A signing bonus is a cash incentive offered by companies to attract top candidates for middle management and executive positions. The bonus is usually over $10,000 USD, but terms vary widely and may require repayment if the employee leaves the company. Prospective employees should carefully consider the terms before accepting the job.
A signing bonus is an amount of money that a company offers a prospective employee as an incentive to join the company. The name comes from the fact that an employment contract must be signed with the agreed terms before the bonus money can be paid to the new hire. These bonuses are generally only offered in middle management and executive positions.
The company offering the bonus often wants a top candidate for a key position. A large cash bonus is obviously very attractive to those qualified candidates looking for a new management position. If they are thinking of several companies they would like to work for but one has a large signing bonus that could be the deciding factor in which job they will take. After all, everyone can use a large lump sum of money to spend, invest or save as they wish.
Studies have shown that most signing bonuses for executive positions in the United States exceed $10,000 United States Dollars (USD). The terms of each vary widely from company to company, however. Sometimes, only part of the lump sum is provided at the time of hiring and the remaining amount is indicated on one or more specific dates specified in the contract. Prospective employees should read the agreement carefully to be sure they understand the terms relating to the bonus.
Under some contracts, employees who leave the company must repay all or part of the money. It is understandable that a company would not want to hire someone and invest a good signing bonus only to have the new employee leave the company after only a short time. Some companies may also reduce or eliminate the amount of other bonuses such as a regular performance review bonus when they offer a bonus upon rental.
The prospective employee must consider all aspects of the signing bonus before accepting the job. Split bonuses are quite common and are not always 50% for hiring and 50% after six months. Some contracts may state that the new employee receives only 10% of the money upfront and then the rest in 10% increments a few times a year. A large lump sum is generally preferred by most prospective employees.
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