Negotiating salary with candidates can sometimes be tricky -- particularly if you're extremely excited about a potential candidate, but she's asking for salary well-above the set salary range for the role. For instance, you might offer more vacation time, higher bonus potential, or commuting reimbursement. Alternatively, you might consider offering a sign-on bonus, which is a one-time increased payment to help you reach a total compensation package that is attractive to the candidate and offers a (sometimes significant) short-term financial incentive. Typically, you'd offer a sign-on bonus to create a more attractive total compensation package for a candidate. Additionally, a sign-on bonus could help you incentivize against competing offers to make the candidate's first year more lucrative and competitive to another offer. In a case like this, you might consider including a sign-on bonus to make the total compensation package more attractive to the candidate. While your compensation expense as an employer in the first year is the 10K sign-on plus the prorated total salary, in subsequent years you are only paying the base salary. While you might not be able to afford to pay her 5K more over the next couple years, you could find the funds to make the offer more appealing to her. Year two, when your candidate sees her total cash compensation comprised only of the base salary in the absence of the sign-on bonus, she might feel underpaid or under-appreciated -- or like she just received a pay cut. You'll need to ensure your company can offer it immediately.
Negotiating salary with candidates can sometimes be tricky — particularly if you’re extremely excited about a potential candidate, but she’s asking for salary well-above the set salary range for the role.
When this is the case, there are a number of elements of an offer outside of salary that a candidate may place significant value on, and could carry more weight when deciding to join your team. For instance, you might offer more vacation time, higher bonus potential, or commuting reimbursement.
Alternatively, you might consider offering a sign-on bonus, which is a one-time increased payment to help you reach a total compensation package that is attractive to the candidate and offers a (sometimes significant) short-term financial incentive.
Of course, like with anything, there are pros and cons to sign-on bonuses. Keep reading to figure out whether a sign-on bonus is really the best tactic for your recruitment team or HR department.
Signing bonus
A signing bonus, or sign-on bonus, is a one-time sum a company might give a new employee as incentive to join the company. Typically, you’d offer a sign-on bonus to create a more attractive total compensation package for a candidate. Additionally, a sign-on bonus could help you incentivize against competing offers to make the candidate’s first year more lucrative and competitive to another offer.
Pros and Cons of Sign-On Bonuses
Pros
1. A sign-on bonus is a one time payment.
Let’s say your candidate asks for 100K, but you’re only able to offer 90K for the role. In a case like this, you might consider including a sign-on bonus to make the total compensation package more attractive to the candidate.
While your compensation expense as an employer in the first year is the 10K sign-on plus the prorated total salary, in subsequent years you are only paying the base salary.
This has less of a financial burden for your company in the long run.
2. A sign-on…
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