How to Claim a Signing Bonus

If you are in the final stage interview for a new job Or an offer has been accepted and compensation details are being worked out, it’s time to consider whether and how to claim a signing bonus.

Once the exclusive prerogative of professional athletes and well-paid executives, signing bonuses are becoming more commonplace as employers compete for top talent and in-demand workers find themselves juggling multiple job opportunities simultaneously. While most negotiable signing bonuses today are offered to skilled workers or those seeking professional work, today’s competitive job market has companies offering signing bonuses to teachers, grocery workers, manufacturing line workers, and truck drivers, to name a few. Example job types now command bonuses.

However, as with all things job hunting, there are some conventions and best practices when it comes to claiming signing bonuses. This article will cover what you need to know before claiming your signing bonus to help you increase your chances of getting what you want and deserve.

What is a signing bonus?

Signing bonuses are a monetary incentive that companies use to persuade potential employees to join their organization. Companies offering signing bonuses are trying to sweeten hiring deals. By offering this incentive—sometimes called a signing bonus or starting bonus—potential employers hope that the extra pay will make their job offer so attractive that it will dwarf any competing job offers.

There are as many compensation plans as there are different types of sign-on bonuses. Typically, however, signing bonuses will fall into one of the following categories:

• It can be a one-time lump sum payment after the new employee accepts the job.
• It can be paid incrementally during the employee’s first year of employment.
• It can be a combination of these types, where a large one-time payment is made immediately, followed by smaller additional payments for a specific period after the job begins.
• It can come in the form of stock options.
• It can be a combination of cash and stock options paid on a mutually agreed upon schedule.

There are no hard and fast rules about how much the signing bonus should be. It just depends on industry norms and what you can negotiate.

Why does the company give out signing bonuses?

Companies offer signing bonuses to potential new hires for a number of reasons, including:

• Steal senior executives and experienced managers from other companies. Filling senior management positions can be difficult. Most qualified candidates will be placed in other organizations. To entice them to jump ship and move to a new company, the company will make the compensation package as attractive as possible (including attaching a sizable signing bonus).
• Compensation must provide a lower base salary than expected. Sometimes, companies are unable to meet the annual salary requirements of potential employees. To make up for this shortfall, companies may offer signing bonuses in the hope of making a sizable upfront payment to make up for the inability to offer a higher salary.
• Offset the loss of bonuses, vacation pay or other benefits. Often, when employees move from one company to another, they lose valuable benefits. Signing bonuses can compensate for this and remove what could be a major hurdle.
• Pay for moving costs. If potential employees face expensive moves, offering signing bonuses to offset those costs can tip the scales in the company’s favor.
• Compete for in-demand workers. Some industries—health care, software development, cybersecurity, and restaurant/hospitality, to name a few—have difficulty finding workers to fill open positions. Companies offer signing bonuses in these understaffed work environments to be more competitive in attracting applicants.
• Compete for the best and the brightest. Some companies and corporations use the promise of signing bonuses to lure graduates from elite universities. Since the starting salaries for entry-level positions offered to many new graduates can be lower, these companies add substantial signing bonuses to support job opportunities.

How to Claim a Signing Bonus

Asking for a signing bonus is not something you should rush for. To be successful, do your research, determine the amount you want, schedule your request just right, and use your negotiating skills to get down to the nitty gritty.

what to research first

Before you start trying to come up with a signing bonus amount, learn the ins and outs of the company you’re negotiating with. What types of bonuses do they typically give out and how often (eg quarterly, year-end)? What does a typical benefits package look like? How is the raise determined and how often are you eligible for a raise or promotion?

If you know someone who is already inside the company, see if you can get them to provide some insight. If not, research similar companies and see what they think in your network. Recruiters are often a good resource for this type of inside information.

Then, based on your current offer, see what you’ve learned. Are the salaries offered by the company comparable? Does your benefit package look reasonable? This will help you determine what kind of leverage you might have when negotiating a signing bonus.

Know the amount of signing bonus you want

Reduce your insights and calculations to a single number: the amount you plan to claim as a signing bonus. Be prepared to back up that number with evidence. For example, if you have industry intelligence that indicates your salary is a few percentage points below average, use that information to support the signing bonus amount you set.

When to Claim a Signing Bonus

The important thing is not to get ahead of yourself. You don’t want to bring up the topic of signing bonuses prematurely, and it could ruin any chances of future negotiations.

Unless you have a sure job offer, don’t mention signing bonuses – including salary, benefits, and maybe even signing bonuses! – in hand. If possible, don’t immediately react to your employer’s offer. Instead, focus first on job responsibilities and other aspects of the job. Then, see if your hiring manager or human resources (HR) person has opened the door to a conversation. If they do, be prepared to respond to their thoughts. If they don’t, it’s up to you to start negotiating.

Signing Bonus Negotiation Skills

To start the conversation, mention how much you look forward to working with your new employer. Then, go to the compensation package and note the offer details.

Now, it’s time to get the word out about the signing bonus. Consider the background research you’ve done and make the best statement for the bonus you seek. to this end:

• Link the amount you are requesting (what) to the reason for your request (why). For example, if you are moving and are seeking help with expenses, show that you have dutifully determined the cost of the move. If you think the bonus makes a salary below your market value palatable, provide numbers to prove your point and consider this part of the salary negotiation.
• Think about your leverage. If you have multiple offers and if your numbers are not met and have the ability to drop this, then you are in a completely different negotiating position than if the job was your only offer. Know how far you are willing to go to get what you want before you start talking. How important is this extra money to you and what are you willing to give up to get it?
• Be prepared for a counteroffer. There is more than one way to formulate bonuses. You can get paid up front, incrementally over a period of time, or on work anniversaries. Will you accept more paid vacation or other forms of compensation if the company can’t pay you the full bonus you want? Don’t be afraid to get creative.

Signing bonus amount in writing

Remember, your signing bonus is part of your employment contract. Obtained in writing. Make sure to detail the amount, how it will be paid, whether taxes are deducted, and the bonus retention terms. Typically, if an employee leaves before an agreed-upon period, they must stay with the company for a year or repay the bonus.

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