You have been working hard for a company for quite some time and you are now looking to ask your boss for a signing bonus. But what is a reasonable amount? What can you offer in return? Employers are often willing to provide an incentive for a candidate to accept their job offer.
This is usually done in the form of a signing bonus or relocation fee. Signing bonuses are provided by employers as an incentive for you to accept their job offer but can be conditional on factors such as your experience level and current salary.
What is a Signing Bonus?
A signing bonus is a fixed sum of money given to a new employee or prospective employee in exchange for their talents and skills and to persuade them to sign with you. Is a signing bonus a legitimate offer?
If a potential candidate says he is negotiating for a $50,000 bonus, what do you think? Now if you ask the candidate to tell you more about their potential bonus, you might be surprised to learn that this individual has not made a formal offer.
Although this is uncommon, a signer might not want to rock the boat and tell you he doesn’t know how much he will make, since the bonus is a hypothetical figure that will be higher or lower than what he is paid.
What is the average signing bonus?
The average signing bonus for jobs in financial services is $7,500, according to PayScale’s 2018 salary survey. PayScale was able to analyze data from over 9,000 recent college graduates to compare their earnings with the amount of a bonus given to them upon signing their jobs.
Highlights of their report also stated that the average financial services worker received a signing bonus worth $14,600, a number which has remained relatively consistent over the past three years. On the other hand, the average starting salary for an employee in healthcare is $30,000.
While the average salary survey includes different positions, it is still more consistent in terms of a range of $14,700 to $20,600.
How to ask for a signing bonus?
A signing bonus can be a great way to sweeten your offer before joining a company. However, many candidates are unsure of how to ask for one. Here are some tips for asking for a signing bonus:
Wait for the right time
The best thing you can do when asking for a signing bonus is take into account your specific situation and what you feel comfortable with. There’s nothing wrong with waiting 3-6 months if that makes the financial burden easier.
Or, maybe you’re in such dire need of money that you need it right away. Some people prefer not to ask for anything at all upfront and wait until they’ve proven themselves.
Don’t think your boss is going to remember
Employees often take it for granted that their boss is going to remember for a signing bonus. There are some reasons why this may not be the case. First, there’s a good chance your boss doesn’t know how much money to ask for in a signing bonus.
Second, your boss may not be aware that you’re due a signing bonus at all! It’s important to get an idea of how much money you’re worth and what other people in your position are getting from other employers.
Catch your boss in a good mood
It’s a good idea to catch your boss in a good mood to ask for a signing bonus. When you’re in a bad mood, they’ll see that and it’s going to be harder for you to get what you want.
There are a few ways to make sure your boss is in a good mood when you ask them.
First off, stay on their good side by putting in the extra work for them. This could be anything from an extra project or two, working overtime without asking, or even waking up early the morning of your request so they don’t have any complaints.
In addition, try not to bring up any issues with work when making your request. Finally, be confident and speak clearly when making your request. It can be tough to know how to go about asking for more money.
While some bosses are happy to give you an annual raise, others might be hesitant because of the company’s financial situation or because it costs too much money.
Know what you want
Make a list of the benefits that would make you happy at the company that you are considering joining, including:
- A raise in salary (if they give you one)
- A change in project, status, or organization
- An opportunity to use their products or services
- Increased vacation time
This will help you to focus your arguments on what you’re after. Don’t assume they are giving bonuses to the best candidates. Do your research and make sure you have a solid argument to convince them.
Wear a poker face. While your goal is to try and get the best deal possible, don’t be scared to walk away from the table when you are not getting what you want.
Tips for negotiating a signing bonus
Know what they’re offering. Get used to saying, “You’re so lucky you get to be my boss.” Come prepared with a number based on research on your value compared to another talent on your team. Above all else, make sure to maintain your composure.
This is usually the most challenging part of the entire negotiation. If you’ve decided that negotiation is the best path for you, now’s the time to start preparing for that next interview. How do you expect to negotiate your next bonus or pay raise?
Make sure that your offer is competitive
It is suggested that when you start negotiating a salary, you let it run for a while until your asking price has dropped so that you can give an official offer once you’re closer to the finish line. Make sure that your offer is as competitive as possible to win the negotiation.
Provide a work availability agreement before you start negotiating, you need to ask for a work availability agreement. This means that you will be working a set number of hours and be available to work during those hours.
This will help your bargaining position. Don’t accompany your negotiator. Your negotiating partner should be your HR person or someone you trust to be unbiased. When you start negotiating, make sure you don’t accompany your HR person or someone who works for your potential company.
Analysis salary and bonus opportunities
Use websites like Salary.com to find the current market value of your position, and find out what the best offer you’ve received in the past is. You’ll want to use a clear formula to base your request.
Simply answer a few questions that tell your hiring manager the amount of money you’d like, which positions you’d like to see and if you would be willing to accept a signing bonus. The more information you can provide about your offer, the better off you will be in negotiations.
Start with the right mindset
You need to start the conversation in an optimistic mindset. Sometimes, the employer will feel under pressure to hire a candidate and will see a big sign-on bonus as a way of saying yes. You should also go into the negotiation looking for ways you can upgrade your salary instead of just demanding a higher figure.
Try to be as objective as possible when you negotiate. Be professional and get your request in now. That way you can get an agreement in writing and ensure both sides stick to it. If you are being offered a base salary, try to be flexible.
Ask for what you want
Never discuss the details of your bonus with anyone other than your recruiter and if they’re involved in your hiring process, the hiring manager. Your recruiter will bring it to you, and the hiring manager will likely be too focused on hiring to spend time on your bonus discussion.
You have to have some time to finalize your bonus offer. For the best results, give your recruiter a few days to finalize your offer so it will be given the best chance of being accepted. In addition, be sure to send a letter to the hiring manager detailing what you want and why you deserve it.
One of the biggest mistakes you can make is to give a set number of weeks for the hiring manager to think about your offer.
Why do employers offer a signing bonus?
Companies offer signing bonuses to attract employees who are in high demand and to attract candidates with specific skills. Although this is a normal practice in the job market, there are downsides to offering a signing bonus.
Pros of a signing bonus
A signing bonus can be used to do something special with your spouse or partner, such as going on a vacation. A lot of times, people will look at the amount of money that they’re getting paid and then calculate what their annual salary is going to be.
On average, it’s about 33% less than what you’ll make in total; plus, you’ll also have benefits like health insurance and retirement programs.
Cons of a signing bonus
However, there are many disadvantages of asking for a signing bonus:
- The offer may not be as good as it seems because the employer can change its mind and withdraw the bonus.
- A signing bonus reduces the bargaining power of the employee.
- It’s difficult to provide a signing bonus if you want to hire someone with less experience because they may not have any other offers to compare yours with.
How much should you ask for?
Unfortunately, no matter what your industry or salary is, and no matter how committed you are to your company, it’s very unlikely that they will pay you more than they initially promised you. That’s because the best companies know that the competition for the best talent is so stiff that you can easily go to a competitor.
That said, because the hiring process is so competitive, companies offer an incentive to candidates that can potentially get them over the line. That’s why it’s important that you carefully research the perks of every company, and you need to try to do some math to calculate how much you should ask for.
Spending your signing bonus
While many companies do offer some type of bonus or free healthcare, company parties, and reimbursements for job site expenses and travel, keep in mind that bonuses are not to be spent as frivolously.
Spend them on the big essentials first, like rent and moving costs, then if you have money left over, it may be a great opportunity to save up for an emergency fund. Once you get used to your new salary and gain some savings, you can start saving for your retirement plan.
Conclusion
There are several ways to finance a signing bonus. Instead of settling for the lowest salary, you may find that you can have more freedom to negotiate based on your role and the role of the person who is hiring you.
Whatever the case, you should do your research to ensure you are making the best possible hire for your company. The sign-on bonus is an important way to increase your salary if you have an excellent employer and if you are interviewing with a great company.
Frequently asked questions
Question 1.) What is the average signing bonus?
Answer- The average signing bonus for jobs in financial services is $7,500, according to PayScale’s 2018 salary survey.
Question 2.) Why do employers offer a signing bonus?
Answer- Companies offer to sign bonuses to attract employees who are in high demand and to attract candidates with specific skills.
