Benefits Tips and Traps – a Recruiting Case Study

Find the best IT jobs in Dallas. GTN Technical Staffing is an employment agency specializing in information technology job search.

When comparing multiple offers it is really easy to over value the "benefits" provided. Recently we had a consultant turn down an offer with us because he thought another agency had a better fringe benefits package. He said he would go with us if he could get an extra $20 per hour (the equivalent of about $41,600 per year). Wow! That must be a really nice benefits package to be worth that much, so after he sent GTN the information we ran a comparison. Some parts of his overall compensation were better than what we offered and some were worse. It is important to look at the big picture. 

Medical insurance
The competitor paid 100% of his insurance. We paid far less. For a full family the additional benefit to the candidate of going with the competitor would have been about $12,000 per year.

The additional benefit to the candidate of going with the competitor for a full family would have been about $12 per month or $144 per year.

No material difference in value.

The competitor's 401(K) match does not kick in until after one year of service (just like ours), but the candidate thought he would get immediate matching. Our match is 3% of TOTAL PAYCHECK in which he makes a contribution, but the competitor matches 18% of his contributions that he makes to the plan. On the surface 18% vs. 3% sounds like a big difference, but not everything is as it seems. If he makes a contribution every paycheck with GTN he gets a match of $104,000*.03=$3,120. If he goes with the competitor he gets 18% * $16,500 = $2,970. That is actualy a little less than under the GTN plan (by $150).

Comparing 401(k) plans is a really easy trap, so be sure you really understand the match first.

Paid Time Off
The competitor offered 0 days in first 6 months and 9 days in first year. GTN offered no paid time-off. Additional benefit to the candidate of going with the competitor = $3,600.

Other benefits
The other benefits were of negligible value.


The total additional benefit to the candidate of going with the competitor is:

+$1,200 (medical insurance)
+$144 (dental insurance)
+$0 (vision insurance)
-$150 (401(k))
+$3,600 (Paid time off)
$4,794 increased value of the competitor's benefits over GTN benefits.

That's almost $5,000! $5,000 is no small sum, but the candidate wanted $41,600 for these better benefits.

Wait! It gets better.

GTN Technical Staffing offering the candidate $5 per hour more than the competitor. If he took the extra $5 from GTN the difference in value of the hourly rate would be about $10,000 over a year. SO, if you subtract the $4,794 "loss" in benefits of going with GTN from the $10,000 in additional pay, he would actually come out better by going with GTN by $5,206 ($10,000 - $4,794 = $5,206).