Once the exclusive purview of professional athletes and highly paid executives, signing bonuses have become more common as employers vie for top talent and in-demand workers find themselves in the position of deciding between multiple job opportunities at one time. While most negotiable signing bonuses today are offered to skilled workers or those seeking professional jobs, today’s competitive job market has companies offering signing bonuses to teachers, grocery store workers, manufacturing assembly line workers, and truck drivers, to name just a few types of jobs now commanding bonuses.
Like everything related to a job search, though, there are conventions and best practices when it comes to asking for a signing bonus. This article will cover what you need to know before you ask for a signing bonus to help increase your chances of receiving what you want and deserve.
A signing bonus is a type of monetary incentive companies use to persuade prospective employees to join their organizations. Companies that offer signing bonuses are trying to sweeten the hiring deal. By providing this incentive — which is sometimes referred to as a sign-on bonus or starting bonus — the potential employer is hoping the additional compensation will make their offer of employment so attractive that any competing job offers will pale in comparison.
There are as many different types of signing bonuses as there are compensation plans. Typically, though, a signing bonus will fall into one of these categories:
There are no hard and fast rules regarding how much a signing bonus should be. It just depends on industry norms and what you can negotiate.
Companies offer signing bonuses to potential new hires for a number of reasons, including:
Asking for a signing bonus isn’t something you should rush into. To succeed, do your research, settle on the amount you want, time your request just right, and draw on your negotiation skills to work through the details.
Before you start trying to come up with a signing bonus amount, know the ins and outs of the company you’re negotiating with. What types of bonuses do they usually hand out and how often (e.g., quarterly, end of the year)? What does a typical benefits package look like? How are raises determined and how often are you eligible for a raise or promotion?
If you know someone who’s already inside the company, see if you can get them to provide some insight. If not, research similar companies and check around with your network for their thoughts. Recruiters are often a good resource for this type of insider information.
Then, look at what you’ve learned in light of your current offer. Is the salary the company offers comparable? Does your benefits package seem sound? This will help you determine what kind of leverage you might have when negotiating for a signing bonus.
Reduce your insights and calculations to a single number: the amount you plan to request as a signing bonus. Be prepared to back this number up with evidence. For example, if you’re armed with industry intelligence that your salary offer is a few percentage points below the average, use that information to support your case for the signing bonus amount you’ve set your sights on.
It’s important that you don’t get ahead of yourself. You don’t want to broach the subject of a signing bonus prematurely and potentially sour any chance of a future negotiation.
Don’t even mention a signing bonus unless you have a firm job offer — complete with salary, benefits, and perhaps even a signing bonus! — in hand. If at all possible, don’t react to your employer’s offer with a counter right away. Instead, focus on the job duties and other aspects of the job first. Then, see if your hiring manager or the human resources (HR) person opens the door for a conversation. If they do, be prepared to respond to their thoughts. If they don’t, it’ll be up to you to start the negotiation.
To get the conversation started, mention how much you’re looking forward to working with your new employer. Then, segue into the compensation package, making note of the offer details.
Now, it’s time to make your pitch for a signing bonus. Consider the background research you’ve done and make your best case for the bonus you’re seeking. Toward this end:
Keep in mind that your signing bonus is part of your employment contract. Get it in writing. Make sure all the details are spelled out with respect to the amount, how it will be paid, whether taxes will be taken out, and what the terms for bonus retention are. Typically, an employee must stay with a company for a year or pay back the bonus if they depart before the agreed-upon time period.
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