What’s a signing bonus?
Signing bonuses are a form of financial incentive that companies offer to encourage potential employees to join their company. Signing bonuses can be used by companies to increase the value of their hiring deals. This incentive, sometimes called a sign-on bonus (or starting bonus), is offered by potential employers to make their offer of employment more attractive than any other job offer.
Signing bonuses come in many forms, just like compensation plans. A signing bonus falls into one of these categories.
After the employee accepts the job, it can be a one-time lump-sum payment.
You can get it in increments during the first year of employment.
You can combine these payments to get a larger lump-sum payment immediately and smaller additional payments over a specified period after work begins.
Stock options are another option.
You can choose to receive cash or stock options at a mutually agreed-upon time.
There are no set guidelines regarding the amount of a signing bonus. It all depends on the industry norms and what your company can negotiate.
Why are companies giving signing bonuses?
Signing bonuses are offered by companies to potential hires for a variety of reasons.
Hire top executives and experienced managers from other companies. It can be challenging to fill high-ranking management positions. The majority of qualified candidates will find work in another organization. The business will offer a competitive compensation package to encourage them to leave their job and join a new organization. This includes a substantial signing bonus.
Compensation for a lower than expected base salary. It happens that companies are unable to meet the annual salary requirements of prospective employees. The company may offer a signing bonus to make up the difference.
This will offset the loss of vacation pay or bonus. Many employees lose valuable benefits when they move between companies. Signing bonuses can help to make up the difference and eliminate what could have been a significant obstacle.
Relocation expenses are covered. Offering a signing bonus to help offset these expenses can make a difference.
Compete for in-demand workers. Some industries — health care, software development, cybersecurity, and restaurant/hospitality, to name a few — have trouble finding workers to fill open positions. To attract more applicants, companies offer signing bonuses to these less-skilled work environments.
Get hired by the best and brightest. Many companies and firms offer signing bonuses to attract graduates from prestigious universities. These firms offer a significant signing bonus as a boost to job offers since many of the entry-level jobs offered to new grads have lower starting salaries.
How to request a sign-up bonus
You shouldn’t rush to ask for a sign-on bonus. Do your research, decide on the amount you want, time your request perfectly, and use your negotiation skills to negotiate the details.
How to start researching
Before you begin to negotiate a signing bonus amount, learn about the company. What type of bonuses are they likely to give and how often (e.g. quarterly, end-of-the-year)? What is a typical benefits package? What are the criteria for raising your salary and when are you eligible to be promoted?
You might be able to get some insight from someone you know who is already working for the company. You can also research other companies and ask your network for their opinions. This type of information is often provided by recruiters.
Next, compare what you have learned with your current offer. Does the salary offered by the company compare? Is your benefits package sound? This will allow you to determine how much leverage you may have when you negotiate for a signing bonus.
Get the sign bonus amount you desire
Reduce your calculations and insights to one number. This is the amount that you will request as a sign-up bonus. You should be prepared to prove this number with evidence. If you have industry intelligence showing that your salary offer falls a little below the average, you can use that information to back up your claim for the signing bonus amount.
How to request a sign-up bonus
Don’t let yourself get ahead of yourself. Do not broach the topic of a signing bonus too early. This could lead to a loss of negotiation opportunities in the future.
If you don’t have a job offer, mention a signing bonus. — in hand. Do not immediately respond to your employer’s offer by countering. Instead, you should focus on the job duties and other aspects first. Next, ask your hiring manager or human resources (HR), if they are open to a conversation. Be prepared to listen to their ideas if they do. If they do not, you can start the negotiations.
Signing Bonus Negotiation Tips
Start the conversation by expressing your excitement about working for your new employer. Next, take note of the details of the offer and then move on to the compensation package.
Now it’s time for you to pitch for a sign-on bonus. Make sure to consider all the research you have done before you make your case for the bonus. This is how you can achieve this goal:
Connect the amount you are asking for (the what) and the reason you are asking for it (the why). If you’re moving and need help with expenses, make sure you do your research to determine the cost of moving. If you see the bonus as making an otherwise below-your-market-worth salary palatable, offer up the numbers to prove your point and consider this part of your salary negotiations.
Consider your leverage. You’re more likely to be able to turn down a job if you have multiple offers. Before you talk, consider how far you are willing to go to get what it is you want. What is your priority in this extra cash? And what is your willingness to sacrifice to get it?
You should be prepared to respond to counteroffers. There are many ways to create a bonus. There are many ways to get a bonus. You can receive it in increment overtime or on your anniversary. Would you accept more vacation days, or another form of compensation if the company is unable to pay the full bonus? You should not be afraid to think outside the box.
Receive the signing bonus amount in writing
Remember that your signing bonus is a part of your employment contract. It is important to get it in writing. It is important to clearly state the amount, the method of payment, the tax implications, and the retention terms. If an employee leaves before the stipulated time, they must either stay for one year or repay the bonus.
Improve your career and live
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