Ask the Experts: How to Negotiate a Signing Bonus

Question:

First Answer:

Signing bonuses vary from company to company and there is not standard policy. It is up the the company. I would not call it a “dirty trick” but
be aware that you will probably be asked to sign a contract that states
that you will work for this company for a certain amount of time. If you
breach that contract, all or part of the sigining bonus would have to be
paid back. As to when you would get the signing bonus, that can also very
from company to company. Some will give it all do you in the
beginning. Some will give you part in the beginning and the rest at a
later time. When you commit to a signing bonus, be sure that this is a job
that you want to stay in for whatever the bonus period covers. It is
really only smart business for a company that pays a signing bonus to
protect themselves from someone getting the bonus and then leaving after a
short period of time.

— Linda Wyatt, Career Center Director, Kansas City Kansas Community College

Second Answer:

I could be old-fashioned, but negotiating financial aspects of employment, such as a sign-on bonus, are best when discussed in-person or over the phone. Email is a wonderful tool, but it doesn’t offer the same affect as speaking and negotiating with someone on a personal, professional level.

You and the hiring manager are the only persons who can determine if you’re worthy of a sign-on bonus. The amount of a sign-on bonus can range from 20% up to 200% of the base salary (more for executive-level positions), depending on the industry. To determine the right amount for you, think about the expenses you’ll incur for changing employers, such as relocation and cost-of-living difference. Let the hiring manager provide you with an amount, take 1-2 days to think about it, and determine if renegotiations are in order or if the initial offering is fair.

Sign-on bonuses are connected to the amount of time you plan to commit, and the amount revolves around the prospected base salary and the company itself. Sizable bonuses are typically reserved for high-profile positions, along with positions that are difficult to fill, such as nurses. Bonuses woe individuals who are employed with other companies to consider changing positions. After all, the old adage “everything is for sale, but at the right price” falls true when trying to obtain candidates for particular positions.

As with any agreement, especially when $$’s are involved, it’s best to get the details of your hiring package in writing. A big concern is the scope of the position presented by the company versus the actual duties once employed. One of the biggest complaints I hear from my clients is that they have a difficult time fulfilling their commitments once employed because the business misrepresented the position during the “dating period.” Ensure that you have a full comprehension of the company, along with the proposed needs of the department, so there are no surprises during your 2-year tenure.

— Teena Rose, a certified and published résumé writer and career specialist with Résumé to Referral

Third Answer:

First, congratulations on your offer. Negotiating an offer can be tough, but rewarding in the end. Keep in mind that anything is negotiable–including a hiring bonus so kudos to you for asking. That said, there is no guarantee that you will be successful in the negotiation or a specific amount you should or will receive. Organizations typically budget for a position so your negotiation leverage will be limited to some extent. For example, if you were offered $40,000, the organization may have budgeted between $38,000 and $45,000 for the position. Any salary increase they give you will likely come from the department’s budget. Signing bonuses however often come from the HR budget, so whether or not you receive one may depend on how much of a budget they have left for such bonuses.

It’s also a better idea to negotiate for a higher salary than a signing bonus. A signing bonus is a one-time payment (subject to full taxes just like your salary) while if you negotiate a salary increase, you’ll receive that for years to come. Since you’ve already asked for a bonus however, there are a few things to keep in mind.

2. You will likely receive the signing bonus upon acceptance of the offer, a few days after or on your first full day of employment (organizations differ here). Full taxes will be taken out, so estimate the bonus to be about 38-44% less when you actually receive the check.

3. Keep in mind that making any promises as a condition of employment is risky. For example, committing to work for the organization for two could be construed as a verbal contract. What happens if you’re there for a year and become very unhappy? The organization could force you to stay.

4. Regardless of the outcome, always ask to see the complete offer and conditions of employment in writing. If there are conditions such as length of time in role, or signing a non-compete agreement, it is always a good idea to have an employment attorney review the offer before you formally accept it.

— Susan Strayer, Assistant Director, Career Services, School of Professional Studies in Business and Education at the Johns Hopkins University and founder and President of University and Career Decisions

Fourth Answer:

Whenever you negotiate a salary you risk that the offer could be withdrawn. That said, you never know what you can get until you ask for it. I like the expression, “The answer is always, ‘NO’ unless you ask the question.”

The tricky part about hiring or signing bonuses is that they are usually taxed at 41.5% ! So, if you were planning to buy a big couch for your living room – think big “bean bag chair” instead.

You also took a risk when you committed to two years. Who knows what could happen during this time – you may stay a longer or shorter period of time. Life is too unpredictable to know what you will be doing two years from now.

Best wishes on it working out for the best – all the way around.

— Carole Martin, The Interview Coach

Fifth Answer:

Let’s take this step by step:

2. Entitlement to a signing bonus: The research I did on signing bonuses indicates these are usually
   offered for positions where the need is high and the
   available talent is scarce. These types of bonuses are typically for those who will be with the company for at least one year and appear to be committed to staying on longer. It appears you are indeed entitled to one. Otherwise, there would be no discussion about it.

3. Typical Amount of Bonus: In my research, I could only find limited information about signing
   bonus amounts. The data was from 1999 and the sampling
   was relatively small (less than 1300 respondents). The
   average bonus range was $1,000 – $2,999. (From
   American Institute of Graphic Arts, Resources (HTML version)

4. Time of Payment: I did some checking around in various places on this issue. Different companies
   have different manners of paying signing bonuses. Some
   pay the amount as the first salary check. The majority
   of companies appear to pay the amount out over time,
   but they still vary as to how much and when. The
   standard seems to be about one-third to one-half after successful completion of 30 days or some sort of probationary period. The second and succeeding installments are paid upon the successful completion of another milestone. This is usually another six months or up to one year without break in service.

   You should also be aware that if you leave before completing your time commitment, you may be expected
   to repay a prorated amount of what you received in
   anticipation of staying with the company. This may be
   part of an employment agreement you sign.

5. Typical Dirty Tricks: I don’t know of any dirty tricks on the company side. Many of the
   companies I researched were concerned about getting
   burned by the candidate who left early with all of the
   bonus they were paid for committing to a long-term relationship.

If they’re asking you about how long you’ll commit to working for them and entertaining the accompanying considerations, I’d say you’ve been offered the job. By asking for a signing bonus, you made a counter offer which they may or may not accept, depending upon how convinced you’ve made the company feel about your commitment to being a long-term, productive team member.

May all of your Entrances be through the doors of success!

— Yvonne LaRose, career and professional development coach, Career and Executive Recruiting Advice

Originally posted by alwin