Everything You Need to Know About a Signing Bonus

Everything You Need to Know About a Signing Bonus

Depending on your career and your job title, you may be able to get a signing bonus from a new employer. But how much do you know about signing bonuses? Before you accept a job offer, find out everything you should know about this type of bonus.

How Does It Work?

A signing bonus is also referred to as a sign-on bonus. The term refers to a payment given to a new employee. Typically, companies offer signing bonuses after they decide to make a job offer. However, they don't always offer these bonuses. In fact, it's more common for employees to not receive a sign-on bonus than it is for them to receive one.

At times, you need to negotiate for a bonus. But in today's climate, some employers are so in need of workers that they add a signing bonus as an incentive. The people most likely to receive a sign-on bonus are those who have significant experience and those who work in understaffed industries.

If you receive a signing bonus, it will probably be between 5% and 10% of your total salary. You might receive the payment before you begin work, but some employers require you to complete training or work for a set period of time before you have access to the funds.

Why Employees Offer Signing Bonuses

There are a few reasons employers choose to use signing bonuses. For one, they make the employer more competitive. If their leading competitor doesn't offer a bonus, the competitor won't get the best employees. If a job candidate needs to choose between two companies, they are more likely to choose the company that offers a bonus.

In careers such as nursing and engineering, the competitive spirit makes bonuses fairly common. Whether or not a company recruited you can also affect the signing bonus. When a company actively tries to hire you, there's a better chance of you getting a sign-on bonus.

Making Up for Salary or Benefits

If a company sees you as a major asset, they may be willing to offer you a signing bonus for one of two reasons. First, it could be a way to preserve salary equity. If you want a higher salary but the company doesn't want to be unfair to its current employees, they may offer you a bonus to make up for the difference.

There's often not much flexibility with salary ranges, but there can be more wiggle room with a signing bonus. The same is true for benefits. Although a company may not be able to offer you the benefits you want, they might be able to make up for it with your signing bonus.

Should You Take a Sign-On Bonus?

Before you accept a sign-on bonus, make sure you understand what you're agreeing to. In some cases, companies require their employees to pay them back for the bonus if you fail to remain employed with them for a specific length of time.

With that in mind, you probably shouldn't accept a signing bonus if you don't expect to remain with the company for longer than a few months. But then again, it's unwise to accept any job offer if you don't have plans to stick around.

Depending on your situation, a signing bonus might not be the best option. If the bonus comes with a lower salary, you might be better off negotiating for the higher salary. The signing bonus is only a one-time payment, but your salary is an annual value. In the end, a $3000 salary increase pays out more than a $4000 signing bonus.

How To Negotiate for a Signing Bonus

You won't know if you're eligible for a sign-on bonus until you ask for one. Therefore, you should consider bringing the issue up during negotiations. Before you ask for a bonus, familiarize yourself with these tips:

Know Your Value

By the time you enter negotiations, you should know what makes you an asset to the company. Think about what your value is and make sure you can articulate that value to the hiring manager.

Be Specific

To make your negotiations easier, know how much money you want for your signing bonus. If you're not sure how much to ask for, research the industry practices. How much do competitors offer their new hires? Avoid asking for too much or too little.

Build a Strong Case

You might need to make a strong case for yourself. After all, not every employee gets a signing bonus. For you to receive one, the employer needs to feel you deserve it. Come up with concrete examples of your worth and make it clear you will be a long-term asset to the company.

Split the Difference with Salary

If a company is adverse to signing bonuses or only offers small bonuses, negotiate in other ways. Ask for a higher salary instead of the bonus. In the end, you get the money you want. It just comes to you at a different time.

Get Everything in Writing

Don't just take the manager's word for it. If you successfully negotiate for a signing bonus, get the details in writing. The document  should say how the company will pay the bonus as well as any specific terms. If anything seems unclear, ask for clarification.

Does the Signing Bonus Matter?

This is a hard question to answer. If a signing bonus is important to you, it does matter. However, a signing bonus shouldn't be the reason you choose one job over another. There's much more to finding the ideal job than the signing bonus.

When you're looking for a new job, consider all of the details. This includes the salary, hours, room for growth, and daily duties. Additionally, think about what's the industry norm. If everyone gets a signing bonus, you should too.

Finding the right job takes time and effort. The signing bonus should be something you consider, but isn’t the only factor that matters.

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