Despite it being a buyers’ market, employers say they are willing to pay sign-on bonuses to attract the right talent. A new WorldatWork study found that, despite budget cuts, a majority (54 percent) of (mostly large) U.S. employers are still offering sign-on bonuses to new employees, especially key new hires filling critical positions.
A sign-on or signing bonus is a sum of money paid to a new employee by a company as an incentive to join that company. Sign-on bonuses are almost exclusively given to full-time salaried employees of a company, as opposed to a temporary hire or intern. They are often given as a way of making a pay package more attractive to the job candidate.
According to the WorldatWork survey on bonus programs (to be released in early May), sign-on bonuses continue to be fairly prevalent for all employee levels (except clerical) within organizations. Most employee groups are typically eligible for amounts between $1,000 and $9,999, but many executives have been known to receive more than $10,000.
With today’s unemployment rates, the sign-on bonus may come as a (pleasant) surprise to many job candidates. This is because despite the current economic slump, there remains a shortage of qualified employees in certain hard-to-fill positions.
Sign-on bonuses can help:
To be competitive
If the candidate is considering another comparable job offer, some money up front can be the clincher.
To bridge a gap
If what the candidate is asking for and what the employer is willing to offer is off by a few grand, this is a way to make up the difference.
To replace a lost benefit
When some benefit or perk with the present employer is not part of the offered package, a sign-on bonus might make up for, say, the absence of a car allowance or diminished amount of vacation time with the new employer.
To cover a performance bonus
If a candidate won’t leave their current company until a certain time so they can first collect their annual bonus, a sign-on bonus can sweeten the deal.
Need further proof that companies are using bonuses to attract talent? Sixty percent of the 1,023 surveyed companies have a referral bonus program, whereby cash bonuses are paid to employees who refer new hires.