Home >> July 2012 Edition >> Re:Sources The Road To The Future—Signing Bonuses
Re:Sources The Road To The Future—Signing Bonuses
By Bert Sadtler, President, Boxwood Executive Search + Contributing Editor

These are extremely challenging times for employers who need to acquire top level talent as well as for those seeking a career change. Today, companies’ economics compel them to re-assess their talent needs in order to remain competitive and drive growth. The satellite communications industry is ripe with new opportunities. Employers are challenged with making a “great hire.” For the candidate, finding an opportunity can sometimes be a rather difficult proposition.

SadtlerHead To assist with career searches, we asked Bert Sadtler of Boxwood Executive Search to respond to readers’ questions regarding the processes of recruitment and hiring as well as how Companies can retain crucially-needed talent. Boxwood is located in the Washington, DC, region and has success in senior level recruitment in satellite communications, government contracting, and within the intelligence community. Boxwood also provides a consulting solution for the analysis and improvement of the employer’s current recruitment process.  If you would care to submit a recruitment, hiring, or retention question for Bert to answer, please email your question to BertSadtler@BoxwoodSearch.com.

Dear Bert,

We are in the process of recruiting a mid-level manager. The issue of offering a signing bonus has come up. What has been your experience regarding a signing bonus?

Jim Q.
Government Contractor

Dear Jim,
Thank you for your straightforward question. I wish the answer was as simple as your question.
Before offering an opinion on a signing bonus, we need to take a few steps back in order to determine if a signing bonus would be appropriate. Consider the following:

If your recruitment process has reached the point of a signing bonus, it should be fair to assume that you have launched a recruitment campaign, screened candidates, interviewed selected candidates, identified candidates who are both a technical as well as a cultural fit, have developed/discussed an action plan and are working with several finalist candidates. At this point, you are focused on the candidate who is regarded as the top choice and you are determining what it will take for the candidate to accept your offer. At the same time, if you are unsuccessful with your top choice, you have one or two more finalists who you could hire.

SadtlerFig1 Do you understand the candidate’s current total compensation? Once you do, you have a better understanding of what it will take to make an offer that is superior to the candidate’s current compensation and you will be positioned for a discussion around “total compensation”. Compensation comes in multiple forms which can include: 401K, Paid Holidays, Paid Vacation, Stock, Stock Options, Equity, Medical Benefits, Company Car, Car Allowance, Salary, Performance Bonus, Sales Commission, Profit Sharing Bonus, Annual Company Bonus, Unlimited Sick Leave and Continuing Education Reimbursement.

Reaching the point of transparency and trust with a candidate is critical in order to develop chemistry. If you have been open and earned the candidate’s trust, it should be easy to obtain the candidate’s total compensation. Once you have understood their total compensation, you are prepared to construct an offer that the candidate would find attractive and compelling.

Does your company’s compensation plan have the flexibility to include a signing bonus? Not all employers can include the words “signing bonus” in an offer. If you can’t, be open with the candidate and say that company policy prohibits offering a signing bonus but here is how we could address the “total compensation picture” once you have developed an attractive offer.

Do you know what the candidate is looking for?  If your discussions have been open, you have heard the candidate tell you why they want to work for your company and what motivates them. Your offer should include “levers” that motivate your candidate to accomplish your challenges. If it is performance based, compensation will play a bigger role. If it is mission based, “making a difference” will play a bigger role. In most cases, it is one or the other. Have you incorporated the right one into the offer you are preparing?

Is the candidate seeking an offer solely based upon financial aspects or are there non-financial incentives that would be attractive to the candidate? Examples might include: Specific title, working on a project that is especially exciting to the candidate, fast track for career advancement, etc.

Are you recruiting a passive candidate or a candidate who is in employment transition? A passive candidate is not looking to make a job change because they have a good one already. However, they can make the best candidates because they are more likely to ask great interview questions and will not over-promise their capabilities since they don’t have to. They take a more thorough approach to the interview process and as a result, generally are a better fit. The passive candidate will be more selective and more likely to negotiate an offer. They are generally less of a hiring risk. It may be necessary to include a signing bonus with them. The candidate in transition is in a different situation and may not request or require a signing bonus.

Once you determine that you want to offer a signing bonus, it should be specific and meaningful to the candidate as a result of your knowing them through several interview meetings. Examples might include:

SadtlerFig2 Cover part of the candidate’s moving/relocation expenses?

Offset an anticipated earnings bonus from the candidate’s current employer?

Increase the total compensation offer to exceed the candidate’s current compensation?

Provide a one time lump sum to cover a projected several month ramp-up of commission earnings?

Offer a lump sum payment instead of increasing the candidate’s base salary?

The signing bonus should be used as the final step in gaining the candidate’s acceptance. At this point, your discussion of an offer with a candidate should be verbal and not written. The written offer should be delivered to the candidate only when the candidate has agreed verbally. 

Jim, in summary, good recruiting is a process that includes specific steps in a specific order. The goal is less about “making a hire” and more about acquiring the right talent who can deliver long-term value and will enjoy working for your company. I have seen signing bonuses work well under the right circumstances and used as an effective means to gain a candidate’s commitment.

I hope you have found this to be helpful.

Bert Sadtler

About Boxwood Search
There is an ongoing battle  for senior level talent. A great hire can make a long term positive impact and a failed hire can prove to be very expensive. How does a company recruit  and  hire the right talent? It is more than just networking within the community of friends and business associates. It requires focusing on results through a process oriented approach. Boxwood Search is committed to reaching a successful outcome with recruitment methods that have repeatedly proven to deliver very qualified senior talent.

Candidates are screened against key criteria, technical fit and cultural fit analyzed, interviews conducted, references contacted and hiring recommendations then presented. Upon making the offer, Boxwood Search is the employer’s advocate and an active participant in communicating with the candidate until offer acceptance has been secured. Results are guaranteed.