What is Desired Compensation and How Do You Calculate It?

Desired compensation is the total value of salary and benefits you request from a potential employer. It's a critical figure that influences hiring decisions and shapes your future earnings. Based on our assessment experience, candidates who research industry standards and articulate their desired compensation confidently are more likely to secure a strong package. This guide will help you understand its components and calculate your own.

What Exactly is Included in Desired Compensation?

Desired compensation encompasses more than just your annual salary. It represents the complete financial and benefits package you seek. Employers often break this down during the hiring process, but it's the combined total that matters. Key components include:

• Base Salary: The fixed annual or hourly pay for the role.
• Benefits: Non-wage compensation that adds significant value. Common examples are:
  • Healthcare and dental insurance
  • Pension or employer-sponsored retirement plans
  • Holiday pay, parental leave, and sick pay
  • Life insurance and critical illness coverage
  • Bonuses and profit-sharing schemes

Understanding this total package is the first step toward an informed negotiation.

How Do Key Factors Influence Your Desired Compensation?

Several variables directly impact the appropriate compensation range for a role. Accurately assessing these factors allows you to align your request with market realities.

Economic conditions and the specific employer’s size and resources also play a crucial role. Your goal is to use these factors to connect your qualifications directly to the job's demands.

What is the Step-by-Step Process for Calculating Your Desired Compensation?

Calculating your desired compensation requires a methodical approach. Follow these steps to arrive at a well-researched and defensible figure.

1. Research Local and National Salary Averages. Use resources like ok.com to find salary data for your target role, adjusting for your specific city. Look at a range of figures for similar job titles to establish a realistic bandwidth.
2. Examine the Local Cost of Living. A salary that is sufficient in one city may not be adequate in another. Factor in housing, transportation, and utilities to ensure your desired compensation maintains or improves your standard of living.
3. Evaluate Your Unique Qualifications. Objectively assess your education, skills, and experience. How do they exceed the basic job requirements? Proven competency and specialized expertise justify requesting compensation at the higher end of the salary range.

When and How Should You Discuss Desired Compensation?

Employers may ask for your desired compensation at different stages: in the job application, during a phone screen, or in a face-to-face interview. If asked early on a form, providing a salary range (e.g., $65,000-$75,000) is often more strategic than a single figure.

If the topic arises in an interview before you fully understand the role, it's acceptable to politely defer. You might say, “I’m very interested in this position and would like to learn more about its responsibilities before discussing salary. Based on my initial research, I’m confident we can find a range that is fair.” This shifts the conversation to your qualifications first.

When you are ready to state your desired compensation, support it with evidence. Cite your research on industry standards and connect your skills to the value you will bring to the organization. Be prepared to negotiate and consider the entire benefits package, not just the base salary.

To successfully negotiate your desired compensation:

• Be confident and honest about your needs and the value you provide.
• Negotiate if possible, but know your walk-away point.
• Consider the total compensation package, including benefits, before declining an offer that is slightly lower on base salary.
• Decline offers professionally that fall significantly below your minimum acceptable range.

Salary figures reflect data listed on ok.com. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background, and location.