With unemployment at an historic low, employers are finding more difficulty filling open positions. One way to attract top talent is to offer a signing bonus. This strategy can help employers stand out when competing for the top talent, or luring them away from another company. Many companies are finding that signing bonuses are a worthwhile investment.
While an employer can set a signing bonus of whatever they want, it is common to see between 5-15% of an employee’s starting salary. They also usually carry with them an expected retention time-frame and/or job performance metrics of some sort.
It may seem like this benefits the employee only but that is not necessarily the case. Bonuses can be a onetime incentive to sway a decision and land you a stellar employee, or help fill a position that is particularly difficult for some reason. The monetary benefit is obvious but there is a psychological one as well, people like being made to feel special, sometimes a signing bonus is just the thing needed.
A signing bonus is obviously something to take seriously from the employer’s perspective. That means making sure to write it into a contract and treat it properly for payroll taxes. In the contract you’ll want to include things like the bonus amount, how/when it will be paid, and any other stipulations like retention and performance metrics mentioned above.
It is also usually a good idea to have your corporate attorney take a look at the contract before it is finalized.
If approached properly, a signing bonus can be a powerful tool in your recruiting strategy.