When Should You Offer a Sign-On Bonus?
In Hawaii it can be difficult to find the right people to get work done. Exceptionally qualified candidates often have multiple job offers and make decisions quickly. If your candidate is already gainfully employed, there’s a good chance their current employer is offering incentives to get them to stay put. In a tight labor market, what you can offer to sway candidates then becomes that much more important. Read through our four tips for when it might be worthwhile to offer a sign-on bonus and decide if they’re worth including in your company’s compensation package.
- If you are trying to woo a candidate
A one-time sign-on bonus might be enough of an incentive to lure a worthwhile candidate if you’re offering a slightly lower level of compensation or aren’t capable of offering a particular benefit an employee is searching for—be it pet insurance, access to a company vehicle, a company cell phone, etc.
- When acceptance is absolutely necessary
If your team’s productivity is hemorrhaging because you’re battling time constraints and/or operating understaffed, a sign-on bonus may be able to entice a candidate who is on the fence. Being creative in your compensation package to attract new employees is worth experimenting with if you’ve found yourself with positions that you can’t afford not to fill.
- If you need to overcome other negative factors
If there have been concerns raised in the interview by a prospective employee about certain factors that are beyond the company’s control, it might be worthwhile to extend an olive branch in the form of a sign-on bonus. If your business is in a remote location, the hours are slightly abnormal, or the employee will be occurring significant expense to relocate to take the position, starting the employment relationship off on a foot that demonstrably shows your business takes care of its employees is important.
- If the candidate’s compensation is performance-based
Employers might consider offering sign-on bonuses when a position’s compensation is performance based. This helps bridge the gap between what an employee expects to earn with performance bonuses and what they might realistically earn as they being a new position.
One thing to keep in mind is that to mitigate the potential risk of a hire quitting as soon as they receive their bonus, the signing bonus can be spread out over the course of the hire’s first six months/year. Offering signing bonuses can be a calculated risk for an employer, but in a market where finding and hiring high-caliber personnel is difficult, finding ways to attract the kind of talent it takes for your business to be successful is worth the effort.