I Just Got a Job Offer! What Do All The Words in this Letter Mean?

Sign it! Sign it! / iStockphoto.com (Grinvalds)

Sign it! Sign it! / iStockphoto.com (Grinvalds)

Congratulations! After five weeks and multiple rounds of interviews, the company decided to extend you a written job offer!

The recruiter emails you the offer and... holy cow, this thing is long. The letter has to be at least two pages long and filled with business speak. What do I make of all this? And why did the company feel the need to send me their own version of War and Peace?

Believe it or not, that lengthy letter you're holding in your hands is a well thought out document, that – if well written – details most of the things about compensation, terms, and conditions, and the other effluvia you need to consider prior to accepting a job offer.

Let's go through the components of a typical offer letter. But first, there are two important items I'd like to mention:

I am not an attorney, nor do I presume to give legal advice. This is a general guide to reading a job offer; if you have serious questions or concerns about the wording of an offer, I advise you to find appropriate legal counsel. But that's not me.

This article details what you will typically find in an offer. There are as many variations to offer letters as there are companies extending employment, so how much or how little documentation a company chooses to include in the letter can vary wildly - from the verbal offer to a lengthy contract.

Let's talk about the components of an offer:

  1. Salary: How much the company pays you to do your job. This will usually be presented as an annualized figure., such as $35,000 per year, and broken down into per-pay-period amount, such as $1,346 per bi-weekly. The reason for this is that unless you sign a serious contract (like a Major League Baseball player or head coach in the NCAA) your pay is not guaranteed. Your job is likely at-will, meaning that once you stop working, so does payroll. This will often tell you if or when you will be eligible for the merit increase (i.e. raise) based upon your performance appraisal and the regular salary review cycle. Some companies don't give regular raises - be warned.
     
  2. Incentive Compensation: Many companies give out bonuses to employees in certain jobs if they, the company, and or their business unit meet some combination of performance goals. This is usually presented as a percentage of salary, such as "12% of eligible earnings." Keep in mind, this is just a target; companies often give more or less (or none) depending upon how that performance turns out. Often, the letter will state that you will have to be employed on a certain date and have worked a certain period (like the previous full year) to collect this. Terms will often be detailed in the offer letter.
     
  3. Long-Term Incentive: Higher-level folks, like executives, often get offers for stock options and the like. It's usually detailed in here.
     
  4. Sign-on Bonus: If company really wants you to join, they may throw some extra cash at you to help influence your decision. They'll detail the amount they're offering you - and they'll detail how they'll claw back a portion of the bonus or the entire amount in case you leave before a certain time (like 1 or 2 years of employment) – companies often include this language to encourage employee retention. My advice: If you're not sure you're going to love the job, put the money in escrow so that you can hand it back when you leave.
     
  5. Relocation Assistance: Moving the old homestead from Texas to California for the job? The company may offer you relocation assistance in the form of mover services or a cash allocation so that you can handle the move itself. The specifics of the actual relocation itself usually reside in a separate policy document, so ask for this if they offer you a relocation package. Again, the company may try to claw back a portion or all of your relocation expenses if you leave the company too soon, and these costs can really add up to major cash.
     
  6. Tuition Reimbursement: Your new employer may pay some or all of the tuition for you to get that degree you've wanted to pursue. There are two catches. First, the degree usually has to be something that will add to the company's benefit in your current role (in other words, if you work in Accounting, they'll more likely approve tuition for an MBA than for a Theater Arts Degree). Second, clawbacks in case you leave usually apply.
     
  7. Health & Wellness Benefits: This explains the benefits you will typically qualify for - such as health insurance, long- and short-term disability insurance, life insurance, dental insurance, etc., and when you're eligible to get these benefits. The letter will usually tell you when and how you qualify, but won't get into the nitty–gritty of what your benefits cost you (your premiums and copays) and what's covered. You'll need the benefits brochures - ask for them.
     
  8. Vacation, Holidays, Sick Time: Also known as PTO (paid time off). Here you'll find out how you accrue days off, and how many you can accrue. Each company's paid time off policy works differently, so read this carefully; some companies offer separate vacation days and sick days, and others will lump these all into a time bank where you draw it down regardless of why you're missing work. Incidentally, if you have vacation time already scheduled to take place after you start, this is a good time to mention this to the recruiter, so that you can get the time approved, even if you haven't accrued the time.
     
  9. Other Perks, Benefits, and Tools: Company phone, company car, discounts on corporate product, travel benefits, whatever, this will all be outlined in the offer letter.
     
  10. Terms of Employment: The company will likely insert verbiage about your employment being "at-will" (in other words, you can quit or be fired at any time), or perhaps contractual terms. Either way, the company usually include a note about their right to change terms and conditions (on benefits, policies, or many other things) in the future.
     
  11. "Employment is Contingent Upon"...: This is where the company details that the offer letter is only good if you pass the drug test and background check. Fail one or both of those, and the offer is null and void.
     
  12. Place For You To Sign: Yep. The offer letter is a contract. The company wants you to sign the letter and send it back to make sure that everybody is on the same page and agrees to the terms. Keep a copy.

What may NOT be in the letter: Employers may have you sign a plethora of other documents once you walk through the door. These could include Non-competition Agreements (which restrict you from working for a competitor within a certain period of time), Nondisclosure Agreements (saying you won't share their secrets), Conflict of Interest Disclosures (preventing you from investing in or doing business for any organization in direct conflict with your employer's interests) and many more covenants. Companies have been known to terminate employees who refuse to sign such documents, so ask your questions up front.

Don't hesitate to ask the HR representative who extended you the offer if you have questions about its contents. It's better to know and to understand what you are getting yourself into.


Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. Insider Career Strategies provides resume writing, LinkedIn profile development, and career coaching services, including a free resume review. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.