A signing bonus or sign-on bonus is an amount paid to a new employee As an incentive or motivation to join their company. As compensation for the signing bonus, the employee will receive a salary package lower than what they desire.
A signing bonus is usually an asset to the company as it is a one-time payment if at all an employee fails to meet the expectations of the company, the company can just terminate the employee. Approximately 67% of employees received a signing bonus at their current workplace.
Should you ask for a signing bonus?
You should ask for one because it gives you a financial boost when you get money at the beginning of your work and you feel more motivated into working and gives you a sense of strength. Other than that there are not many reasons to take a sign-on bonus.
When a company offers you a signing bonus it’s for two reasons mainly, either to beat the competition with other employees or to make up with benefits that are not included in the package.
By understanding the terms and conditions of taking a bonus, you can decide on either accepting or declining the offer.
How to negotiate
Before the negotiation, you need to strategize and think through options carefully to avoid getting conned.
Just because they offer you a signing bonus with a particular dollar amount doesn’t mean that it is not negotiable.
If the company has not offered you a signing bonus, consider opening up a negotiation with the respected authority.
Here are five steps and tips that can help you to prepare for a negotiation
Step 1: Wait for the official offer
Wait until you get the details of your salary and benefits. If you have already been offered a bonus, you have the advantage of negotiating a better one. If you have not been offered, no worries, wait for the hiring manager to strike up the conversation or wait for the right time for you to start one.
Step 2: Research about salary and bonus openings
To ensure you get that bonus you need to build a case for why you deserve it.
Research your company and find the benefits that they offer in general then make a comparison with benefits offered by other companies.
Write them all in detail and make a strong case.
Step 3: Have a definite amount and the justification for it
If your research is good enough, you have a better chance of getting a perfect bonus and the authority will be ready to talk numbers.
Mention the values that you will bring to that company which shows why you deserve the bonus. You could also mention how company M offers a better salary package and how company N offers better benefits to their employees.
Step 4: Be open to negotiation
If the hiring manager is ready to offer you a bonus but is less than what you expected, have a minimum amount that you’re willing to accept
A reasonable negotiation is where you ask for 75% of your initial offer but with extra benefits. That way the employer can hire you easily while accepting the hiring bonus.
Step 5: writing it down
Just like your salary the signing bonus needs to be contracted. This gives you the right to request payment if you haven’t got it on the agreed date.
Be aware that all the details and conditions are present in the contract, including the bonus amount, method of payment, and how long you need to be employed to keep the bonus.
The hiring process can be exhausting especially when it comes to salary and bonus negotiations. Firstly you need to decide if you want a signing bonus after knowing its pros and cons. If you do want a bonus you need to know how to ask for it, which can be stressful. Being prepared helps you to be calm and stress-free.
Remember to do your investigation to have a better understanding of the company and its terms.
Now that you know how to ask for a bonus, use these tips to increase your chances of getting one.
Frequently Asked Questions
- What can I do after taking a signing bonus?
A: A signing bonus can be used as a good investment. You could start an emergency fund that will help you in the unplanned events of your life, or you could invest it in the stock market as a long-term investment.
You could also use it to pay off your debts or student loan.
- What is the average signing bonus?
A: The amount can vary concerning the company and the position that you are in.
Usually, a signing bonus is 10 percent more than your annual income. So if your salary is $50,000 you will get a bonus of $5000.