Should I accept a retention bonus? here’s what experts say
From not if you plan to leave to it all depends on the employee. Here are 10 answers to the question, “Should an employee accept a retention bonus, if offered one? Why or why not?”
- You May Feel Obliged to Stay
- Don’t Be Blinded by the Dollar
- Not if You Plan to Leave
- Assess Why You Are Receiving It
- Consider the Taxes
- It Depends On the Employee
- Read the Fine Print
- Look Out for Red Flag Conditions
- Might Leave You Feeling Trapped
- You Rightfully Earned It
You May Feel Obliged to Stay
Although retention bonuses are meant to reward and motivate employees, they can be a double-edged sword. Some organizations offer retention bonuses to avoid layoffs or to prevent a mass exodus. In this case, accepting the bonus may come back to bite you. If you have already accepted the bonus, you may feel even more obligated to stay. In the end, you may be stuck in a situation where you are overqualified and undervalued.
Matthew Ramirez, CEO, Rephrasely
Don’t Be Blinded by the Dollar
There is nothing wrong with accepting a retention bonus if it’s something that meets your needs. Don’t let yourself get enamored by quick cash infusions; they won’t last. Consider if the job is still meeting your needs on a financial and professional level. Are you still satisfied with the position? Would you still be satisfied with the position if a bonus wasn’t in place? If the answer is no, then the choice should be simple; it’s likely time to consider moving on. Your situation isn’t going to change just because of a bit of short-term money. Before accepting any form of a retention bonus, take the time to consider whether or not you can imagine yourself in your role months from the day of your consideration. If the image isn’t sitting well with you, then reject that offer. Don’t make yourself or your company suffer through employment if your heart isn’t in it.
Max Schwartzapfel, CMO, Schwartzapfel Lawyers
Not if You Plan to Leave
Accepting a retention bonus for an employee depends on whether the employee plans to stay with the company heading into the future. If the employee plans to leave the company soon, accepting a retention bonus may not make sense, since they may not be around to receive it. Consequently, if the employee plans to stay with the company for the long term, a retention bonus could be a useful supplement to their income.
Yongming Song, CEO, Live Poll for Slides
Assess Why You Are Receiving It
Whether an employee should accept a retention bonus depends on their individual circumstances and goals. A retention bonus is typically offered to employees who are at risk of leaving a company, to incentivize them to stay. Before accepting a retention bonus, an employee should consider the amount of the bonus, their reason to leave the company, their job prospects, and the company’s prospects. If they think that the company is offering the retention bonus because it doesn’t have enough funds to give them a raise because it’s in financial trouble, they should view the bonus as a red flag.
Luciano Colos, Founder and CEO, PitchGrade
Consider the Taxes
Understanding how much of the bonus will be paid in taxes is crucial to making an informed decision on whether to accept it. The bonus may be subject to federal, state, and local income taxes, as well as payroll taxes such as Social Security and Medicare. Depending on your tax bracket and the size of the bonus, a significant portion of the sum may be paid in taxes. It is important to consult a tax professional or use tax preparation software to understand the tax implications of a retention bonus before accepting it. It might turn out that what looks like a great deal on paper will not be so sweet in reality.
Piotrek Sosnowski, Chief People and Culture Officer, HiJunior
It Depends On the Employee
This depends on everything. Does the employee need the money or are they financially stable enough to leave their job regardless of the retention bonus offer? How much did they dislike the environment they were working in? Do they have any offers lined up? These are all factors that one should take into account when faced with this situation. As it depends on whether the person is in a secure and stable financial and career-related point in their lives, and whether they can afford to let a retention bonus go by.
Derek Sall, Founder of Life and My Finances and Financial Expert, Life and My Finances
Read the Fine Print
It’s important to understand that not all retention bonuses are created equally. So, it’s not safe to recommend an employee accept one without looking at the actual offer. Typically, there will be some fine print in the contract that’s critical to understand before signing. The bottom line is to make sure you fully understand what you’re signing. Have a professional read the bonus offer with you and advise you on your specific situation and future goals.
Kelli Anderson, Career Coach, Resume Seed
Look Out for Red Flag Conditions
Before accepting a retention bonus, be on the lookout for any conditions that might be a red flag. Sole discretion conditions can be particularly insidious when it comes to these kinds of bonuses. This condition allows the employer to effectively decide if they follow through with giving the bonus that they offered initially. In the case that the employer was to decide that your work was “unsatisfactory,” they would be able to withhold your bonus without facing any legal repercussions. In essence, you’d be working under the promise of a bonus with no actual obligation to be given one. While most employers probably won’t, this could enable them to simply not pay you that bonus simply because they don’t want to. Take the time to carefully consider all conditions on a bonus. They’re strong signs that you need to seriously consider whether or not the bonus is better than just finding new employment.
Max Ade, CEO, Pickleheads
Can Leave You Feeling Trapped
It depends on the individual situation and the specifics of the retention bonus. Generally speaking, if an employee feels that their current job is a good fit, then accepting a retention bonus can be an excellent way to stay with the company while also receiving additional compensation. However, if the employee is unhappy in their current role or is considering leaving for another job, then a retention bonus may not be the best option, as it may leave them feeling trapped in a job they don’t like. It’s important to consider the long-term implications of the bonus and whether or not it is worth staying with a company that may not be fulfilling. Ultimately, it’s up to the individual employee to decide whether or not accepting a retention bonus is worth it.
Mark McShane, Marketing Director, Leeds First Aid Courses
You Rightfully Earned It
Retention bonuses are a way for a company to show that they value their employees and would like to keep them as part of their staff in the face of stiff competition in the labor market. I recommend employees take the retention bonuses offered to them without any regrets or feeling like they are being blackmailed. Retention bonuses are rightfully earned and will help motivate you to continue improving your skill set and the value that you offer your employer.
Alvin Wei, Co-founder and CMO, SEOAnt
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