Sign-on bonuses have always been around. Professional athletes commonly receive big sign-on bonuses when moving to a new sports team. Now, in the midst of the “Great Resignation” — or the rise of workers leaving their jobs since the onset of the coronavirus pandemic — sign-on bonuses have become more accessible than ever. Many companies are openly advertising sign-on bonuses not only to top candidates but to all potential employees. If you have found a job posting or received a job offer with an attractive sign-on bonus, here’s what you should know and consider before taking the next step.
What Is a Sign-On Bonus?
A sign-on bonus refers to an amount of money that a company offers to a job candidate as an incentive to accept their job offer. The bonus can be a one-time payment, several payments over time or stock options.
When Are Sign-On Bonuses Offered?
When a company sees that you can provide a lot of value to their company or you are considering multiple job offers, they may arrange a sign-on bonus as an extra incentive to entice you to come on board. Sign-on or hiring bonuses have also become more commonplace during the coronavirus pandemic to attract job seekers in industries that have been hit the hardest.
[Read: Job Market Outlook.]
When Are Sign-On Bonuses Paid?
A sign-on bonus is given after the candidate accepts the job offer. Some companies pay the sign-on bonus in one lump sum after the new employee signs the paperwork for a new job. Others pay out the bonus in increments over the first year of the job.
What Industries or Jobs Offer Sign-On Bonuses?
Various industries may offer sign-on bonuses but, generally speaking, they are offered mostly to those in management and executive positions as opposed to new professionals entering the workforce. Of course, there are exceptions, such as companies looking to hire employees during the great resignation. New professionals with a certain high-level skill or knowledge that makes them more valuable to the company looking to hire them may also get a sign-on bonus offer. You can research the company beforehand to see if sign-on bonuses are typically offered to incoming employees. You can also ask your network connections for information about common practices in the industry when bringing on new employees.
[SEE: What Hiring Managers Wished You Knew.]
Read the Fine Print
Before accepting a job with a sign-on bonus, make sure you are clear on the terms. You will want to make sure you understand how and when you will receive the bonus so there are no surprises.
Do you have to meet certain requirements, such as completing a provisional period before receiving the bonus? If you decide the job is not a fit and you leave, do you have to return the bonus? Are you missing out on other benefits by accepting the sign-on bonus?
Also, make sure you are clear on when you will get your sign-on bonus. This will depend on the company and circumstances. Ask the company for a copy of the paperwork for the bonus to read over and think about before accepting.
Are They Worth Taking?
Sometimes a company will offset a lower salary by offering a sign-on bonus to a new employee. They may also use a sign-on bonus to make up for benefits that you wouldn’t be eligible for as a new employee. These are both things to consider. After the sign-on bonus is paid out, will you be happy with the salary and the available benefits to you long-term? How long would you have to work there to get a pay increase or more benefits? While you don’t want to give the impression that the salary is the most important thing to you, you can inquire about the company policies and practices.
It’s also worth noting that you will have to pay taxes on the sign-on bonus. Many employers will do this for you. But when calculating the extra money you will receive, make sure you subtract out the taxes you will have to pay to have an idea of how much you will actually get from the bonus. This will allow you to have more reasonable expectations.
[READ: 11 Seasonal Jobs for Retirees.]
Yes, it’s always good to negotiate the sign-on bonus, especially if you would prefer to have a higher base salary or other employee benefits. For example, you could negotiate a smaller sign-on bonus that would allow you to receive a higher overall salary as opposed to a bigger sign-on bonus and a smaller base salary. You could also negotiate a lower amount for a sign-on bonus in exchange for a certain employee benefit that you would prefer to have. Some companies will be flexible, and others cannot offer a higher base salary to new employees due to policy. That’s why it’s important to do your research to know what options are available to you.
You could also initiate the sign-on bonus proposal to the hiring manager. If they aren’t able to offer you some of the benefits or base salary that you are looking for, you could propose a sign-on bonus that would make accepting the job worth it to you. To do this, you need to be confident in your value and worth as a professional. It’s also important to know the average salary rates for your profession and experience. You can present this information to the hiring manager and propose that they include a reasonable sign-on bonus in the job offer.
More from U.S. News
10 Things to Do Before Resigning
How to Make the Most of Your College Career Center
What Is a Certified Financial Planner?
What to Know About Sign-On Bonuses originally appeared on usnews.com
Update 11/29/21:
