The Pros and Cons of Sign-on Bonuses as a Recruiting Tool
Every sector has seen fierce competition for the top candidates in 2022 as companies struggle to survive the Great Resignation, despite surging inflation and impending recession. According to the U.S. Bureau of Labor Statistics, job openings were at 10.7 million in June 2022, while the number of people voluntarily leaving their jobs was 4.2 million.
One of the things we have seen done to attract candidates is to offer them sign-on bonuses. But before you do so, you might want to review the pros and cons:
Pros
Only 1/3 of companies offer a sign-on bonus, so you’ll have a competitive advantage
A sign-on bonus demonstrates you are willing to compete to get talent to join your team
If you can’t match a candidate’s salary expectations, it might make up for the difference
It might pique the interest of more passive candidates who are not actively looking to change jobs
If the sign-on bonus is paid after a certain amount of time in the company, or in installments, it can help ensure the new hire stays
Cons
It may only be a short-term solution if it means a candidate accepted the job for the wrong reason
It may make organizations focus too much on hiring and not enough on current employees
It might leave recent recruits and current employees with a sour taste in their mouths as they are doing the work and helping the company succeed, but a bonus is given to someone who hasn’t yet done anything for the company
Employees know they can easily find another job because there are so many available. Being creative means attracting those passive candidates who are not actively looking for a job. Getting expert help, using programmatic recruiting, databases, and LinkedIn searches might be more effective ways to creatively complete your hiring goals than offering a sign-on bonus.
Before you start bonusing unproven candidates (and maybe making your current employees look for a job where they can get a hiring bonus), we suggest you explore other methods of hiring and retention. Need help? Contact us today to learn more.