Negotiating compensation packages can be a stressful and sometimes difficult process. If you’ve taken my advice in previous MENG Blog posts on salary negotiations (How and When to Talk Compensation in the Interview Process and How Much Does This Job Pay? When to Discuss Five Common Compensation Components), you will have set yourself up to avoid any surprises.

As we all know, there are multiple elements of a compensation package and knowing when to discuss them is important to the negotiation process. Let’s assume for this post we are focusing on cash compensation, defined as salary and bonus. Let’s also assume that your negotiations are stuck on salary.

When You Are Stuck in Salary Negotiations

Companies get stuck negotiating salary because they are not able to go over a certain dollar number for a variety of reasons―they can’t get the position graded any higher, it would create inequity with peers, or they simply don’t have the budget to commit in the “salary” column. I’m just listing these reasons, not validating them.

As a side note―I’ve seen some companies use a sign-on bonus in place of relocation assistance, so be careful as the sign-on bonus is taxed and relocation assistance is not.

Back to the gap. Negotiating a sign-on bonus is an effective tool to fill the gap for the first year. Once you are successful in negotiating a deal for the first year, be sure to evaluate what happens year two. This is where the discussion can become hypothetical. You can take the word of the hiring manager on conditional benchmarks or you can be more aggressive and negotiate specific, reviewable, and measurable items you must accomplish in a specific time frame to earn a raise of X%. I’ve seen both work successfully.

Another side note―I’ve also seen this arrangement negotiated for stock/equity.Typically, the suggestion of a sign-on bonus, regardless of the terms, comes from the hiring company or the executive recruiter. If, as the candidate, you are the one to suggest it, I would recommend that it’s as a last resort and you are confident you have hit their ceiling on the salary.