Evaluating Job Offers

Mar 14, 2022 — career — 13 min read

India's software engineering job market is witnessing a transformation like never before. It is seeing a very crazy demand-driven job market in favour of engineers. With terms like Lying Flat and The Great Resignation trending globally, one can say that the workplace transformation is just beginning.

Demand for Digitisation: Organisations are shifting their work online. Many classes of employees can now work without being in an office. Such a shift hugely benefits IT and SaaS companies.
Work from Anywhere: Previously, one had to relocate to access opportunities outside of one's city/state, or companies had to invest in real estate to hire across locations. But companies are increasingly embracing a fully-remote or hybrid approach. Doing this increases the size of the talent pool and has a cascading effect on the entire hiring landscape. More and more companies would want this on their job descriptions as a differentiator, prompting more companies to do the same so they don't lose talent.
Record Low-Interest Rates: The pandemic forced governments worldwide to slash interest rates to spur spending. This led to an increase in VC money and private equity funding. This is leading to inflation in the job market. Everyone wants sound engineers, and by negotiating at multiple companies, the market raises its bar continuously.

It is the right time to change a job because the market favours the job seeker. This post will explain what a candidate can focus on to evaluate the job offer (or multiple job offers). Although I've tried to keep the content as generic as possible, it is best suited for software engineers working for a product company. For others, YMMV.

We can break down any software engineering job into three main components: People, Technology and Benefits, in that order.

People

Who you surround yourselves with is the most critical asset in your life. People can inspire, challenge and teach. The people you will work with will have a lasting effect on your entire career. Your professional network is your gateway to opportunities. A referral at the right time or a chance to start a business together is usually a life-changing milestone that is only possible through a network of great people.

It is vital to take some time to get to know the people with who you'll be working.

Manager

The most important person in your job is your immediate manager/boss. Take some time to research their past achievements, their thought process, what they expect from you. Take some time outside the job interview process to build alignment with your manager. Your manager is recruiting you because they feel a particular void in the team they think you can fill. Understand the expectations. The best way to grow in life is to be challenged, and your manager will fill that gap.

A manager's role plays a very impactful role in your career. If you have a good relationship, you'll be given opportunities to grow. Your manager will usually prefer to hire you wherever they go. If you have a terrible relationship, you'll realise what lousy management looks like for you. You will usually search for better managers in new jobs with traits that you resonate with better, eventually helping you move towards a better career.

Leadership

The leadership team steers the company towards success or doom. They influence your career because their decisions will translate to your goals at work. Study their credentials and their background. Look out for their interviews in the press. If you're joining a startup, this becomes crucial. If possible, ask the recruiter and try to talk to them. The vibe from the leadership team should inspire you to work for their company.

Team

Talk to the other team members by working with your manager or the recruiter. Visit their LinkedIn profiles and blogs, understand them and how they think and work. These co-workers will be your future co-founders or entries into other jobs via referrals. Take time in understanding what they do. Talking to them is also a great way to know the culture. Some team members are good enough to reveal the company's dirty secrets, which may help you make a better decision.

Technology

Technology choices at a company shape your long term career.

Tech Stack

A startup could have a modern tech stack. An established company may have very different technologies across different products or teams. If possible, work with your recruiter/manager to understand the exact product you'll be working on and the tech stack it is built with, and what problems does it solve. You should reasonably try to work in a newer technology stack as it may keep your experience recent for a more extended period.

12 Factor

A good framework for deciding the tech maturity of technology powering a product is using the 12 Factor framework. Asking questions in the 12 Factor list will help you understand the stage of the company. Are they still validating/building stuff, or they're investing in technology? Usually, startups will score low on that list, and large companies will do better. But if you're interviewing for a large company that does poorly on the 12 Factor questions, something is wrong. It may be run by a leadership team that does not understand or invest in technological maturity. Or they never got around to doing it because there is always pressure from business. Both of which are not the right signals.

Processes

I mentioned processes under technology because these processes are a way to deliver products to the customers. A conversation into 12 Factor also reveals a lot about the techniques used within the team and company. It is essential to know about agile rituals like standups, planning meetings, retrospectives, incident response and on-call management. These processes will occupy your time and reveal a lot about technological maturity. A frequent problem is unnecessary meetings which usually means the management is not too mature.

Product/Engineering Roadmap

Ask the manager or team for things on the roadmap for the team/company for 3-6-12-18 months. Usually, a high-level overview works. Knowing this will allow you to understand what are the kind of projects you can expect and whether you're excited about them or not. If you're significantly experienced, the manager will try to hire you because you've solved similar problems before. Knowing this beforehand allows us to evaluate if we're excited about those challenges.

Startups typically require a builder mindset where many things need to get built with speed. At a larger/mid-size organisation, more focus will be on scaling engineering, iterative delivery and process execution. If you go into a large company assuming you'll be building many things from scratch - it will usually not work out that well. Aligning your goals and mindset with the company's roadmap is essential.

Benefits

I title this section benefits rather than compensation because there are a lot of non-compensation benefits that companies provide. To a person, some benefits may outweigh marginal differences in compensation.

Fixed Compensation

It is crucial to make sure that the compensation is close to the market rate for the position. Underpaying is terrible, so is overpaying. Usually, candidates do not think twice when they receive a compensation offer that is much above the market rate. But overpaying would usually indicate that the company is desperate to close this position, which could show issues in hiring and retention, which could be a negative signal. Companies know they're paying a premium to hire. If you join, your pay would usually normalise down the line during yearly compensation changes. If your performance were better than the comp changes, this could affect your morale. Also, overpaying means it is harder to leave the organisation if it does not provide a fulfilling career. Generally, people do not accept lower pay.

One of the problems in India is there is no good publicly available data on compensation. We have to do with whatever we have + our expectations. Some of the sources are:

Stocks

Companies typically offer stocks with the motivation that employees will act like owners and do what is in the company's best interest. Although a full explanation of stocks is outside the scope of this article, I will try to talk about a few critical parameters that should be covered when discussing stock compensation.

Stocks are typically not paid up upfront. They are usually paid in batches to the employee based on their tenure. This is known as the vesting period. A typical vesting period is around 4 years, with 25% available each year (or monthly after the first year). This is done for retention.

For RSUs, since the stock is public, one could attach a monetary value to it and realise the profit immediately once they're vested. There is a lesser risk involved except if the company does terrible and the public stock value goes down.

For ESOPs, it is a bit tricky because the valuation is determined by a closed group of people (usually the company's board). It may or may not materialise into anything monetary. Thus, one has to place a bet on the potential future value of the company based on its present state. The only time the employees can realise monetary value out of ESOPs is either company decides to buy back ESOPs from employees or an exit event (acquisition/IPO). Not all startups exit; some die a horrible death.

Another complication with ESOPs come with the fact that they are "options", i.e. employee could "buy" them at a pre-determined price (strike price). They are not provided for free. This is like getting stock for a discounted price. The earlier an employee joins a company, the lower this price (accordingly, the asset's riskier). Once vested, an employee has to pay some money to "exercise" those options, i.e. transfer ownership to the employee.

Nevertheless, for stock options, it is crucial to clarify the following data before accepting an offer:

Vesting period - time an employee has to wait before getting the ownership of stocks (or an option to purchase/exercise them)
Strike price - price per stock at which employees can buy them. This does not change once allotted.
FMV (Fair Market Value) - current value of the stock as decided by the board (and vetted typically by a 409a provider like Carta)
Post Termination Exercise Window - The final period after the termination of employment when the employee can choose to exercise the stock. If it is not exercised, it goes back to the company.

In my opinion, look out for companies with a higher post-termination exercise window, as this will make the decision to move on more effortless if you find another opportunity and keep a window of decision open for a long time whether to buy them or not.

Here are some resources which explain this topic in much more detail:

Non-Monetary Benefits

These may vary a lot based on different companies, but usually, the aim is employee well-being. These include:

Time Off Policy: Good product based companies these days mostly opt for Unlimited PTO, but rather than the number of PTO days, the focus should be on the culture of taking days off, whether for vacation or health. If there are unlimited leaves, but no one avails them and everyone is burned out and chasing targets, that is a bad sign. Look out for reviews from existing employees and the team to know the pulse around this.
Remote Working Policy: Some companies may want employees fully in the offices, while some adopt a hybrid or fully remote approach. If a company offers some sort of remote working schedule, that would mean less time spent in commute or no need for relocation.
Wellness Allowances: Companies value the well-being of employees because happy employees are productive employees. Companies usually provide allowances for physical and mental activities to encourage employees to remain healthy. It may be a gym membership, reimbursements for particular hobbies or food coupons to promote healthy eating. This is the icing on the cake, and usually, this factor should not be used to judge the compensation. Instead, it should be used to evaluate the culture of the company. It is not about the extra money (it is a small amount anyways compared to the fixed compensation) but rather what values the company promotes by offering those allowances.
Learning Budgets: Companies encourage employees to gain complementary skills or level up by offering or reimbursing courses. For some senior/leadership roles, companies also sponsor the cost of conferences that lead to networking and hiring.
Health and Insurance: Larger companies may have more comprehensive plans with more extensive benefits as they can afford a higher premium. But it is vital to make sure that the company has one as disaster usually strikes without warning.
Relocation: Companies usually help employees relocate if they are in a different city than the office. But some companies also help employees relocate to other countries by sponsoring the cost of visas and travel. This is the proverbial carrot since a large portion of middle-class Indian people wants to move outside of India. Suppose a company hires you with a promise to relocate later. That is usually a bad sign because the company may also have promised other employees. Highly performing employees or those with tenure will be preferred because of the high cost of relocation outside the country.

Conclusion

I've tried to cover as many factors as possible to help make a better decision. You can use an excel sheet to compare job offers objectively by placing each factor into a column and assigning a score to each cell.

But then again, sometimes the decisions are very subjective. Here are some of my recommendations based on the framework above:

Prefer a company with good and passionate people above everything else.
Try to maximise learning and technology in an early career by compromising on benefits (I've explained this in my other blog post Jobs vs Careers).
If you're late in your career with family and other responsibilities, take a hard look at the non-monetary benefits. They may be better in value than a few extra lacs.
Regarding ESOPs - it is essential to set expectations regarding the value of options. At early companies, there is a risk, and for late-stage companies, the difference between exit price and strike price may not be that much. Consider this money extra, a non-guaranteed bonus. At the very least, one should not plan their goals based on the future value of stock options.
Companies that claim to be fully remote usually need to adopt a culture of asynchronous work to have productive employees that are not burned down by back-to-back meetings. Remote work is a lot of things, but it is not back-to-back virtual meetings. The best source of this information is the team you're interviewing for, so getting to know this is essential.