Why do Employers Offer a Sign on Bonus?

You may have seen in recent news that Amazon are offering new employees a sign on bonus of up to £3500. In an already stretched labour market, the race is on to secure top talent. This had us asking the question, why do employers offer a sign on bonus? In a nutshell, it is offered to attract and secure key employees.

In this blog post we will dive a little deeper and look at a few different reasons why a sign on bonus may be offered. We will also look at the pros and cons of accepting one.

💸 What is a sign on bonus?

It is a monetary offer, paid to an employee as an incentive to join the company.

💡 What are some of the reasons why employers offer a sign on bonus?

There are many reasons, here are a few examples:

To attract key talent:

We mentioned this earlier, but if an employer is competing for a candidate, like how Amazon are competing for temporary Christmas staff, a sign on bonus may be offered to entice you to choose them.

To make the business more attractive:

If the benefits package isn’t that enticing, one may be offered to make the business appear more attractive, and to distract you from the benefits (or lack of) that they have to offer.

To make up for what you’re leaving behind:

On the other hand, if you’re leaving a an excellent benefits package behind, by offering a sign on bonus, it may encourage you to join the new company.

Bridging the salary gap:

You may ask for a higher salary, but if the company works with salary banding, or doesn’t have the budget to increase your pay, a sign on bonus may be offered to make up the difference.

💭 If I am offered a sign on bonus, should I take it?

It’s important to weigh up the pros and cons of any decision you make. The main thing to think about here is why your potential employer is offering a sign on bonus. All of the reasons above are fair reasons, but you need to look at the bigger picture before accepting:

👍 Pros:

It’s a positive incentive – It can provide the foundations to a positive relationship between employer and employee. In fact, a sign on bonus isn’t ever a negative thing, it’s just about deciding what is right for you.

Compensation – If your new employer is unable to offer a better benefits package than its competitors, it can be excellent compensation to make up for it. It also shows your employer understands its shortfalls and is trying to make up for them.

👎 Cons:

Pay back clause – Make sure you find out the T’s and C’s. You may find you have to pay it back if you decide to leave the company. So make sure you find out if there is any hidden catch before you accept.

Is it the best option – You may find that a sign on bonus of £5000 isn’t as good a deal if you can get a pay increase of £2000 and stay with the company for 3 years or more. Look at all your options first.

✔️ In a nutshell…

  • A sign on bonus is a monetary offer, paid to an employee as an incentive to join the company
  • The main reason one is offered is to attract and keep top talent
  • There are both pros and cons but overall it can be a great incentive if it works for you

We work with many clients, and have built relationships spanning over 20 years. If you are offered a sign on bonus once you’re offered a job through GB Solutions, we can discuss your decision with you, so that you make the right choice for yourself. We will never tell you what to do, but we are always here to help our candidates.

Get in touch if you’d like to discuss any of our current opportunities.