How job candidates should navigate sign-on bonus negotiations

Yahoo Finance contributor, co-host of the Brown Ambition Podcast, Mandi Woodruff-Santos explains how to negotiate a sign-on bonus confidently.

Video transcript

- We know we're in a tight labor market, right? And employers are throwing lots of extra bells and whistles at folks to try to get them on board. So what should you be asking for? Well how about a signing bonus? Joining us now is Mandi Woodruff-Santos. She is a Yahoo Finance contributor and co-host of "Brown Ambition Podcast." And, Mandi, I know you brought along some negotiating tactics when we're talking to potential employers about negotiating that banging sign-up bonus. Tell us some ways we can do that.

MANDI WOODRUFF-SANTOS: Yeah. Absolutely. I think the biggest mistake that a lot of job candidates are making today is not even bothering to ask. We've seen a five-fold increase in the number of employers offering sign-on bonuses. So there is money out there, and employers are not dumb. They know this is a great way to incentivize amazingly skilled, talented candidates to come work for them, so you've got to ask.

One of the biggest things that I've encountered from folks that I career coach is, how much do I ask for. And I always say, go directly to what kind of money are you actually leaving on the table at your current job. That could be unvested equity in the form of stock options or RSUs, Restricted Stock Units. It could also be unvested 401k contributions that your employer would make to you. So I would add all that up and at a minimum tell them, hey, I'm leaving this amount on the table. What are you going to do about it?

- And there are also a lot of freelancers at work now, particularly with contract and gig jobs. So what advice you have for them? Because they don't have a stable or steady income, so how do they gauge what to ask for?

MANDI WOODRUFF-SANTOS: Yeah, I've got a really good friend of mine actually, and I was just coaching her because she was being begged to join a company as the head of PR. And she's been doing consulting for the past six months, and she's doing really well. And I said, if they want to hire you full time, they're going to have to make up for all of the amazing client work that you're going to be leaving on the table in order to join them full time.

I think this is very wise, especially if you're someone who's been freelancing for a while and you're entertaining the idea of going full time. Ask for a sign on bonus and let them know, I'm actually leaving a lot of business on the table. So I can free up my bandwidth for you. So how can you guys make it more incentivizing for me to join and give up all this great business that I've already built independently on my own?

- You know, Mandi, if you're offered a sign-on bonus, what are some things you should look out for? Because I know you know you need to read the fine print, right? Because--

MANDI WOODRUFF-SANTOS: Yeah.

- --somewhere in there, the company wants to gain something from giving you a signing bonus as well.

MANDI WOODRUFF-SANTOS: Absolutely, there are always going to be strings attached. And most commonly when you accept a sign-on bonus, it's going to require you to work there for somewhere in between six months, what's more common is even a year. So be sure that you are willing to take that risk. I actually advise people, listen, take the sign-on bonus. Don't spend it right away

Park it in a savings account, you know, maybe a safer kind of investment account if you want to invest it. But don't immediately spend it. Give yourself a year to make sure that you like the company, that you're going to stick around because if you leave, they can absolutely go back to that signing bonus clause and say, OK cool. But we're going to want that, you know, $10K back that we gave you in the beginning.

And you do not want that to be a hurdle to you potentially leaving a job that you're no longer happy with, so absolutely read that fine print.

- Mandi, this is so timely that this segment came up because my son, he's 25 years old. He just got a job and has been working at it for about three weeks. So he was going back and forth negotiating on the offer, and he said, you know what, this isn't enough. I'm going to ask for a signing bonus. And I immediately started screaming, jumping up and down, and said, no, don't do that.

You're not some high-level executive or whatever. You're just a regular person. Just keep quiet, take the job, work hard, and work your way up.

MANDI WOODRUFF-SANTOS: Why would you talk him out of that? No. They are giving pizza delivery people sign-on bonuses.

- That's exactly--

MANDI WOODRUFF-SANTOS: The money is there. Don't talk him out of that. I hope he got it.

- And they actually-- you know, the thing is that there are more blue collar workers that are now asking for these bonuses as well. He did ask. He did get one.

MANDI WOODRUFF-SANTOS: Yeah, hell-- I mean, sorry, excuse me, pardon my French. Heck yes.

[LAUGHTER]

[INTERPOSING VOICES]

- I think you guys just bring up a good point is that sometimes we don't think we're worthy of it, right. I think we have to start sort of changing our mindset. But look, sign-on bonuses are nice, but it's a bonus at the end of the day. What are some things that you should really make sure you're ticking off these boxes if you're really going to say yes to a job offer, Mandi?

MANDI WOODRUFF-SANTOS: Absolutely. I've actually added $160,000 of additional income myself over the past 10 years from asking for sign-on bonuses. It is possible. But it was not the only factor I considered. I was not just going to jump for a nice shiny cash windfall. It had to be the right opportunity. It had to provide me with career advancement. It had it be more challenging. I'm someone who likes to work. I think a lot of people genuinely want to feel like our skills are being utilized.

So are you joining a company that's going to give you the kind of opportunities to use your skills in an effective way that will make you feel fulfilled in your work? Are you getting out of a toxic work culture and into a work culture that actually is-- you know, feels more comfortable for you. I want people to remember when you are interviewing these days you are every bit as entitled to interview the company talking to you as they are to interview you.

So keep your eyes peeled. You want to find a company that you want to work for, takes care of their employees, that pays you what you are valued. And of course, those nice little cash incentives, those are like sprinkles on top of the cake. But if the cake is gross, if it doesn't taste good to begin with, then those sprinkles don't really matter, do they?

- Sprinkles are nice, but you're right, it's the cake that really matters. Mandi Woodruff-Santos, Thanks so much for joining us. Some great advice as always.