Evaluating and Negotiating Job Offers Part 2 – Signing Bonus and Relocation Benefits

(This is part 2 of the series on Evaluating and Negotiating Job Offers. You may also find these other parts interesting: Part1: Base Salary, Part3: Stock Options or Restricted Stock Units(RSUs), Part4: 401K, Part5: ESPP, Part6: Other Perks).

The next aspects we look at are the Signing Bonus and Relocation Benefits.

What is a Signing Bonus?

Signing Bonus or Sign-on Bonus is a lump sum amount offered by the employer to a new employee as an incentive for accepting the offer. In the height of the dot com boom, IT companies offered oodles of money to attract the cream of the crop to their companies. Fresh graduates with Master’s degree in a computer-related major could actually expect $10,000+ to start working in reputed companies like Intel (Source: the trusty grape-vine). When the bubble burst, students were happy to just get a job and the signing bonuses were all but forgotten, mentioned only while regaling the glory days of the past. When the economy came back up, the signing-bonuses made a comeback, but at a more modest level. And with the recession, it pulled a vanishing act, again.

The takeaway: It is not a given that a company will offer a signing bonus. Depending on the times, the industry (tech or non-tech?) and how much the company really wants you, you may be able to negotiate this into your package.

What are Relocation Benefits?

Relocation benefits is the compensation offered by the company for you to move from the location you are in right now, to the location that the job requires you to be in. They come in several different forms. Some employers treat this strictly as the means to offset the cost of your move. So, they may either offer assisted all-managed moves or may reimburse you for what you spent and will require you to submit receipts. Other companies align more with the thought that it’s an “incentive” for moving. They offer you a bulk amount, and how you spend (or save) it is entirely left you. Students (at least, the ones I have met) do not have fancy furniture or other heavy belonging they care to move and so can manage the move themselves, fairly inexpensively. So, for students, it usually works out better to get the relocation package as a bulk amount, so they can spend the bare minimum and pocket the rest. You don’t really need a closed, climate controlled mover for that 1990 Honda Civic (which by the way, does not have a working A/C or heater), do you?

An additional component of the move package is that some employers offer an additional paid trip to the employee and spouse (or family) to the new location for house hunting, looking for schools and checking out neighborhoods. If you have decided on taking an offer, you should avail this benefit to check out the place and make doubly-sure that you really want to relocate.

Finally, some employers offer home-sale assistance for those who own houses. Usually, this is grade dependent and is mostly offered to those in higher grades. This comes in many different flavors, with the most common one being that the company assigns a realtor to help you with the home sale, and will pay all realtor costs. At 6% of the home sale price (3% to the buyers realtor, and 3% to the sellers realtor), it can be quite a bit. So, if you own a house definitely ask your employer if they have some kind of home-sale assistance included in your relocation package.

Setting your expectations

Contrary to the term, the signing bonus is not actually paid to you when you put your signature down to accept the offer. Generally, it will be paid with your first or second paycheck. In some companies, it may be paid even later. In some companies, only a part of the signing bonus may be paid upfront, while the rest might be paid after you have spent a sufficient amount of time (e.g., 6 or 12 months) at the company. And, remember, not all companies pay signing bonus.

Relocation benefits are usually part of the company’s policies. If the company policy states that it can only be paid to cover the actual expenses incurred, then you will not be able to negotiate for a lump sum payment. Even when paid lump sum, the company may have policies based on the distance between the current and the new location to determine whether you qualify, and for how much.

The Gotchas

Most signing-bonuses and relocation benefits are awarded with a “minimum stay” clause. Most commonly used minimum stay requirement that I know is 12 months (This may vary in your particular area of work, please tap into your personal grape-vine for more info). If you do not stay at the company for the amount of time stipulated in the clause, you will be liable to return 100% of what you received as part of signing bonus and/or relocation benefits.

Also, both the signing bonus and the relocation benefits count towards your earned income and are hence, taxable. So, if you company offered you $5,000 as signing bonus, you will likely receive somewhere in the range of $3,000-$4,000 in hand. So, beware, those of you that like spending your money before you receive it.

Negotiation

Should you negotiate the signing bonus or relocation benefits? While the knee-jerk answer to that question is “Of, course”, you may want to step back and evaluate the negotiation strategy for the whole package first. As a rule, always, try to get your base salary bumped up first. Remember, both signing bonus and relocation benefits are one time payments, but the increase in base salary will keep on giving year after year. However, if the offer looks like it does not have a whole lot of wiggle room, then definitely push for an increase in your signing bonus or relocation benefits. The HR almost always, will leave some room or increase. If you do not ask for it, you will not get it. So, try to guage a winning strategy and go for it.

While negotiating for the signing bonus and the relocation benefits, be flexible. For instance, if the company offers no signing-bonus and only the relocation reimbursements for receipts provided, you may be able to negotiate with the HR that you will forego the relocation benefits in exchange for a lump sum signing bonus.

That covers the discussion of this part – the signing bonus and the relocation benefits. Check out the other parts of this series at – Part1: Base Salary, Part3: Stock Option or Restricted Stock Units(RSUs)Part4: 401KPart5: ESPPPart6: Other Perks.

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