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I see more and more, in every industry, employers offering sign-on bonuses to incentivize candidates.   While I get the reasons why I think you need to be careful when offering a sign-on bonus. One thing to consider: What will your existing employees think? Especially those that are loyal and have been with you a long time.  Another thing to think about; If the person you are hiring is basing his/her decision on money alone, is that good for the long term? 

I always struggled with sign-on bonuses,  but I would like to hear from those that have done it, and how they handled it. 

 

Posted

I never offered a sign-on bonus per se, but what I did often was advance the new hire their first week's check before they even started working.  When the first week's pay period came around, they wouldn't get a check because I already gave it to them when hired.

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Posted

For my heavily bonused employees, I will offer a sign-on bonus that gets the to the next pay period.  They may be in a full salary role.   The last one I did said:  Salary + $400 bonus paid weekly thru XX date.   Then, monthly bonus from that point forward.  This kept their salary at a competitive level until their earned bonus kicks in.  The bonus was less than he would make hitting goals, so there is an incentive to have next month's payout bigger and better.    NOTE: This is not a true sign-on bonus, but shows a method of implementation.   It is implemented in weekly chunks so that if it falls apart, the business is protected and spends less on that hiring mistake.

I've received bonuses in the past which had "claw-back" clauses.   If I didn't meet the time commitment, it would be demanded back.  I've made similar offers. 

If possible, I think it's best to avoid sign-on bonuses as a main-attraction.  If this person leaves their current job for the bonus, will he leave here for the next bonus?   You would prefer to have someone selecting their next job for better reasons.  However, if adding a sign-on bonus helps you close a deal-that-you-like, then go for it. 

I'm a fan of structuring any bonus payout with a time commitment or earned over time vs a day-one payout.   Sometimes that new hire does not pan out and it can be hard to claw-back what is already spent.

  • Like 1
Posted
40 minutes ago, bantar said:

For my heavily bonused employees, I will offer a sign-on bonus that gets the to the next pay period.  They may be in a full salary role.   The last one I did said:  Salary + $400 bonus paid weekly thru XX date.   Then, monthly bonus from that point forward.  This kept their salary at a competitive level until their earned bonus kicks in.  The bonus was less than he would make hitting goals, so there is an incentive to have next month's payout bigger and better.    NOTE: This is not a true sign-on bonus, but shows a method of implementation.   It is implemented in weekly chunks so that if it falls apart, the business is protected and spends less on that hiring mistake.

I've received bonuses in the past which had "claw-back" clauses.   If I didn't meet the time commitment, it would be demanded back.  I've made similar offers. 

If possible, I think it's best to avoid sign-on bonuses as a main-attraction.  If this person leaves their current job for the bonus, will he leave here for the next bonus?   You would prefer to have someone selecting their next job for better reasons.  However, if adding a sign-on bonus helps you close a deal-that-you-like, then go for it. 

I'm a fan of structuring any bonus payout with a time commitment or earned over time vs a day-one payout.   Sometimes that new hire does not pan out and it can be hard to claw-back what is already spent.

Interesting concepts. Are you transparent with your current employees on this plan, or is it kept private? (If that's possible) 

Posted

Always private.  It's a temporary measure to accomplish a goal.   He who gets extra money is generally happy.  Others are oblivious.   But for the one receiving it, it is in writing... for 2 reasons:  1) So that the person understands what is happening and 2) So that I don't forget what I promised.

Expand this thought beyond me:   You raise a good question.  If you are going to paper the neighborhood with BIG SIGN-ON BONUS, how is this received by current employees when the are not getting a bonus?   They would be thinking that maybe they should leave to get one themselves.   It's likely that I could get away with a sign-on bonus in an Indeed Job Posting that no one would hear about, but it's also likely that a technician's friend was looking for a job and saw my bonus.  You'd need to be prepared for this conversation... 'cause it is a small world. 

If the techs are overworked and would be thrilled to have another tech, they might be all for it.   But probably not.

Posted
2 hours ago, Transmission Repair said:

I was never a fan of a sign-on bonus.  Instead, I would advance the their first week's pay.  That worked for me.

Not sure how this helps them?   With weekly pay, you're first check arrives at the end of the 2nd week.   If you are accelerating their first EARNED paycheck, then there is a 2 week gap until the next earned paycheck.  If you are paying them for a week that they did not earn, then you are indeed paying them a sign-on bonus, but not calling it such.   It must be the latter.  

  • Like 1
Posted
2 hours ago, bantar said:

Not sure how this helps them?   With weekly pay, you're first check arrives at the end of the 2nd week.   If you are accelerating their first EARNED paycheck, then there is a 2 week gap until the next earned paycheck.  If you are paying them for a week that they did not earn, then you are indeed paying them a sign-on bonus, but not calling it such.   It must be the latter.  

Nope, at the end of their first week they don't get a paycheck.  Great filtering to find out if they fit in.

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  • Have you checked out Joe's Latest Blog?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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