Signing bonuses suggest the market may be warming up again. Values are still way down from 2022 highs, but prevalence is ramping up.
You can see half the story in this chart:
This is software engineering data spanning 4,564 offers from Compa for individual contributors. Values remain down 43-47%, and consistently broken out by levels.
However, prevalence, or usage of signing bonuses, reveals the rest of the story:
For senior levels (P5 and P6), usage bottomed out in April, and it’s been steadily creeping back up for the past four months.
P3 and P4, where lots of offer volume exists, still see fairly suppressed usage at 35% of offers. However, the junior levels have rapidly spiked up in the past two months.
By the way, interesting to note the elevated usage of signing bonuses for junior levels. Cash is king everywhere, but especially for new college grads. And when I chat with comp teams about this, they note that signing bonuses are often programmatic for NCGs instead of exceptional, so slower to respond to market trends.
So what’s going on?
For one, the stock market has modestly recovered. To the degree signing bonuses pay for walkaway value from unvested stock, it now costs more.
But the trend may also suggest green shoots in the talent markets as big tech looks to invest in growth again. Signing bonuses are a measure of how hot the market is, kind of like paying above asking price on a house.
In other words, like everything else, the answer is probably AI. 😉🤖
This post was originally featured in Peer Group, a newsletter for comp leaders navigating the new era of pay transparency by Compa Co-founder and CEO Charlie Franklin.
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