After searching for the perfect role, you've finally managed to land a job offer. Only this time, there's an upfront perk on the table to sweeten the deal: a signing bonus.
Signing bonuses are somewhat common in the financial and legal world -- at least with the big law firms -- though you'll find them in other industries, as well. And clearly, their purpose is to incentivize strong candidates who probably have their share of offers to choose from. But before you rush to snag that cash prize of sorts, there are a few questions you need to ask.
1. Will this take the place of a year-end bonus?
A signing bonus is a great way to get some cash in your pocket before even starting your job. That said, you may come to find that your signing bonus takes the place of the year-end bonus you might otherwise be eligible for, so it pays to ask the question so you can plan accordingly.
Keep in mind that if that signing incentive renders you ineligible for a bonus your first year, that's not necessarily a bad thing. This way, you have your cash in hand earlier and you don't have to worry about not getting it due to circumstances outside your control (say, a bad spell on the company's part, which could leave workers empty-handed at the end of the year). The point, however, is to know what to expect.
2. Am I required to stay with the company for a certain period of time?
The last thing a company wants to do is pay you a signing bonus only to have you jump ship several months later if things aren't working out to your satisfaction. Therefore, your employer will probably take steps to prevent that from happening, so be sure to ask about the terms of that upfront payment before accepting it.
Some companies, for example, stipulate that in exchange for your signing bonus, you're required to remain employed for a specific period of time or otherwise be liable for paying that money back. Again, this won't necessarily be a deal breaker, but it is something you should know about.
3. Will I get the money upfront or over time?
Some signing bonuses are paid immediately once you accept an offer. Others are paid over time, such as in quarterly increments over the course of your first year on the job. Obviously, the more cash you get upfront the better, but that doesn't mean you should be suspicious of a company that spreads that payment out.
Rather, just ask the question so that you can develop your own financial plan around that money. For example, if you're hoping to use your $10,000 signing bonus for a down payment on a house, you'll need to know whether you're getting that cash right away or in several installments.
One final thing to keep in mind about signing bonuses is that they're not always an indication of a company's generosity. That bonus of yours, in fact, could signal desperation on the part of your employer to bring someone talented such as yourself on board, which might indicate that that company isn't a great one to work for.
Furthermore, you never know when a company might use a signing bonus against you. For example, you may be denied a raise your first year or two on the job because you got a signing bonus, instead. None of this is guaranteed to happen, and there's an equally strong chance you'll collect your signing bonus and things will work out splendidly afterward. Just be aware that sometimes, what seems like a windfall is nothing more than a ploy to get you to make a very bad career decision.