Yahoo Finance Should new hires be offered 'golden hello' joining bonuses?
Employers struggling to fill job vacancies are offering signing-up bonuses to applicants for in-demand roles. There have been more than 1.1 million job vacancies across the UK for 11 consecutive weeks as a result of chronic staff shortages, according to the job search engine Adzuna.
Hiring is one of the biggest challenges facing businesses because of a lack of skills and Brexit. The "pingdemic" has also forced jobseekers to self-isolate rather than attend interviews or start work, which has led to delays in recruitment.
To entice workers into roles, almost 5,000 vacancies across the UK are currently offering "golden hello" signing-on bonuses for in-demand roles such as healthcare providers, care and nursery workers, and HGV drivers. These bonuses range from about £1,000 to £10,000.
A one-time payment can be attractive to candidates, offering a short-term financial incentive to join a new company. Yet although a joining bonus sweetens any job offer, are there any strings attached that applicants should be aware of?
Read more: How to negotiate a higher salary if you're offered a job
“Joining bonuses are usually offered when an employer wishes to compensate a new hire because either the salary is lower than market value or the packages on offer are not desirable,” says Alan Price, CEO at BrightHR. “They would mainly be offered in cases where the employer believes the candidate to be a great fit for the role and they would not like to lose them.
“These types of bonuses can also be used where a business wishes to stand out during a recruitment process. For example, where a candidate has been given an offer by another company or a counter offer from their existing employer, in which case a joining bonus may help attract the candidate towards your business.”
Employers may also offer signing-on bonuses to attract jobseekers to positions they are struggling to fill. A bonus may tempt jobseekers into roles with downsides such as night shifts or unsociable hours.
What are the pros and cons of joining bonuses?
For employees, the benefits of signing-on bonuses are clear. New hires may end up receiving more than their current salary and people won’t have to wait until their first paycheck for monetary pay-off.
“They can make the decision about which company to join easier when changing jobs,” says Price. “Employees may also feel valued because the employer is offering them a bonus to join.”
For employers, a signing-on bonus is a one-time payment that may not cause financial issues for a business. “You are not committing to paying a higher monthly salary or yearly bonuses,” says Price. “They can help with attracting new talent, help recruit into hard-to-fill roles and can help during the salary negotiation stage.”
The money may boost productivity and engagement among new hires too. “Employees will feel valued and work hard to show they were worthy of the bonus,” adds Price.
Read more: How to help employees adjust to hybrid working
However, signing-on bonuses can come with downsides. Firstly, it’s important to understand the terms. Some companies require the money to be paid back if you leave before a certain date.
Although an initial payment can be tempting, it might not be as financially beneficial in the long run. For example, workers may end up earning more via yearly salary increases instead, but employers may be reluctant to offer pay rises after paying joining bonuses.
“People could feel as though they will be held to a higher standard by the employer, having been paid a bonus. Expectations will be high on both sides,” says Price. “People may start to feel less valued as the years go by if no further bonuses are offered.”
Employers may also want to think twice before offering joining bonuses. Other employees may feel resentful if they were not offered a similar golden hello, which may lead to disengagement, a lack of productivity and a high staff turnover.
If a candidate still wants to negotiate a higher salary in the future, it can also end up costing more for companies. “Workers may begin to look elsewhere if they feel underpaid once they start to receive their agreed salary,” says Price.
