It’s a Sign-on Bonus – Not a Retention Bonus
You’re seeing, and perhaps your organization is posting, job advertisements just like this: “We’re hiring! Great career opportunities at XYZ Company! We offer sign-on bonuses for new employees!”
It seems logical that the promise of more money will attract additional candidates for an open position. But, as the saying goes, the devil is in the details – and if that sign-on bonus comes with strings attached, don’t expect it to make a difference in your recruiting efforts.
Where sign-on bonuses go wrong
While organizations are eager to hire, they’re also wary of someone accepting a position, collecting the sign-on bonus, and staying only a short time before quitting. Their solution is to add conditions: typically, paying the sign-on bonus in installments, say over 6 months or a year, rather than in a lump sum.
That strategy, companies reason, will keep a new employee on the job longer. However, what they’ve really done is create a retention bonus. They’re paying more money so an employee will stay. Guess how that turns out? Those employees will stick around until they’ve received the full amount. And then, once the cash is in their pocket, they’re out the door.
How sign-on bonuses should work
A true sign-on bonus should be paid in its entirety at the time a new employee accepts and starts a new position. If your organization’s goal is to ramp up recruiting, that offer will surely carry more weight than a bonus paid out over time.
What does that approach tell a prospective candidate? Some pretty important messages, to be sure. First, that you believe in your organization. Second, that you stand behind your company’s leadership and culture. And third, that you’re confident your work environment is a place where top employees actually want to be.
The bottom line is this: if your organization is a good one to work for, you don’t need to put terms on a sign-on bonus. The better bet is to put your money where your mouth is. Going that route will generate more interest and attract better candidates, particularly the ones that you prefer to hire.
One last piece of advice that should go without saying: you can’t offer a sign-on bonus, and then try to offset it by lowering the salary or reducing benefits. Any candidate worth hiring will see right through that – and keep walking.
The experts at Alaant know what works, and what doesn’t, when it comes to finding and hiring great employees in a tight job market. Can we help your organization connect with the top talent you need? Contact us today and let’s get the conversation started!
Miriam Dushane, Managing Partner
Miriam is all in when it comes to doing whatever she can to help the Capital District grow and thrive. She is passionate about helping talented professionals find the right job and her work in the community is focused on furthering our area as a center of economic vitality. Miriam likes to garden and care for her pets. She is a member of an adult-only skate group where she rollerblades every week. She loves the Mets! And she is obsessed with vacuum cleaners; she really likes to vacuum and has 6 right now.