Will offering a sign-on bonus boost your ability to hire talent?
Employers have often debated the benefits of offering sign-on bonuses. During the pandemic, more companies began advertising sign-on bonuses to boost recruitment efforts. According to a Business Insider report , healthcare, education, and trucking are a few industries that are offering notable sign-on bonuses for new hires – some as high as $75,000. These can be a great tool to show candidates that you value their experience and allow your company to stand out among the sea of companies looking for employees. However, some claim that sign-on bonuses may be short-lived and do little to help with retention.
When weighing whether to offer sign-on bonuses, here are a few things to consider.
Sign-on bonuses may sweeten the offer, making your recruiting efforts more competitive
Offering a sign-on bonus is a great way to attract prospective employees, especially if other areas of the job offer are merely competitive with the market. Offering health insurance, paid time off, and a 401(k) no longer make an employer stand out as these benefits are now the standard. Additionally, a sign-on bonus may help bridge the gap between a new hire’s start date and when certain benefits kick in later. For instance, a sign-on bonus can be set aside for retirement savings if a new hire is not eligible to participate in a company’s 401(k) plan until 12 months of service have been completed. Particularly when it comes to exceptionally strong candidates weighing multiple job offers, a sign-on bonus may help tip the scale.
Sign-on bonuses can cure an immediate staffing need
Areas like nursing and education have been struggling with staffing shortages for years, and the pandemic only exacerbated this issue. Sign-on bonuses may help to quickly attract talent and fill the immediate need for roles like these. According to nurse staffing platform Incredible Health, 47% of its health systems are currently offering sign-on bonuses – up from 30% before the pandemic began. Many of these sign-on bonuses, however, come with stipulations. Many of these companies are requiring those who accept the sign-on bonus to stay for a minimum of two years. Structuring bonuses as such has become a way to not only attract employees, but also retain them.
Sign-on bonuses may be required to keep up with other employers
According to a survey by Salary.com, one-third of companies currently offer sign-on bonuses. This is a massive jump from the 6% who offered sign-on bonuses in 2019, as shown by this report from CNBC. If these numbers continue to climb, job candidates may expect to see a sign-on bonus mentioned in the job ad. Applicants may only apply to positions with an offered sign-on bonus as they feel that’s a better use of their time. Ultimately, a sign-on bonus may become a deciding factor for which job those applicants choose to pursue.
Keep in mind, sign-on bonuses may do little to help with retention and can impact the morale of your current team.
Some companies that have had success hiring with sign-on bonuses have found that they still struggle retaining those employees long-term. Those who do not require new hires who accept the bonuses to stay for a certain period of time, may quickly lose those employees who only took the job for the bonus. McKinsey & Co. recently released a survey that says 40 percent of employees are somewhat likely to leave their jobs in three to six months. If employees are only enticed by the bonus, and not truly passionate about the company or the position, then you may end up back at square one after a few months. If you are considering sign-on bonuses but are worried about this risk, you can create contracts for new hires that require them to remain with the company for a set amount of time or return the bonus. It is also important to be mindful of the impact sign-on bonuses may have on existing staff. If employees find out new staff are receiving bonuses when they did not receive them at their own time of hire, they may feel shorted or unappreciated. Consider offering them an additional holiday bonus, raise or other tokens of appreciation to ensure they still feel valued. Incentives such as these can help boost retainment of your current staff!
If done right, offering sign-on bonuses may help to increase your talent pool and bolster recruiting efforts by proving to applicants up front that you value their experience. In today’s competitive job market with many applicants receiving multiple job offers, competitive sign-on bonuses may help your company stand out.
At Recruit4Business, we offer a variety of recruiting and HR consulting services. If you have questions about offering sign-on bonuses, connect with us today.