A signing bonus is a lump sum of money that an employer provides a prospective employee. The purpose of the signing bonus is to entice the applicant to sign-on with the employer’s organization. The signing bonus is most often used with executive level positions or to recruit employees with special, hard-to-find skills. The signing bonus is also used, on occasion, to recruit high potential students out of college.
The signing bonus is useful when an employer wants to recruit a candidate when other employers may be competing for the same potential employee.
A signing bonus is also useful to help a candidate bridge the gap between the salary that he or she wants and the offer that is on the table.
The advantage of a signing bonus for the employer is that it is a one-time payment. The employer has not added that extra compensation to the company’s bottom line as a recurring annual expense.