Amy Lindgren
Hiring bonuses are having a moment — thanks to a well-publicized recruitment push by the Department of Homeland Security (DHS). As you may have heard, their employment offer for targeted roles features $50,000 bonuses, with additional student loan forgiveness topping off at $60,000.
This is a rich package by any measure, and one that would not normally be offered to frontline workers. That said, hiring bonuses on a smaller scale are not uncommon, appearing in any industry or level where employers perceive an extra boost is needed to attract candidates.
These incentives might seem straightforward (Extra money up front? Why thank you!) but they can come with more strings than a macramé potholder. Read on for tips to keep from getting tangled in the knots.
• Understand the employer’s perspective. Why would an employer craft a hiring bonus instead of simply offering a better wage? In a nutshell, bonuses happen once but wages are forever. Where a bonus will be paid but not repeated, the worker’s wage will continue to increase. Not only that, but wages also serve as the foundation for percentage-based perks such as retirement benefits or future raises. The higher the initial wage, the more money the employer will spend year after year on the same worker.
Conversely, these are the same reasons career consultants urge their candidates to go for the wage first: It will mean more money in the long run. That said, negotiating for a bonus can be a viable alternative when candidates can’t get to the wage they want. It’s better than nothing, and could be easier for the manager to get approved.
• Understand the offer. To start, it helps to rename the hiring bonus for what it really is: A retention bonus. While you might get a bonus simply for signing on (sometimes this is accurately called a sign-on bonus), it’s more likely that you’ll receive only part of the pay up front, with the rest coming after you hit certain milestones. (That’s the case for the DHS bonuses, with the money being paid out in installments over the course of five years.)
In these cases, it’s not the fact of the milestones that matters, but their content and the conditions for meeting them. If, for example, you’re told you’ll receive $5,000 paid out in $1,000 increments every six months, that’s an easy requirement to track.
But what if you need to meet a certain work quota every six months, or find that the payments will depend on performance reviews? You can see where this is heading. Some of these factors are out of your control, which means that you might not see some or most of the payment you were expecting.
• Watch for the clawback. That nasty-sounding word is nonetheless accurate. Depending on the terms of your offer, an employer can “claw back” money already paid if you leave early or otherwise don’t hold up your end of the bargain. This can be a nasty surprise, particularly in the case of money you used to relocate or invest in the job itself.
• Check for stability. If your payout is staged for three years, or even five on the long side, are you certain the funds are going to be there? Will the organization? This isn’t the easiest thing to assess, but having the question in mind might motivate you to negotiate for a shorter window or more of the bonus up front.
• Get it in writing. If a recruiter or manager mentions off-hand that they’ll “sweeten the pot” with a bonus, your next step is to confirm that by email and then look for it in the formal offer. For example your email might include, “I enjoyed our meeting on Wednesday and learning more about this position. It was especially good to hear about the bonus you mentioned. I’d be interested in knowing more details about that as we talk more; it’s a great incentive!”
One reason for the email is to create the (electronic) paper trail, in case your hiring process gets handed off to someone else. But it’s also a way of testing the waters. If they were serious, they’ll take the bait; if not, they’ll either back-pedal or go silent. That’s not ideal, but it’s better to know early on if someone’s playing games with you.
When you receive an employment offer with the bonus described more fully, consider running it by an attorney or mentor before accepting, particularly if you see clawback wording.
Bottom line? Bonuses of all stripes can be wonderful things, provided you understand the terms and don’t count too heavily on receiving the total payout. Celebrate the moment but proceed with caution, remembering “All that glitters is not gold,” as the saying goes.
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Amy Lindgren owns a career consulting firm in St. Paul. She can be reached at alindgren@prototypecareerservice.com.
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