Salary increase or sign on bonus?

Question

I would like to approach the company who is offering me a position to increase my salary over giving me a sign on bonus. The bonus is only $1500. The partner I spoke with mentioned it was a small amount because the firm would have to come up with the money upfront. I feel that if they increased my salary by $1500 instead, it would be more worth it to the firm. Also, my raise next year would be increased because my salary would be slightly higher. So my question is... should I just settle for the money upfront or should I fight to have it as my salary?

Answer 1

It depends - do you need the money up front?  Do you have relocation costs?  Will you need to purchase a new wardrobe, or anything for the job?  If so, the sign on bonus may be better.

You may not get a $1500 raise if you ask (though it never hurts to ask).  There are additional employer costs based on salary.  Workers compensation rates are based on salary.  If your company has a matching 401k program, it would be affected.  The company also pays social security taxes for you (the amount on your pay stub is only your half).  All of these factors mean that if the company gives you $1500 more, it may cost them $2000.  Plus, as others have already said, future raises would be based on a higher rate.

I'd still ask, but be prepared for them to counter-offer at $1000 or less.

Answer 2

The sign on bonus sounds good until you think about it:  It is a "one shot" deal.  You get the money and the temptation is to spend it on something you have been wanting or need - then it is gone. By accepting it as part of your salary, it keeps coming every paycheck.  Granted, spread out over a year, it may not sound like much, but it does increase your base salary, a good starting point for future raises.  Since the company is offering to increase the salary, it sounds like you don't have to fight for it, just accept it.