Which method of compensation would you prefer?

[Descartes]

Originally posted by: JS80

Originally posted by: Descartes

Originally posted by: FoBoT
i like getting a bonus, even though the formula is bogus, that is , they can't or won't tie it directly to MY performance, they tie it to the overall company performance, which i can't directly impact in my role

Sorry, let me clarify:

Your bill rate is $50/hour.
Your rate is $40/hour.
You work an average of 50 hours a week.
The gross profit for each week is $2500.
Your income for the week is $2000.
The net profit for you is $500 for that week.
Your bonus would be $50 for that week, or potentially $2600 for the year.

This means that your performance directly impacts your bonus. The performance of others won't impact you.

[edit]Note this is overly simplified. There is overhead, etc. to consider. Hopefully the point is clear though.[/edit]

That's a really low bill rate. If your rate is $40/hour your bill rate is probably $150-250/hour especially for SAP consulting.

It was an example only. I don't think it would be too smart of me to post actual numbers...

$250/hr for SAP is astronomical though. Granted, there are some niches where that's possible, but there is a lot of foreign influence with in the SAP market. There SAP for small businesses market can usually yield you higher bill rates than at larger companies, in my experience.

 

[Descartes]

Originally posted by: JS80
I'd rather get salary + benefits + bonus.
Benefits is worth a lot because it's pretax.
I would maybe negotiate a lower salary + benefits + bonus.

Yep, sounds like that's the consensus. It will lower the overall total income potential, but at the benefit of not having too many fluctuations in your income. Maybe I should include Sharpe Ratios for the various options?

 

[CPA]

Scenario number 1 would most likely exclude you from any 1099 relationships, if benefits means health insurance and it's ilk.

 

[Descartes]

Originally posted by: CPA
Scenario number 1 would most likely exclude you from any 1099 relationships, if benefits means health insurance and it's ilk.

Right, that's one thing we're considering. We wouldn't want the IRS reclassifying anyone as an employee and then coming after payroll backtaxes. I've seen that happen before, though I'm not entirely clear on what they use to determine whether a resource constitutes an employee or not.

Thanks!

 

[ahurtt]

Originally posted by: sonambulo
I'm young and healthy enough that I'd go for a bonus as long as it doesn't get taxed as such. If it does, then I might as well go with benefits.

But your good health and your bonus are kind of alike in the respect that you could lose either one of them with little or no notice. But that's where the similarities end. You can live without your bonus. You can't live without good health. But oh yeah I forgot. . .young people are invincible.

 

[spidey07]

It would have to depend on the benefits and what I thought the true value would be. In other words I'd have to weigh total compensation.

I prefer higher salary and bonus over benefits for the most part because I can get better bennies on my own.

 

[ahurtt]

Originally posted by: Descartes

Originally posted by: ahurtt

Originally posted by: Descartes

Originally posted by: FoBoT
i like getting a bonus, even though the formula is bogus, that is , they can't or won't tie it directly to MY performance, they tie it to the overall company performance, which i can't directly impact in my role

Sorry, let me clarify:

Your bill rate is $50/hour.
Your rate is $40/hour.
You work an average of 50 hours a week.
The gross profit for each week is $2500.
Your income for the week is $2000.
The net profit for you is $500 for that week.
Your bonus would be $50 for that week, or potentially $2600 for the year.

This means that your performance directly impacts your bonus. The performance of others won't impact you.

[edit]Note this is overly simplified. There is overhead, etc. to consider. Hopefully the point is clear though.[/edit]

But what happens when you suddenly are no longer allowed to work 50 hours per week because the company has to make its quarterly or yearly numbers so they clamp down on all overtime hours? And then when you get that news you are so angry you are not paying attention while you are driving and you crash into a tree rupturing your spleen, breaking both your legs and arms, suffer a concusion, and are unable to work for several months?

LOL. Well, certainly everyone hopes that doesn't happen. It's more volatile to go with option #1, that's for sure. It's like investing in foreign stocks vs. your average high-cap US stock, and some people are simply willing to assume more risk for more return.

I just think the bonus is a carrot dangled out there for the short-sighted. Trust me, if the company thinks they are paying out too much money in bonuses they will find a way to limit it. Don't trust them.

Well, in this case I am the company, and I really want to do what's right by everyone. At the same time though, companies have expenses and there's simply no single system that's absolutely fair to everyone. It will come down to a personal choice, either to your benefit or detriment. In my experience, most people make choices unknowingly to their great financial detriment, and I'm just trying to balance that out a little.

I also agree that it's slightly short-sighted, but you have to maximize your earnings while you can, imo. When you're young, you can assume more risk than you can when you have a family. Take the risk now, maximize your earnings, put that away and then let it grow throughout the rest of your years.

Appreciate the feedback...

Gambling with money is one thing. Gambling with your life and your health is another. You can't equate gambling with your health and your future to gambling with the stock market. Fortunes come and go. . .you only get 1 life.

 

[Descartes]

Originally posted by: ahurtt

Originally posted by: Descartes

Originally posted by: ahurtt

Originally posted by: Descartes

Originally posted by: FoBoT
i like getting a bonus, even though the formula is bogus, that is , they can't or won't tie it directly to MY performance, they tie it to the overall company performance, which i can't directly impact in my role

Sorry, let me clarify:

Your bill rate is $50/hour.
Your rate is $40/hour.
You work an average of 50 hours a week.
The gross profit for each week is $2500.
Your income for the week is $2000.
The net profit for you is $500 for that week.
Your bonus would be $50 for that week, or potentially $2600 for the year.

This means that your performance directly impacts your bonus. The performance of others won't impact you.

[edit]Note this is overly simplified. There is overhead, etc. to consider. Hopefully the point is clear though.[/edit]

But what happens when you suddenly are no longer allowed to work 50 hours per week because the company has to make its quarterly or yearly numbers so they clamp down on all overtime hours? And then when you get that news you are so angry you are not paying attention while you are driving and you crash into a tree rupturing your spleen, breaking both your legs and arms, suffer a concusion, and are unable to work for several months?

LOL. Well, certainly everyone hopes that doesn't happen. It's more volatile to go with option #1, that's for sure. It's like investing in foreign stocks vs. your average high-cap US stock, and some people are simply willing to assume more risk for more return.

I just think the bonus is a carrot dangled out there for the short-sighted. Trust me, if the company thinks they are paying out too much money in bonuses they will find a way to limit it. Don't trust them.

Well, in this case I am the company, and I really want to do what's right by everyone. At the same time though, companies have expenses and there's simply no single system that's absolutely fair to everyone. It will come down to a personal choice, either to your benefit or detriment. In my experience, most people make choices unknowingly to their great financial detriment, and I'm just trying to balance that out a little.

I also agree that it's slightly short-sighted, but you have to maximize your earnings while you can, imo. When you're young, you can assume more risk than you can when you have a family. Take the risk now, maximize your earnings, put that away and then let it grow throughout the rest of your years.

Appreciate the feedback...

Gambling with money is one thing. Gambling with your life and your health is another. You can't equate gambling with your health and your future to gambling with the stock market. Fortunes come and go. . .you only get 1 life.

Who is saying you're gambling with your life? You're putting this far out of context. No one is saying you go without insurance and put yourself at physical risk. The only difference is that you pay for the insurance. This is already the way many companies work, especially smaller companies. You have the option of buying into the group policy, or instead buying an individual plan on your own.

 

[Descartes]

Originally posted by: spidey07
It would have to depend on the benefits and what I thought the true value would be. In other words I'd have to weigh total compensation.

I prefer higher salary and bonus over benefits for the most part because I can get better bennies on my own.

I agree. That's the point I'm trying to make.