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Why Top Tech Companies Offer High Signing Bonuses?


Signing bonuses are common to see in a range of industries, but the tech industry is where it’s being seen more often.

If you’re unfamiliar with the idea of a signing bonus, it’s when a company offers a prospective employee a single lump-sum payment as a means to make them more likely to accept an offered position.

When it comes to employee benefits, it’s hard to beat the signing bonus, and big tech firms like Google and Facebook have taken to offering large sums of cash to attract the best team members.

With so much competition in the tech industry, there are some key reasons why those signing bonuses are as high as they are.

Attracting The Best Employees

When a highly-specialized vacancy comes up in a tech company, those companies will have a very select pool of candidates. For senior-level positions, or those niche roles that require specialized training and education, that pool of potential candidates can be very small indeed.

A one-time payment and an agreement to stay in the company for a set period, that signing bonus can attract top talent away from competitors. Amazon, Google, and Facebook offer the most consistently high signing bonuses, but even the medical tech industry realizes the benefits of using signing bonuses to attract more promising graduates or proven professionals.

In the past, having a working environment that was clean, relaxed, and filled with the most exciting and high tech equipment would have been enough to help businesses land the top candidates, but now that the majority of businesses are all offering great working spaces, these signing bonuses are now one of the main incentives in attracting top candidates to the business.

The reason why the top talent is so sought after for these businesses is that the better and more capable the member of staff in your team is, the more complicated and sophisticated the algorithms and systems they can develop, which will give them a great advantage against their competitors.

A Salary Filler

Another reason why tech companies are offering signing bonuses is that they can be used to help bridge any gaps between the salary that a prospective employee wants and what the company can afford.

Employees willing to take a signing bonus instead of a higher annual salary will save the company money in the long run, but it can be a risky strategy to adopt. That’s because those hires will usually have the option to leave the company at the end of the year, meaning that the hiring process has to begin again. It’s very similar to the way that a casino will offer a sticky bonus, meaning that players can bet with their bonus money but can’t withdraw it.

There are many advantages of a non sticky bonus, but for companies trying to bridge salary gaps with a signing bonus, the risks are often outweighed by the potential benefits. In this model, a signing bonus can be seen as more of an investment, and if the candidate stays on with the company for an extended period of time, then the investment would be worth it because the company would have been able to save a bit of money through this payment method.

Offering a signing bonus of $50,000 and then a yearly salary of $80,000 is more cost-effective in the long run than offering a higher salary of $120,000. This does mean that prospectus employees need to be wary of these bonuses when offered them, as although the instant cash injection can be a great thing to receive, it might mean that you’re losing out on money for the future.

Improving Diversity & Faster Growth

There are many benefits of having a more diverse workforce, and tech companies know that more diversity means stronger brands. That narrows the field of potential hiring options even further, especially with those highly skilled tech professions.

It’s not just the big names either. Startups have started to adopt the practice of offering signing bonuses, despite the smaller budgets and bootstrapping approach favored by many. If those startups can attract team members with proven skills that will make scaling up faster and more likely, those payments can be well worth it.

While not every tech company will offer signing bonuses, and not all vacancies will require one, they can be very useful. When it comes to attracting the best team members, signing bonuses are becoming one of the most sought after benefits in the technology sector.

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