With the job market getting hotter and hotter, both employers and employees are experiencing issues. Employers are struggling with finding, attracting, and hiring savvy workers in their industry. Employees, in their turn, have a hard time landing jobs in companies that would provide caring working environments. Therefore, both parties have to come up with new solutions on how to achieve their employment goals.
One of these solutions is a sign-on bonus. In our article, we discuss what a sign-on bonus is, what kinds of sign-on bonuses exist, and the workable tips on how to negotiate a sign-on bonus if you’ve already got a job offer.
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The word “bonus” itself sounds delicious. However, there is a huge array of different bonuses, and if you claim one, you should completely understand what this bonus implies. Let’s look at the sign-on bonus and its peculiarities and figure out if it really makes sense to require one.
To make it clear, a signing bonus, a hiring bonus, a starting bonus, and a sign-on bonus are all the same. They stand for a one-time financial reward to a new employee as an additional monetary incentive to pick the company over others and accept their job offer. Normally, only middle and senior-level positions are entitled to a signing bonus, not entry-level ones. The terms and conditions of giving a hiring bonus may, however, vary from company to company.
As we’ve already mentioned, a sign-on bonus is a financial incentive offered to prospective and competitive candidates to encourage them to land a job. There are three options for how this financial incentive may be paid out:
In terms of the size of payments, hiring bonuses stand at 5% up to 20% of the fixed gross annual salary, depending on the role. According to GlobalData research, sign-on bonuses range from $150 up to $100,000 nowadays. According to Harvard Law School, managers and executives can typically count on signing bonuses between $10,000 and $50,000 and even more. Clerical and technical workers are usually entitled to sign-on bonuses of under $5,000. McDonald’s offers a $500 sign-on bonus. There is still no one-size-fits-all rule about assigning a starting bonus, conditions vary from company to company or are negotiated individually.
Even though the idea of getting a bonus doesn’t seem to have any drawbacks, an employee should keep in mind that receiving a hiring bonus entails some duties they have to fulfill. For instance, refunding the amount of the bonus payments in case they decide to leave the company before a certain period of time. They are normally stated in the employment contract.
Secondly, the signing bonuses are taxed. The IRS classifies bonuses as “supplemental wages”, or simply wages that aren’t regular. What tax to withhold depends on whether your employer identifies the bonus as a separate payment from regular wages or not. Check the “supplemental wages” section on the official IRS website to get more information about it.
Finally, remember that the signing bonus is a single payment. Given you can negotiate a nice increase in your annual salary instead, you can benefit from it much more.
It’s interesting that a starting bonus used to be a prerogative of a limited list of professions like sports starts. The 2021-2022 pandemic became a game changer. Millions of people reconsidered their lifestyles and working conditions. Instead of jumping on the first best option, employees got picky, and many companies encountered staff shortages and fierce competition for the best talents.
According to the 2022 survey, one-third of responding companies tend to utilize sign-on bonuses to stand out from other employers. Another 2022 survey has shown that financial compensation beyond salary is the 3rd most desired requirement for candidates, whereas it doesn’t even appear on the employers’ lists of intensives at all.
As we can see, receiving a sign-on bonus may prove to be quite a challenge, as it hasn’t become a widespread perk offered by employers so far. If you’ve considered all the intricacies of receiving a hiring bonus and you’re still interested in getting one, there are some tips on how to negotiate it professionally.
Knowing the market value of your role will help you understand if it’s relevant to anticipate a sign-on bonus. Some companies possess little salary flexibility. It may happen that you’ve felt a special connection with an organization, but you’re not happy with the salary they offer. It’s a good opportunity to negotiate a starting bonus as compensation for the salary gap during the first year.
If they are ready to negotiate, do the market research to know the real situation and be reasonable with the numbers you are requiring. You should know the average salary and average signing bonus (if it exists) that a specialist with your experience and skills is entitled to. If you’ve faced a firm no on all items, prepare yourself to accept the defeat calmly and with dignity, and make a list of benefits that would make you happy instead.
While your CV is laconic and provides dry numbers, your presentation is something that adds colors to your image. You may share some outstanding facts or situations which are hiding behind the numbers and, therefore, form a more vivid understanding of what kind of a specialist you are in practice. Furthermore, it’s a good chance to demonstrate the level of presentation and negotiation skills you possess.
We might be experiencing a candidate-driven market and serious staff shortages nowadays, but it doesn’t mean all employers will be submissive and cooperative. Under no circumstances should this fact tick you off. There can’t be any aggression, neither open nor covert. Furthermore, avoid threatening them to accept another job offer if they don’t meet your requirements – manipulation is not a good way to start cooperation. Finally, don’t compare their company to others – different companies have different financial capabilities, and it has nothing to do with candidates.
What you should do instead of the things mentioned above:
Finally, you may use a sign-on bonus option as an alternative to benefits that are not included in your contract, such as comprehensive health insurance coverage or gas mileage reimbursement due to long-distance daily commutes. You may explain that some of the benefits are not relevant, and you aren’t going to use the company’s money on them. Or, if a company offers a good sign-on bonus, but you’d like a higher salary, offer a smaller or no bonus in return for the base salary you’d want to get.
