Why are employees given a “signing bonus”? Isn’t the salary enough incentive to join?
In: Other
Someone on the finance or HR side can probably add to this, but in my experience there are a few reasons just off the top:
1. Because of the complicated legal and tax implications, as well as varied costs and keep things fair and straightforward between candidate, it is often easier to give a “signing bonus” than to offer a relocation package. If a company is looking outside their local geographic area a signing bonus may help attract outside talent by making it easier for them to relocate to the job’s location
2. Some people are hesitant to leave their current position due to annual or quarterly bonus structures that mean leaving their current position results the forfeiture of hundreds/thousands of dollars they “earned” but hasn’t been paid out yet, and due to its classification as a bonus isn’t required to be paid on departure. A signing bonus can help make up for that lost income from changing jobs.
3. Related above, Sometimes people may have outstanding obligations with an employer, such as tuition reimbursement programs or vacation time which if they leave before the obligation is met (time after tuition reimbursement is paid, or before the front loaded vacation time is actually accrued) will be withheld from their final checks. A signing bonus makes it easier for people to not worry about those outstanding obligations to their current employer.
4. A simple business budgeting consideration combined with a need to attract qualified talent. If they are trying to attract people in a competitive industry or skill set, It may be easier to budget a standard reoccurring salary for the employer, but that won’t differentiate them from other employers, so a signing bonus can be a one-time expenditure to get the eyes of the talent you want to attract
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