Finance

Should you stay at work for the cash bonus? Experts weigh in

The job market is tougher than it was during the heady days of the Great Resignation, with massive layoffs (mostly in tech) and people leaving their jobs en masse. A new LinkedIn report found that 61 percent of American workers are considering leaving their jobs in 2023, CNBC reported. What will it take to make them stay? A suitcase full of cash – or something like that.

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New research from Keep Financial found that 86% of employees would take an additional cash bonus in exchange for time commitment to their company. Additionally, of those respondents who receive stock options or other equity, 76% say they would prefer to receive all or part of that equity in cash in exchange for time commitment to their company.

Cash rules in today’s economy

“I am absolutely not surprised to see workers’ willingness to stay with their company for a cash bonus,” said Peter Rahbar, an employment attorney and founder of The Rahbar Group. “Interest rates are at an all-time high, the cost of living has risen, and many workers feel they have been undercompensated for their efforts during the pandemic and beyond.”

Equally unsurprisingly, employees prefer cash over equity compensation.

“Most employees have historically valued cash over equity compensation simply because they don’t know how to value equity,” Rahbar said, noting the following additional factors: “More experienced employees are less likely to value equity because they don’t trust companies to treat them fairly, reducing thus the value of every capital in their eyes; The current environment of high interest rates and high monthly debt carrying costs; and in today’s workplace, it’s much more common to hear of workers looking at potential jobs with a one-to-three-year time frame, as opposed to a ten-year time frame, and choosing cash over equity preserves their flexibility to navigate that time frame. “

But is staying at your job in exchange for an extra cash bonus a good idea?

“An additional lump sum cash bonus can be useful for paying off high-interest debt or saving for a down payment on a home,” said Michael Samuel, career consultant and vice president of human resources at CEOMichaelHR. “However, employees should consider the trade-off of giving up future earning potential or locking in a job they may not be happy with.”

It turns out that there is no one-size-fits-all solution here. Everyone should weigh the options for themselves and carefully consider what is available. The same goes for deciding whether to choose cash over equity.

“If you’re making a decision to stay for equity or cash, factor in how long you’ll need to stay for both options,” said Malinda Kohler, founder of Roadmap. “If you have to stay longer to earn money, you may miss out on bigger pay raises.”

“Equity allocations can give you more flexibility than upfront cash commitments,” Kohler explained. “Employees vest (or fully own) a portion of their equity within six months to a year of working with the company, and then continue to give more each month.” It’s common practice in tech to join a company, give away part of your equity package for a few years, then find a new job with a raise and a new equity package. This practice gives you regular raises and equity in multiple companies, so you have several options in play for bigger cash payouts.”

Keep in mind the coming recession – but also, take your time

“As you make these decisions now, consider that we are at the beginning of a recession,” Kohler said. “The economy is transforming as we go. Cash is king in volatile times. Make decisions based on your personal finances, risk tolerance and earning potential.”

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But there’s also something to be said for taking the time to really think about your future.

“In general, I believe workers should spend more time thinking about their career plans and how they can get to their final destination,” Rahbar said. “They should then revisit this plan every six months.” In that exercise, they will discover that choosing a job solely for the money is not a winning or successful strategy.”

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This article originally appeared on GOBankingRates.com: Should you stay at work for a cash bonus? Experts weigh in

The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Nasdaq, Inc.


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