As business struggle to find great candidates, more and more businesses are offering signing bonuses. Some signing bonuses are posted in the job ad; some are negotiated at the offer. Signing bonuses can be an attractive carrot for a job seeker, but what about your current employee who finds out the “new kid” is getting a bonus and they aren’t being rewarded or recognized for staying?

It may be time for your organization to focus more on why you’re offering signing bonuses but not retention bonuses, and whether you can afford to do both. As much as we bemoan the lack of job candidates, it’s actually more costly for an organization to lose a productive and positive current employee. If you’re offering sign-on bonuses because it’s hard to hire right now, keep in mind this practice may create more open positions if your long-term employees decide to leave due to pay equity issues.

Stay bonuses – or other bonuses related to job performance or project completion – are a great way to recognize your current staff and keep your wage increases in check until inflation ends. A bonus to a current high performer will probably have a better ROI than using signing bonuses for new, untested, and unknown employees.

As you think about these bonuses, keep in mind that offering one type of bonus but not the other could create pay disparities between employees who do similar work, thus could expose you to discrimination and pay equity claims.

With any compensation decisions, be transparent about your compensation philosophy as appropriate. If you share your compensation philosophy with employees, they have a better understanding of the business factors influencing comp changes and surprises and speculation are minimized.

Lastly, don’t reprimand employees who share information about wages or bonuses or other forms of compensation. Discussing pay is a protected concerted activity under the National Labor Relations Act.

Talent acquisition, performance management, and compensation are complicated. Let the experts at The Employer Group help you navigate these decisions by contacting us today.