Read the bonus wording in an offer and say how much of the bonus is guaranteed.
Take out your offer letter and a pen. Find the sentence that deals with the bonus, read it at a slow pace, and circle each of these phrases wherever it appears: "discretionary", "up to", "subject to performance" (the longer version is "subject to company and individual performance") and "eligible for". Whoever drafted the clause picked those words on purpose. They show up in offer after offer, and every one of them signals that the payment is not guaranteed.
A discretionary bonus is one where the company chooses whether to pay anything and how much to pay, with no duty to give you its reasons. "Up to" fixes the most you could get and is silent about the least. "Subject to company and individual performance" makes the bonus depend on two results going well, and you only influence one of them, which is your own work. "Eligible for" means you may be considered for a bonus, and being considered is a long way from being paid.
Put any of these in front of a number and the fair way to read that number is as a range that starts at zero and ends at the figure printed.
Some clauses are written differently. "A fixed bonus of one month's salary, payable in December" is a term of the contract, so if the money doesn't arrive you have wording you can point to. The annual wage supplement from lesson 1.1 works the same way: treat it as guaranteed only if your contract says so.
Hui Min is weighing the two offers from lesson 1.1: Offer A at S$4,200 a month and Offer B at S$4,000 a month (both invented figures, as are the other amounts below). The line Hui Min keeps going back to in Offer A says the holder is eligible for a performance bonus of up to three months' salary. At S$4,200, three months comes to S$12,600. A friend's advice is to add that S$12,600 to the salary, and on that basis Offer A wins by a wide margin. With a pen in hand, though, three of the circled phrases sit in that one sentence: "eligible for", "performance" and "up to". Read fairly, Offer A's bonus could be anything between zero and S$12,600.
The wording tells you the maximum. To find out what people were really paid, you need the history. Put two questions to the recruiter or hiring manager: how the bonus was paid over the past two or three years, and what decides the amount.
Give the second question equal weight. At some companies the bonus comes mostly from company results, at others it follows each person's rating, and others use a formula combining both. Where company profit drives it, a weak year cuts everyone's bonus regardless of how well they performed. Where your rating drives it, ask how ratings are distributed across the team. Ask about timing as well: someone who joins partway through the year may get the full bonus, a pro-rated share, or nothing in the first bonus cycle.
You'll usually get a rough answer. When no one will tell you anything about earlier bonuses, take the silence as information and set your estimate low.
When Hui Min asked, the recruiter gave Offer A's team history: 1.5 months, then 1 month, then nothing last year because the company missed its targets. Offer B's clause reads "up to one month", which caps it at S$4,000, and the two most recent payouts there were half a month each.
A sign-on bonus is cash you really receive when you join, but it often carries a clawback, a condition requiring you to return some or all of it if you leave before a set date. Check three points in that clause: how long the period runs, whether you repay everything or a portion that gets smaller the longer you stay, and whether it still applies when it is the company that ends your job.
Suppose you're offered S$3,000 that has to be repaid in full if you resign within 12 months. Until those 12 months pass, the money behaves more like a loan than a gift. If leaving early is a real possibility for you, count the sign-on bonus at less than its face amount.
For any variable bonus, use a cautious estimate in your numbers and never the maximum. The friend's suggestion, salary plus the full S$12,600, is the error to steer clear of.
One method that works is to take the payouts you were told about for the last few years, average them, and treat the answer as money that may come but that you can't rely on. If you have no payout history to work from, enter zero as the cautious figure and jot the maximum beside it as a note. Receiving more than you planned for at year end is far easier to deal with than a budget that assumed money which never arrived.
Hui Min's sums for Offer A start with the three payouts: 1.5 + 1 + 0 = 2.5 months. Spread over three years, 2.5 / 3 gives about 0.83 of a month, and at S$4,200 a month that is S$3,500 a year. For Offer B, half a month of S$4,000 is S$2,000.
The possible bonus figures in Hui Min's comparison now read S$3,500 and S$2,000, where before they would have read S$12,600 and S$4,000. The difference between the two bonuses is down to S$1,500, and neither offer promises its amount.
Lesson 1.4, "Build a total compensation sheet for two offers", is where you set up the comparison sheet. Give guaranteed pay and possible pay their own subtotals. Salary, any fixed contractual bonus and an annual wage supplement written into the contract belong in the guaranteed subtotal. Cautious estimates of variable bonuses go in the possible subtotal, with the maximum noted next to each one. Kept apart like this, the two subtotals show how much of each offer depends on things outside your control.
Take the bonus clause from your own offer, or from Hui Min's, and read it once more with three questions in mind: what is certain, what is only possible, and what you might have to give back.
Rewrite the bonus clause of an offer as one plain sentence that states the guaranteed amount, the possible amount and any clawback.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).