How to estimate a reasonable amount for a signing bonus?

Question

I'll be receiving the details for a job offer in the next few days and I was wondering if there are any guidelines for negotiating or evaluating possible signing bonus amounts. Obviously, if they don't include a signing bonus in the offer and they don't indicate that one is negotiable, then it's probably just not in their budget.

But if it is negotiable, is there any way to determine a fair amount? I currently live in the same area where the job is located, so they won't have to pay any relocation fees for me. It's also somewhat of a niche style job (hybrid of scientific programming and financial analysis), so I expect employment options are competitive.

Are there guidelines for understanding how the signing bonus might relate to the other parameters of the offer (e.g. as percentage of salary or benefits, what if there is also a yearly performance bonus option, etc.)?

Answer 1

So you've already considered relocation. Here are a few additional things to consider with respect to negotiating a signing bonus (if any):

• Would you be leaving a position where you are eligible for an upcoming bonus, profit-share, or other special incentive payout, such as a stock option or RSU vesting date? A signing bonus can help offset the opportunity cost of leaving a previous job when an incentive payout date is near.

• At the new company, would you be required to wait some pre-defined period to be eligible to participate in the pension or retirement savings plan with employer basic or matching contributions?

  If you were receiving ongoing employer contributions in your previous company's plan and would need to wait, say, six months before participating in the new company's plan, a signing bonus can offset lost employer contributions in the interim. Consider funding your own IRA in that time.

• Would you be required to give up something else of value to you that your previous employer was providing, such as an expensive laptop, that is not expected to otherwise be replaced by the new company?

Whether they offer a signing bonus and how much you can expect to negotiate is based on a lot of factors and you'll need to "play it by ear." Remember what bonus means: "A payment or gift added to what is usual or expected, in particular."

Remember also that a signing bonus is a one time thing. In general, it's more important to consider the overall ongoing compensation package – salary and incentive plans, vacation, retirement benefits, health benefits, etc. – and whether those meet your long-term needs.

Answer 2

Signing bonuses are probably the most variable of all, as there is a general understanding that more personal factors are taken into account. As a result, HR isn't under a huge obligation to explain away the differences. In comparison, for salary there's the wide expectation that same job = same pay.

Since there's so variable, but also fairly rare, "budget" isn't a main concern for many HR departments. And they certainly won't have a finely grained budget breakdown. "This year we'll pay $250.000 for headhunters, $50000 for relocation payments, $100,000 for pension transfers, $150.000 for stock option losses...". It's generally tossed on one big heap, "cost of hiring".

So, what can you ask for? That's really a market question. What's your value to the company? How much of that is already reflected in salary and other benefits? The main downside to signing bonuses is that a company won't know how long you'd stay. Your value to the company is probably your monthly work. Therefore they cannot amortize that bonus over a fixed amount of months. What if you leave after 3 months? For that reason, a "conditional" signing bonus is a reasonable offer from your side. E.g. ask for one month salary, conditional on you staying for 24 months, and otherwise you'll repay them from your last salary.