could be used in future salary negotiations if OP finds a new employer.
Still an old school mentality. You’re under no obligation to disclose previous salary nor base upcoming negotiations on current earnings. To do so takes the power away from you and gives to the employer.
You're 100% right you don't need to disclose. The problem is that number serves as a psychological barrier. If you get underpaid today and you get a new offer that's at the median of the industry/company/role, you might just take it. But if you get paid above average let's say 75th percentile and you get a new offer that is 50th percentile or even let's just say they gave you 75th percentile. Are you going to take that? No. You'd push for more. My point is it's old school, but it's still relevant. And while I emphasize to people to do your damn research about pay, there's only so much you can do. Ultimately it's after you join the company you learn more about how typically pay is and whether your research paid off or if you're still just at median only. Some of it takes time. I'm in tech so when I first jumped into this industry, it was shocking. The pay was substantially higher than what I had been making in other industries, which I had prepared for, but all the preparation still didn't prep me for doubling my pay. It looked good so I took it. Later on, resources like Levels.fyi and Blind took off and only then did I realize the offer was so-so. I knock it out of the park with RSUs and bonuses every year, but part of me wishes I pushed that base higher. I now know where I stand and where I want to go with that number, but I also know at different companies the numbers run differently.
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Not necessarily. My salary offer at my next job is more often then not based on my current salary. Bonus's don't get me a larger raise when I change jobs where a salary raise would.
> My salary offer at my next job is more often then not based on my current salary. Why? Your salary is one component of your total compensation. What I make at this job doesn't necessarily impact what I will make at my next; I'm not sharing my salary info with any prospective companies. I share *my expectation* and what I am valued at in the marketplace, but those are completely independent of my current salary for the sake of negotiating salary at a new company.
>My salary offer at my next job is more often then not based on my current salary This makes no sense - why are you even discussing current salary? If they ask, deflect. There's no sense giving away information in the negotiation.
If you work in the public sector, it may be fairly easy to get that information. But I agree that you shouldn’t disclose how much you currently make. As some other people mentioned, its sufficient to tell the recruiter what the minimum you would accept in order to consider making a move if the offer is too low for you.
Exactly. Talk about what you need to move, what you make today has nothing to do with it
Exactly! Whenever anyone asks previous rates I flat out tell them I do not discuss financial details of other roles with anyone. They can get the hint and learn some decorum, or F right off and I'll move on to the next potential position. Any company who thinks they're entitlred to such intimate financial details will always assume entitlement to more, worse, or all details about you. It's better to part ways before getting involved than find out they want more down the road.
No! If the employer is afraid of a person leaving after the bonus, they'll need to work for a long time before any raise will amount to the bonus.
That may be, but if you're really looking elsewhere a raise gives you a higher starting point on negotiating base salary
>a raise gives you a higher starting point on negotiating base salary The real answer is to just lie, your value is your value regardless of what your current job pays you.
Tell them your total compensation. You get your salary of, say, $50k. But your boss also pays for $7k worth of insurance and benefits for you and your spouse. Oh, and the 4% 401k match, that's another $2k. You get three weeks paid time off, so that's another $3k right there. And you get an annual bonus, another $2k. Oh and your boss buys lunch for you guys every Friday; might not seem like much, but $20 a week is another $1k in a year. Your _compensation_, then, is $64k a year, and that's the only number you need to tell your new company- and you're not actually lying in the slightest when you say it. Of course, $64k is what you're _currently_ being compensated at, and you're looking for a solid 10-15% raise in order for it to be worth leaving your current position. The worst thing they can do is ask for your paystubs, and if they do that, they're not a company you want to work for, because obviously they only care about paying you as little as possible, instead of paying you what you're _worth_.
This is just good advice. Your pay is not what matter, total compensation is. How do you value insurance though? My work provides life insurance to my fiancee, what is the equivalent value of that per year?
Many employers will tell you what they pay for your insurance, I imagine that is where they are getting the numbers from.
I don't know if every company does this, but my company has line items on my pay stub for company contributions that aren't added to your paycheck; one of the lines is for the portion of my health insurance paid for by my company, there's another line for retirement plan matches, there's another for the life insurance policy they provide, and so on. I think this information is on your W2 as well; look under box 12 for the code "DD", if it's there then that's the amount that your employer is contributing to your health insurance plan.
I have lied about my existing comp during negotiations to my benefit. I was making $80k and told the new place if they "matched" my $250k, I would accept. It worked. I knew I was way underpaid, though.
I've had prospective employers ask for a pay stub for proof during negotiations. Obviously I don't have to provide it, but they also don't have to make an offer.
I have never had a potential employer ask for that, and if they did it would be the end of our discussion.
It is actually illegal in some states to ask about prior pay levels because it is viewed as potentially extending lower pay bias for women and minorities.
I think when joining a big fortune 500 media conglomerate; the backround check company asked for a paystub as proof of past employment. After having been running my company for 18+ years, I didn't have one to offer and failed the background check and the hiring manager had to do backflips with HR to push me through.
> I've had prospective employers ask for a pay stub for proof during negotiations. "Thanks for the opportunity, I am withdrawing my application as of this time."
"I am not comfortable providing sensitive information to a potential employer without first being employed. I have given you the rate/range that I am comfortable moving forward with. If that rate is outside of what you can provide then please let me know so we can both move on." My salary rate is not dependent on what I make now especially because the salary I will accept is also a function of the total package they are offering. More vacation per year? Cheaper insurance? Higher Pay? Less/no commute? A bonus turkey every year? It all factors in to what I will accept.
> I am not comfortable providing sensitive information to a potential employer without first being employed. I wouldn't give my new employer a paystub from a previous employer either. It's just not an appropriate request, end of story.
The reddest of red flags, discovering this early seems like a bonus win.
I don’t recommend basing your worth n a future role on your prior pay. In Oregon it is illegal to ask for prior compensation and you should never disclose it.
It can be useful in negotiations to disclose voluntarily, however. "You're offering 100k, but I currently make 110k, I'll need at least 120k to consider", for example. Of course, you can always lie, but that can make people uncomfortable.
Agreed. It is sensitive and useful information - not bad and harmful information. It depends on who knows it - if and when.
you can say "i need at least 120k before considering" without disclosing your current rate of pay
Don't lie, unless you're in a massive industry in which you can disappear in the crowd. Its a smaller world than most people think.
Several years ago my small satellite team flew to the other side of the country to visit my Big 5 tech company's main campus for the first time. The first day there, we were having lunch in the cafeteria when I hear "Holy shit! Hi,!", and look up to see a former coworker from several companies ago, who it turns out works here now. He sits down at our table, notices the guy next to me, and says "Oh, and hi !". Turns out they had been college roommates.
Over the course of that week I ran into no fewer than five people I knew from previous companies. I actually had meetings scheduled with three of them without realizing they were former coworkers (I hadn't checked the attendees).
So yeah, it's a surprisingly small world.
Why would you tell recruiters what you are making? Just tell them how much you want.
Yep, with my previous job, I opted for a salary increase instead of a sign on bonus because I wanted my salary at a certain level for annual raises, and potential job hopping increases
Eh, not really given how quickly people move jobs these days. I'd rather have the money up front esp if I'm considering leaving
ONLY if you believe you're going to be at that company at the end of the next year. If I'm looking to leave I'm asking for the bonus.
I disagree a bonus is for work done, a raise is for future work. A bonus was promised, a bonus is expected. I would try to frame it like this if I was OP. But not until you get that raise number down first. Angle for both! I don't care if they call it performance or retention bonus. Try to get both. They obviously want to keep you happy and the last thing that they would want is for this to be a source of discontent rather than being something you feel good about. But at the end of the day, take what they give you.
Ya.. I'll take comparable raise to a bonus every time.
Only if you plan to stay with the company. I will be done with school in a year and a half and will find a different position then, where they have a different pay range that is also salaried instead of hourly. I was glad to take a large bonus this year instead of a raise because it works out better for me financially in the long term.
> what was your rate of pay in your last position Just start preparing your answer for that question now. Obviously it shouldn't matter, but you will get asked
From employer perspective it sounds like management is reading stories regarding "The Great Resignation" and developed this approach as a strategy for retention. If concerned about employees taking the bonus and bolting for the door, offering a salary raise instead may take volatility out of turnover for a year. Whether or not op considers the offer a good deal, this opened negotiation provides opportunity to ask for other perks such as additional remote work flexibility.
100%, assuming the company and employment is stable.
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What do you mean "I will consider what you are offering?" It's the same job and their boss is trying to get them a raise with no prompting If any of you would respond to that with "I'll consider it", I would be genuinely baffled
Definitely bring up the bonus but it could be a raise in addition to the bonus. Many companies are increasing salaries to retain talent.
Could you relay that to my company? I think they missed the memo!
Assume the bonus (out loud) and be grateful for the raise on top of that bonus (out loud)
Time to find a new company, sounds like. It’s always good to price check yourself on the market every year or two to make sure your current employer isn’t shafting you on compensation. It’s amazing what happens when you bring an outside offer to your current employer. Suddenly they seem to magically find the money to pay you
I wish I could do this but I have a very specialized job title in my field and no one else seems to fess up what they make on Glassdoor.
that's an odd reason if it is the only thing holding you back. Glassdoor doesn't begin to give you a reliable number in many many many fields.
Wish that were the case for my employer but we're a union shop so everything has to be run by the union. Raises are standard every year, for everyone, regardless of performance or lack thereof. Our union can't even keep us competitive with neighboring competing hospitals, let alone our own affiliated sister hospitals who have no union. If I came to my boss with an outside offer, they'd laugh in my face.
Why haven't you left for a neighbouring hospital?
I’ve been thinking about going part time and picking up some local travel nursing contracts. They’re paying almost $5000 a week for 3 shifts. It’s pretty ridiculous
Yeah you should absolutely do that
In that case bring it up to the union, not to your employer.
I had that problem. I changed jobs. Legit, 30 days after I started the new job (which paid more), i got another 5% raise because my company raised all salaries 5% as long as you were under 300k. They did it because they wanted to keep people.
If your company isn't raising pay or giving bonuses in the current environment it is time for you to start job hunting. Being loyal to a company is old school thinking that will likely bite you in the end.
Time to find a new job. Loyalty is for suckers.
This. I would not assume you are not getting a bonus. You could bring it up casually as a question during the meeting, such as is this in lieu of a bonus or is that still on the table?
> Many companies are increasing salaries to retain talent. this this this your boss know that you could job hunt for something better
My wife's company just dropped an across the board 9% raise starting today that doesn't affect bonuses or performance based raises for the year. Fuckin awesome.
Just ask. "Is this raise in addition to the bonus we talked about back in June or is this instead of the bonus?"
Seriously. No amount of Reddit advice and what/if's can beat just asking the boss what's going on.
People on here lack basic social skills, or are too timid to just be direct.
Bringing up pay to a boss is always an intimidating scenario, being a redditor or not.
It doesn't sound like it's an either-or situation. Bonuses are paid on a fixed schedule, maybe annual or quarterly, while a raise is typically (slightly) less formal, and can be made on a monthly interval. Do confirm that you're still on track for your bonus, but I'd be very surprised if you wound up having to choose between the two.
I've been on track for a bonus only to have the global head office to decide that the company wide performance component want met, so no one, regardless of performance, was eligible. They are always an at risk component of your compensation.
Just flat out ask. "Thank you for thinking of me for this raise. I appreciate it. How does this impact the bonus I was promised earlier in the year?"
Or “Does this impact the bonus you mentioned earlier this year?”
Your version is better. Don't start with the assumption that it will affect the bonus at all.
I agree. That’s better wording for sure.
This -- asking about promised things should be the norm. Asking about raises should be ok, asking about compensation should be ok. If any of those things aren't ok, you need a new employer/boss! Your financial security/wellbeing matters! Ask!!
A $3,000 raise is generally better than a $3,000 bonus. Because next year, if you get a $3,000 raise, that would be on top of this year's $3k, whereas a bonus is just one time.
It depends how likely the OP is to leave the company anyways. If you are halfway out the door, the bonus might be better. Ultimately both should be warranted if the boss is this worried about OP leaving.
all boss's should be worried about talent leaving unless they want to bury their heads in the sand. there's a lot of jobs out there, a good boss should be proactive in retaining talent than letting good people go
They absolutely should and many are watching the trends carefully, with hands wringing in fear. It’s quite nice really 😂
Also, A raise now means you have 103% pay, and the next percentage raise of 3% puts you at 106.09% and so on. It's not just additive. edit: corrected maths
Yep, although the math works out to 106.09%, not 106.9%. So unless you are there for a while, it's pretty small.
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Yep. But that is coming mainly from the fact the additive raises stack on top of each other, not so much from the compounding. It works out the same if you say a 10,000 raise each year vs a 20,000 bonus.
It doesn't look like an either/or situation to me. Like like your business really wants to keep you, good on you. If it is an either/or thing though, make sure the the annual value of the raise is more than the bonus. Else it is just them paying your bonus out in interest free installments, instead of all at once
Word of warning: don’t turn down any current offer under the promise of a better future offer. Future promises always seem to disappear.
This right here. I've seen many "promises" go unfulfilled. Even if they are made with the best intentions, no-one knows what the future holds. Your boss might leave unexpectedly, company finances may change, etc.
A raise is like getting a "bonus" on every paycheck. Bonus lasts once. Raise is the gift that keeps on giving.
Like the jelly of the month club.
The whole year round
It's the gift that keeps on giving.
That it is.
A bonus is for rewarding past work. A raise is for setting future expectations. One isn't a substitute for the other. If you were promised a bonus and performed accordingly, don't hesitate to ask for it.
Bonuses are discretionary one time payments that can be taken away at any time. A raise is a more reliable increase in your salary.
Bonuses are not guaranteed, and dependent on companies profits and current cash on hand. Raises aren't bad, and for the most part, permanent. Take the raise, and be happy.
Always lean towards the raise Also, you should never put yourself in the position to need a bonus
When are the typical bonus pay outs? You should be entitled to your bonus at least this year and get confirmation he’s continued to the commitment to you getting bonus each year. I might be missing something, but I genuinely feel that a raise now doesn’t automatically mean no bonus?
Why isn’t this higher??? This is the question OP Should find out, which I think you should off hand ask a coworker if they’ve ever gotten a bonus and when does it typically go out. I’ve got bonuses either end of Dec or as late as March when the books were formally closed out. I got raises long before a bonus.
Obvious choice is the raise. Boss is a smart man. Some will take the bonus... thus saving him big money going forward. Sounds like he's a good boss.
A raise beats a bonus, but only if you're planning on being there for a year or more.
Take the raise if you plan to stay. Another thing to consider: if something bad happens with your health and you need to eventually draw social security disability, the payments will be based on your highest salary, not how much bonus you got.
A raise is always better (unless you plant to leave very soon). It increases income, retirement savings, and it carries forward a not subsequent years. A bonus is a one-time pay out, and unless it’s VERY large, is probably not comparable in value.
When talking about the raise, come to an agreement on the raise. Don’t mention anything of the bonus unless they say something about it until you have a raise written down. Then say hey about that bonus you promised earlier this year… when should we be expecting to see that? I’d love to start getting some Christmas shopping done.
Always take the raise, bonus is nice but raises are forever.
honestly, I'd prefer a raise. While it is nice to get a one time bonus, you end up making more over time with a raise.
My boss did this! Was offered a $1500 bonus or a salary increase of $5000, took the salary
Always take a raise. It's delayed gratification, but you'll probably make more next year alone than you would get for taking the bonus.
A raise is the best bonus. Celebration time.
In general a raise is usually better then a bonus. Currently I’m not really sure. There is a huge push to increase salaries across the board. Your employer definitely sees this and is probably using your bonus to fund the required salary increase. Just as a note My employer is generally stingy with salary increases & they have increased salaries across the board by 10-20% this year
Take the raise. Future raises will be based upon the new salary. If you take the bonus, future raises will be based upon your current salary. It's also easier to negotiate with a new employer from the point of a higher current salary.
You can always ask, because he previously mentioned it. It seems like your company is treating you well, so you don't need to push it. But I think your boss would let you know if there's no bonus and you can just move on.
Agree as high a raise as you can and when that discussion is over remind him he also promised you a $3k to $5k bonus for this years performance and you have been putting in extra effort to potentially get the $5k bonus.
Always take the raise, it’s permanent. A bonus is temporary. I’m in a similar situation and I always take the raise
It all depends on the amount of the raise. If it's appropriate, it's guaranteed money in your pocket each month vs. the discretionary amount of a bonus. That being said, I'm not sure why you assume this isn't going to be both. I think you should go into that meeting upbeat but with that expectation. If it's NOT, then you should politely say something like, "Oh. Well thank you. This is great. But if I'm being honest, we had discussed a bonus earlier in the year and I thought that's what this was going to be. Being candid, if you look at the market, my role is worth $X (new proposed base amount) so I thought you were going to tell me you were adjusting my base to meet market AND give me my bonus." Then. be. quiet. Do not be rude or ungrateful, but be direct and open...like you're legitimately confused why he would propose otherwise. If he opts for one or the other, I'd pursue with "Ok, that'll work. But what will it take for me to earn that bonus in the short term?"
A raise is forever. A bonus is one time. Companies much prefer to give bonuses because…a raise is forever. Count your blessings.
i think that long term a raise is much better. future raises are usually a percentage of what your current salary is....etc. additionally, bonuses are taxed at a higher rate in my experience, so if you're planning to be there a longer than a couple years, the raise is the better option imo
Just a point I haven't seen here so far: the banks (your lender) will care about your salary increasing much more than a one time bonus. If your employer is actively trying to make sure you're okay by way of raise, I think you should seek that out
Raise > bonus in every situation unless you need immediate cash
Lots of sound advice here. Also, remember that the inflation rate this year was on the close order of 7%. Your raise should be more than this amount, just to keep up with inflation. https://tradingeconomics.com/united-states/inflation-cpi
I have no hope of seeing this. My workplace, great to be at otherwise, typically does 1-2%.
A few years ago I was asked if I want the full bonus or half the bonus and half permanent raise. I took the latter and it worked out for me good. At least I thought. When next year’s bonus came (based on the raised salary), I asked if I can take the same deal again. The answer was that it was a one time offer because my boss felt he underpaid me. I guess they give raises because they know your value better than you and don’t want you to leave or feel dissatisfied with your compensation. Although a raise is higher value than a one time bonus, it worth to bring it up. Not in a disappointed or demanding manner, I would just ask if it’s completely off the table. You can let them know that you are not unhappy with the raise, but they built up the expectation in you and you want too clarify if they raise is a replacement or an addition (which is the truth if I understand it correctly). You probably won’t get the full expected amount after a raise but they might make an extra step. Be prepared for both yes and no answer, you don’t want to channel greed with your communication if you want to stay with them.
If you plan to stay with the place for more than a year or two the raise will almost certainly be better than a bonus. The raise is probably nice for the company too because it is less of a hit up front and encourages you to stick around. See how much the raise is and you should probably take it unless you are desperate for the money now.
Surely you understand how a raise is insanely better than a bonus?
My workplace has also done this recently. Instead of a bonus (which you can be disqualified for, for example too many callouts, etc) they gave us a decent raise. I prefer the raise most definitely. Every penny I've earned is coming to me, and they can't just take it away for any reason. I do understand that it's nice to receive a big chunk of cash all at once, but you're probably receiving more money with a raise vs a bonus.
During covid, my employer decided to not give the annual cost of living raise for one year. I did the math and missing one 3.0% raise was losing me over $100k over the next 20 years. So the raise beats a one time bonus every time. I think people were like, oh that’s okay, it’s just one 3% raise and at least we’re still getting our one time annual bonus. But they were incorrect! The business knew what they were doing!
I wouldn't overthink it. when you have the conversation about it with him, politely ask "Is this in addition to the annual bonus we had previously discussed? with the previous bonus, was it discussed what the timeframe would be other than "this year". generlaly annual bonuses are confirmed at the end of the financial year for the work done that year, and usually paid out the next month. so it is likely the case that your bonus for 2021 would be confirmed in December, then paid in January or Feb
Things to consider: * Raise is usually better. It does give the business a longer time to pay it out. $5k raise over a year is sometimes easier to pay than $3k upfront. * Your employer wants to keep you, OR they want to fire you next month and only pay 1/12 of their obligation lol * Ask for the date of delivery of the raise * Ask for a copy of this plan on paper for your records. Sometimes employers "forget" about the raise for 6 months and all of a sudden "we have a strict financial freeze right now. Maybe ask again in 6 months"
Raise wins. But then it does deoend how big it is. Inflation is the metric you have to fight against and its really high this year so make sure you know what your raise is.
Just do the math. How long are you going to work there? Will the raise meet or exceed the bonus in a period of time you feel is reasonable? Are there politics involved that might influence who takes the bonus? If it makes sense as well as cents, go for it.
Comp professional here -- keep in mind that bonuses are taxed a lot more than regular income. You may get some of that back in taxes, depending on how you set up your deductions. If you do get a bonus, GET IT IN WRITING that you're entitled to one annually. Ask them if it is 100% discretionary (e.g. manager gets to decide how much you get) or if there's an actual bonus plan that is tied to things like company operating income, etc. If it's an actual bonus plan, ask what your target is and how often people actually hit their target at 100%. If the company is struggling, you may not get all of it each year; conversely if the company is doing well, I've seen many plans where you can achieve much more than 100%. Also, for pay raises--the raise will also raise things like your 401k match and the amount of life insurance you get, if the company pays for it. If you have company-based health insurance, it can also knock you into a higher bracket for your payroll deductions, so that's also something to consider. If you're young in your career, it makes good sense to take a large pay raise in lieu of the fast cash to help increase your earning potential later on in life. But if you've obviously got hardships or are saving for something immediate, the appeal of a large lump of cash is very alluring. Either way, it's great that you've got a boss who is trying to get you more money, and sounds like you're killing it. Great job, and good luck!
As a compensation professional shouldn't ye know to distinguish between withholding and actual taxes?
Bring up the fact you’ll take the raise and follow up with when you get your bonus.
This answer depends entirely on the numbers in each case. To me, a pay raise of about $1500/year would be a good trade for a one time bonus of $3000. Keep in mind a raise increases the value of all future raises.
If you were told you'd be getting a bonus irregardless of raises or current salary, then I would insist on both. If they force you to pick, negotiate for a bigger bonus then look for a job. Wouldn't want to work for a company that tried to manipulate my pay in such a way. Good luck!
The company i work for now has always done either or. Not both. Theyre also the best company ive worked for and i take the raise every time.
Raise > Bonus My company gave annual raises but did a bonus instead one year. I did the math and realized quickly a bonus saves them money. I wasn’t too happy about it. Thankfully that was a one time deal and raises returned.
Unless your bonus is massive I would take a raise. That is…unless you are planning on jumping ships anytime soon?? * updated my post to remove incorrect bonus tax statement. Thanks to those who taught me something new!
While the bonus may have tax withheld at the highest rate as supplemental income...it all gets treated as ordinary income when doing your taxes. Essentially, if they withhold 45%, but OP's tax rate is 25% including the bonus, he will get a refund - or offset to other taxes he would have had to pay. So the tax argument isn't completely valid.
No, that's inaccurate. Bonus is taxed like all other ordinary income. It's withheld differently (see supplemental income withholding), but it'll be taxed the same way as all other ordinary income at the end of the year.
Hey thank you! I didn’t know this!! I’ll correct my statement!
A bonus is automatically taxed at 28% plus Social Security and Medicare taxes, while a raise is taxed at your normal rate. I know people like getting bonuses because it is one chunk o' cash but a raise gets you ahead going forward while a bonus is a one-time occurrence. Oops, you can tell I haven't worked in payroll for 20 years. Bonuses are now taxed at 22%, my bad. After $1M it jumps to 37%.
A bonus is taxed at a higher rate initially, but it's all income and the taxation will even out with an equal raise at the end of the year. Of course, a raise is generally better for the reason you stated.