Sign On Bonuses

If you’ve tried to recruit new staff in the last 6 months or so, you have probably noticed that applicant numbers re definitely not what they used to be. A role that once you may have received 50 applications for, now you’re lucky to get 5, and the chances of them being high quality options, to be fair, are slim.

You may have found yourself in a situation where you thought you had struck gold and found ‘the one’ only to have them accept another role right under your nose. You’re confused, you had a great connection with them, they showed all the signs of being really interested in your position, so why would they accept another role without at least checking in with you first?

Generally, it comes down to a few possible scenarios. Either the role they were offered was just too amazing to turn down, they were willing to take on almost any job offered, or, and more and more commonly these days they have been offered a cash bonus to accept that job- and that nice little cash bonus was just too tempting to pass up.

Sign On Bonuses, as they are known, are becoming increasingly common. Whilst they have been used for many years in high level, technical and tough to recruit for industries, they have traditionally remained in the world of mega salaries and extremely senior positions.

Now however, we are seeing tradies offer sign up bonuses to secure a new plumber, mining companies offering sign up bonuses to secure truck drivers and even McDonalds offering sign on bonuses to secure crew staff to work in their Sydney retail outlets! It seems like no industry, occupation or position level is off limits – sign on bonuses are being used, with success, across the board.

If you’re wondering what exactly a sign on bonus is, as the name suggests, it’s simply a one-off payment you offer to a potential new employee if they accept your position over any others. Usually they are paid as soon as the employee commences work with you, but in other cases the sign on bonuses are paid in a staggered pattern, some up front and more after certain periods of tenure.

How much are companies paying for these sign on bonuses? As you’d imagine it varies. McDonalds were offering around $1,000 to secure floor staff in their Sydney stores (which seems like a lot I am sure to the typical 15 year old who fills these roles), tradies are paying several thousands and upwards, and the big mining companies are happy to drop $10k to secure truck drivers.

When you put yourself in the new employees shoes, you can understand why it seems really attractive to take the offer. The cost of living is rising, we could all use a free cash injection into our bank accounts, and they start to imagine the things they could spend that bonus cash on.

But is a sign on bonuses a short sighted solution to a long term problem? Sure, in the short term a sign  on bonus will help you drag someone over the line to join you over anyone else they might be talking to, but will that mean they are a great, long term, highly engaged employee? or will they be likely to jump ship in 6 months time when another company approaches them with an offer, and a brand new shiny sign on bonus?

If you entice someone to take on your position using money as the motivator, then you’re almost certain to attract someone who is money motivated – stands to reason doesn’t it? So what do you think will happen 12 months in when their next years’ salary stands to be lower than their first, because there is no sign on bonus in year 2… they’ll likely be asking for a pay rise to compensate the difference, and that feels like a dangerous cycle to be getting into.

Add to that the perception the rest of the team will undoubtedly form when money is being thrown at new employees and not them, the sign  on bonus in my mind might seem like an attractive strategy, but I’d be wary of the pitfalls and risks associated.

If it was me, I’d be thinking of where else I could spend that money to engage and motivate my existing team, whilst I search for a new employee with the right motivation to join the business.

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