A signing bonus is an amount of money that a company offers a prospective employee as an incentive to join the firm. It's called a signing bonus because an employment contract must be signed with the terms agreed to before the bonus money can be paid to the new hire. Signing bonuses are usually only offered in middle and upper management positions.

The company offering the signing bonus often wants a top candidate for a key position. A large cash bonus is of course very attractive to those qualified applicants looking for a new management position. If they are thinking of several companies they would like to work for, but one has a great signing bonus that could be the deciding factor in which job they'll accept. After all, everyone can use a large lump sum of cash to spend, invest or save as they wish!

Studies have shown that most signing bonuses for upper management positions in the United States are over $10,000 U.S. Dollars (USD). The terms of each signing bonus vary widely from company to company, however. Sometimes, only part of the flat signing bonus amount is given at the time of hiring and the remaining amount is given at a specific date or dates specified in the contract. Potential employees need to read the contract thoroughly to be sure they understand the terms surrounding the signing bonus.

In some contracts, employees who leave the company have to pay back all of or part of the signing bonus. It is understandable that a company wouldn't want hire someone and invest a good signing bonus only to have the new employee leave the company after only a short time. Some companies may also reduce or eliminate the amount of other bonuses such as a regular performance review bonus when they offer a signing bonus.

The potential employee should consider all aspects of the signing bonus before accepting the job. Split bonuses are fairly common and are not always 50% on hiring and 50% after six months. Some contracts may state that the new employee only receives 10% of the signing bonus upfront and then the rest in 10% increments a few times per year. A large lump sum signing bonus is usually preferred by most potential employees.