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After receiving an initial job offer, you may find that a sign-on bonus is part of the package. While any sign-on bonus is often a boon, figuring out whether yours is competitive may seem like a challenge. Fortunately, there is a way to determine whether it’s a strong offer. Here’s a look at what a sign-on bonus is and how to tell if you got a great one.
What Is a Sign-On Bonus?
A sign-on bonus is a financial incentive designed to entice you to accept a new job offer. Typically, they come in a few different forms. Some are one-time lump sum payments that you receive on a specific date. With these, you may need to remain with the company for a particular period, such as 90 days, six months, or one year. Once the outlined date arrives, you get the entire amount all at once.
Another version of the sign-on bonus involves annual installments. Typically, you receive the first payment relatively quickly after beginning the job. Then, you’ll receive the rest of the sign-on bonus in subsequent annual payments. With these arrangements, the payment schedule should be outlined upfront, letting you know exactly when you can expect the remainder of the funds.
While sign-on bonuses always function as financial incentives, they can serve additional purposes. Along with helping the company secure your skills, sign-on bonuses may offset lower salaries. Additionally, they could be used as compensation for benefits that you elect to forgo or wouldn’t receive adequate value from, though this isn’t as common.
How to Tell If You Got a Great Sign-On Bonus
As with all parts of your compensation package, determining whether your sign-on bonus is competitive usually requires research. Often, this is a bit complex, as you don’t want to compare sign-on bonus information alone. The value of other aspects of compensation packages also matters as the goal is to get the most total value possible.
Ideally, you want to explore what competitors usually bring to the table in regard to salary, benefits, perks, and sign-on bonuses. By comparing the competitor offerings to the value of the total compensation package outlined in the job offer, it’s easier to see if you’re coming out ahead or are at least in the ballpark of what’s available elsewhere.
How to Negotiate a Better Sign-On Bonus
If you feel that the total compensation presented in your job offer falls short, you can attempt to negotiate the sign-on bonus in your offer. Use your research to show that the total compensation package falls short of what competitors offer and demonstrate the value of what you’re bringing to the table. By doing so, you can create a strong case for additional compensation, which may result in a larger sign-on bonus.
However, don’t focus on the bonus alone. Instead, consider other compensation increases that can also provide the proper value. Options like a higher salary, additional ongoing performance bonuses, better benefits, more paid time off, and similar offer improvements can all work in lieu of a stronger signing bonus. Just consider what may also meet your needs and express an interest in exploring those alternatives if raising the sign-on bonus isn’t possible.
Additionally, if the company isn’t able to align the total compensation package with industry norms, then you need to consider how that impacts your feelings about the job. If you get enough value elsewhere, such as by getting to join an exceptional culture or having ample opportunities to develop professionally, the lower compensation might not be problematic. But if what you’ll gain doesn’t offset the lower compensation, turning down the job could be worth considering, as that allows you to relaunch your job search and continue working toward an opportunity that can better meet your needs.
Have you ever received a sign-on bonus and want to tell others about your experience? Do you plan to negotiate for a sign-on bonus in the future? Share your thoughts in the comments below.
This article was originally published on The Free Financial Advisor