Stay bonus vs sign-on bonus: which keeps techs longer
They sound like variations on the same idea. They are not. One buys an arrival, the other buys a year — and they attract different people.
No borrowed statistics on this page. Every figure is either arithmetic you can check yourself or a clearly marked example, because the numbers that matter are the ones from your own shop.
The difference in one line
A sign-on bonus is paid for saying yes. A stay bonus — also called a retention bonus — is earned over time for still being there.
That timing difference is not a detail. It decides what behaviour you are paying for, and therefore which candidate finds your offer most attractive.
What each one is good at
- A sign-on bonus fills a seat this month. When you are short-handed right now and competing against shops offering the same hourly rate, cash at the door is the lever that moves fastest.
- A stay bonus keeps the seat filled next year. It does nothing for you this week. It compounds quietly, and it is working hardest on the person who is halfway through it.
Neither is wrong. They solve different problems, and a shop that is bleeding people out the back does not fix it by pouring more in the front.
The selection problem nobody mentions
A sign-on bonus is most attractive to the person who values money at the door — which, uncomfortably, includes the person most willing to take money at the door again somewhere else in eight months. You are not only paying for an arrival, you are advertising specifically to people who respond to arrivals.
A stay bonus is most attractive to somebody who intends to still be there. It filters in the direction you want, and it does so before you have spent anything.
Cost, honestly compared
The usual argument for a sign-on bonus is that it is cheaper. Sometimes that is true. Sometimes it only looks true because the failure is invisible.
An illustrative comparison — use your own numbers
Say a sign-on bonus is $3,000, paid on day one. If that hire leaves at month seven, the $3,000 is gone and you are hiring again.
Say instead a stay bonus is $6,000 over two years. The same person leaving at month seven has earned roughly a quarter of it, so you have paid around $1,500 — and they had a visible reason to reach month twelve that the sign-on bonus never gave them.
The headline number is twice as large and the money actually spent on a departure is half. That is the trade: a stay bonus costs more when it works, and less when it does not.
Why a stay bonus is easier to get wrong
A sign-on bonus is hard to mess up. You pay it, it is done. A stay bonus runs for years, which gives it far more ways to quietly stop working.
- Nobody can see it. Mentioned once at a hire and never again, it stops being a factor within weeks. This is the most common failure by a distance.
- The waiting period is too long. Hold the first payment back eighteen months and the incentive is switched off during the period people are most likely to leave. More on why that backfires.
- The terms were never written down. Then somebody leaves, two people remember the deal differently, and whatever you decide looks like a decision made after the fact.
- You quietly resent it. A figure set too high in a good year becomes a bill you look for reasons not to pay in a bad one. Your crew will remember how that went.
Using both
They are not exclusive, and pairing them is reasonable: a modest sign-on bonus to compete for the arrival, and a stay bonus that begins the same day and gives the person a reason to reach their second year. If budget forces a choice, the question is simply which problem you actually have — an empty seat, or a revolving one.
If you go with a stay bonus
Write the terms down, keep the waiting period short enough that a first payment lands while the person is still deciding how they feel about the job, and give them a way to see the balance without asking you. That is what Vestly does, and the pricing is one flat figure.
Have any agreement reviewed by your own attorney before you issue it. This page compares two approaches; it is not legal or tax advice.
Vestly keeps the record, so the promise is believable.
Set the terms once. Your crew logs in and sees what they have earned, and what they would leave behind.