If you’re looking for a way to land that top candidate who may be weighing multiple job offers, consider sweetening your offer with a sign-on bonus.In a recent Robert Half survey of 2,500 hiring managers in the United States, 30% of respondents said they offer these upfront payments to attract and hire skilled candidates. If you’re looking to learn more about this effective recruiting strategy, plus best practices for incorporating sign-on bonuses into your job offers, we’ve got you covered.
A sign-on bonus, sometimes called a signing bonus, is a financial incentive offered to help persuade a potential new hire to accept the job offer.The sign-on bonus amounts for jobs — and how they are paid — vary widely by industry and position level, but a reasonable signing bonus generally falls between 5% and 20% of the base salary. Smaller bonuses are usually paid in full right away, while larger bonuses may be handed out over time or come with strings attached (more on that below).Signing bonuses work well as a recruiting tool in many situations, especially those where a candidate has in-demand skills that are not easy to find. Offering sign-on bonuses is a way to let candidates you really want to hire know in no uncertain terms that you mean business and are willing to show it from the outset — before they’ve even worked a day on the job. Simply stated, sign-on bonuses work by sweetening the job offer.Get the Demand for Skilled Talent report from Robert Half for additional insights to help you in your recruiting efforts.
Below are some of the most common situations when employers decide to offer sign-on bonuses:To recruit for hard-to-staff positions: A recent Robert Half survey shows that employers in many sectors find it challenging to attract top talent, with 86% of respondents saying it is either very challenging or somewhat challenging to find skilled professionals. In such a competitive environment, a signing bonus could tip the scales in your favor.To bridge the gap between your offer and candidate expectations: Perhaps during salary negotiations a candidate asks for a higher figure than you can afford or mentions that the benefits at their current employer are better. Consider making up the difference with a sign-on bonus to make your overall offer more appealing. An added advantage? As this is a one-off payment, you won’t incur the annual expense of a higher salary.To show a candidate you recognize their value: Professionals want to be rewarded, but they also like to feel that you understand and appreciate what they can bring to the team. If you know that a candidate is in high demand and considering other offers, a sign-on bonus sends a powerful signal that you recognize their value and are willing to go the extra mile to bring them on board.
Although sign-on bonuses often differ in range and conditions, several general principles apply. Consider these options and best practices:1. Build in contract termsIf a sign-on bonus is substantial, you may want to include conditions such as:Paying a portion upfront and the rest after a probationary periodPaying in installments, with later payments due only if the employee remains for a set period, such as six months or a yearStipulating that the employee must repay all or part of the bonus if they leave before completing a defined period of active employment, such as two yearsBonuses with strings attached act as loyalty incentives and give you time to confirm that the candidate is a good hire. The potential drawback? Too many clauses and caveats may offend candidates who feel they have nothing to prove. That’s why it makes sense to structure bonuses on a case-by-case basis, accounting for the candidate’s skill set, track record and experience.2. Decide your upper limit — and stick to itConfident, in-demand candidates will want to negotiate the terms and amount of the bonus, so you need to know your ceiling. If that number fails to meet the candidate’s expectations, emphasize other advantages of making the move, such as work-life balance, opportunities for advancement and additional perks.3. Don’t get into bonus bidding warsIf your competitors are handing out generous sign-on bonuses, you might feel the need to match their offers or even increase the stakes. But this isn’t poker, where you can bluff your way to success. If the sign-on bonus becomes more than your company can afford, you may end up hurting your bottom line and hiring a worker whose value doesn’t justify the upfront cost.4. Remember that sign-on bonuses are discretionaryMarket conditions can change quickly, and positions that are hard to hire for now might not be so difficult to hire for a few months — or vice versa. That’s why flexibility is essential. Rather than having a hard-and-fast corporate policy regarding sign-on bonuses, empower hiring managers to make use of them as needed. A signing bonus is just one of many tools in your recruiting toolkit, so use it when it suits the situation at hand.Sign-on bonuses are becoming more common, particularly in industries with skilled labor shortages. By understanding how to structure and use them, you can make them an effective tool in your arsenal for attracting and retaining top talent.Subscribe to the Robert Half newsletter for more tips on how to land a job and succeed in your career.
