The Perils of a High Sign-on Bonus!

When the job market gets tight employers resort to a variety of avenues to attract top candidates. In the Silicon Valley, a fast-growth start-up is able to offer new employees attractive stock options and RSUs as a part of the overall compensation package. However, when such an avenue is not available to employers they offset this by offering their new hires a sign-on bonus and other perquisites to sweeten a deal.

Sometimes, a sign-on bonus is also offered to offset the monies an employee leaves behind when they end their employment prematurely (before vesting of certain benefits). So, when you are making a decision to move to another company it is important to understand the motivation behind someone offering a large sign-on bonus and its implications to your welfare and to your career.

Recently, one of my clients, a senior executive, was offered a good salary package that was competitive with the market price point for that level and the job family. After we negotiated the package, including the sign-on bonus the hiring manager came back and substantially increased the amount of the sign-on bonus (more than doubled the original agreed-to amount, exceeding a six-figure sum). The sign-on bonus was to be given in the first 90 days and was contingent on my client staying at the company for the first year.

Without giving this much thought my client was quite flattered by this spontaneous gesture of largesse and accepted the offer. She received the entire sign-on bonus as promised within the stated time, as the honeymoon period with her boss and company was beginning to ebb. During this period my client uncovered many underhanded things that were not apparent during the interviews. The hiring manager, a C-level himself, was always in a hurry throughout the interview process for a studied discussion on any topic other than a hectic interview punctuated by phone calls and interruptions. My client gleaned the information in fragments from the various interviewers, each of whom did not have the full picture of the entire situation for which my client was going to be hired to deal with and lead.

So, with some probing and going by the reputation of the company my client decided that this was a good opportunity for her, where she could contribute meaningfully to the business initiative the company was shepherding and she concluded that this would also make her rsum shine, as she was confident that she would be able deliver what was needed.

As my clients tenure slipped into her fourth month, with the large sign-on bonus check now in her bank account, things started going south on many fronts. The boss reorganized the entire team and changed the original mission of my clients team. He also took away some key players from her team and put them in another organization, where she did not have the needed access to them to complete her mission as she had originally planned. Her boss also started openly criticizing her in meetings with vendors and started interfering with her role and team. Very quickly the entire situation became quite unbearable and started getting worse each day. Despite spending increasingly more time away from her family to keep with the constant surprises she kept her cool, but was getting increasingly frustrated as her peers and even her own team was finding it difficult to move with purpose. As things were not progressing per the original plan (how could they?) all the open requisitions for my clients team were frozen. Now my client was whipsawed from both ends: Lack of resources and constant demands from the boss to deal with the revised plan and stay on track!

Despite many temptations to quit after just five months my client was increasingly reluctant because of the sign-on bonus constraint. It is difficult to just forget about such a large sum of money and move on to get away from such a tyrannical, oppressive, and unbearable situation. So, what are some of the lessons from this experience? Here is my list:
1.Before you decide to accept a new job make sure that you are fully satisfied with the discussion with your hiring manager and that they are able to answer all your concerns and questions. Distrust them and verify with others as you do your interview rounds with their peers and subordinates. A harried boss, who has no time for a detailed interview is a red flag.
2.If you are offered an unusually high salary package check and see how it is constructed. If there is a large component of the package that forces your stay, at will employment is only a lip service.
3.Check with your employment lawyer to see what legal right you have to keep the sign-on bonus despite what it says in your Agreement if you leave prematurely. Some states have ruled that a sign-on bonus is an advance on your regular pay and cannot be asked to be returned if you leave before the stipulated date.
4.Keep the sign-on bonus intact in your bank account without spending any of it for the duration of the time when it can still need to be surrendered if you were to quit before the stipulated date.
5.Look for the early signs of surprises and discord (with your boss) and have an honest discussion with them. Do not dismiss early warning signs of trouble and be influenced by the fate of the big sign-on bonus you just got. See # 2 and #3 above.
Nothing is worth the wrath of a tyrannical and oppressive boss if it affects your health, family life, and your career. Make the right decision when it comes to your own future!

Good luck!

Warning: Since I am not legally trained, do not construe any suggestions in this post as a legal advice. Consult an appropriate legally-qualified professional to get the right guidance.

About Author

Dilip has distinguished himself as LinkedIn’s #1 career coach from among a global pool of over 1,000 peers ever since LinkedIn started ranking them professionally (LinkedIn selected 23 categories of professionals for this ranking and published this ranking from 2006 until 2012). Having worked with over 6,000 clients from all walks of professions and having worked with nearly the entire spectrum of age groups—from high-school graduates about to enter college to those in their 70s, not knowing what to do with their retirement—Dilip has developed a unique approach to bringing meaning to their professional and personal lives. Dilip’s professional success lies in his ability to codify what he has learned in his own varied life (he has changed careers four times and is currently in his fifth) and from those of his clients, and to apply the essence of that learning to each coaching situation. After getting his B.Tech. (Honors) from IIT-Bombay and Master’s in electrical engineering(MSEE) from Stanford University, Dilip worked at various organizations, starting as an individual contributor and then progressing to head an engineering organization of a division of a high-tech company, with $2B in sales, in California’s Silicon Valley. His current interest in coaching resulted from his career experiences spanning nearly four decades, at four very diverse organizations–and industries, including a major conglomerate in India, and from what it takes to re-invent oneself time and again, especially after a lay-off and with constraints that are beyond your control. During the 45-plus years since his graduation, Dilip has reinvented himself time and again to explore new career horizons. When he left the corporate world, as head of engineering of a technology company, he started his own technology consulting business, helping high-tech and biotech companies streamline their product development processes. Dilip’s third career was working as a marketing consultant helping Fortune-500 companies dramatically improve their sales, based on a novel concept. It is during this work that Dilip realized that the greatest challenge most corporations face is available leadership resources and effectiveness; too many followers looking up to rudderless leadership. Dilip then decided to work with corporations helping them understand the leadership process and how to increase leadership effectiveness at every level. Soon afterwards, when the job-market tanked in Silicon Valley in 2001, Dilip changed his career track yet again and decided to work initially with many high-tech refugees, who wanted expert guidance in their reinvention and reemployment. Quickly, Dilip expanded his practice to help professionals from all walks of life. Now in his fifth career, Dilip works with professionals in the Silicon Valley and around the world helping with reinvention to get their dream jobs or vocations. As a career counselor and life coach, Dilip’s focus has been career transitions for professionals at all levels and engaging them in a purposeful pursuit. Working with them, he has developed many groundbreaking approaches to career transition that are now published in five books, his weekly blogs, and hundreds of articles. He has worked with those looking for a change in their careers–re-invention–and jobs at levels ranging from CEOs to hospital orderlies. He has developed numerous seminars and workshops to complement his individual coaching for helping others with making career and life transitions. Dilip’s central theme in his practice is to help clients discover their latent genius and then build a value proposition around it to articulate a strong verbal brand. Throughout this journey, Dilip has come up with many groundbreaking practices such as an Inductive Résumé and the Genius Extraction Tool. Dilip owns two patents, has two publications in the Harvard Business Review and has led a CEO roundtable for Chief Executive on Customer Loyalty. Both Amazon and B&N list numerous reviews on his five books. Dilip is also listed in Who’s Who, has appeared several times on CNN Headline News/Comcast Local Edition, as well as in the San Francisco Chronicle in its career columns. Dilip is a contributing writer to several publications. Dilip is a sought-after speaker at public and private forums on jobs, careers, leadership challenges, and how to be an effective leader.

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