The Health and Safety Guide to Golden Hellos

 In a tight market, you need to pull out all the stops to both and attract and close on talent. And of course, most right-minded employers do just that, by creating and executing on great employer brand propositions during the hiring process. But, this does not mean that the top talent that you have carefully pampered will accept your job offer.

Why? Because, they may be seduced by counter offers from their former employer and your competitors. In fact, as most of you may know, things have a way of heating up around the time you want to close on a candidate and it can turn in to a bit of a dog fight. You may need more than your standard package of shiny corporate propositions, you often need to look under the counter for some guerrilla tactics.

One such tactic is the ‘Golden Hello’ or sign on bonus. It’s kind of under the counter because employers don’t like to give out the impression that they need to bribe people to join or buy their loyalty. It can send out very negative brand messages, e.g. no one wants to join you.

So, while you might not exactly choose to advertise the fact that you offer sign on bonuses, there is nothing wrong with using the ‘golden hello’ joker in the pack so you can contend well in the proverbial candidate job offer dog fight.

But, there are various guards and measures you should place around your sign on bonus to minimize any potential damage to your brand and to ensure the worker is signed up in the most effective and performance enhancing way possible.

First, as suggested above, don’t advertise sign on bonuses; don’t make them part of policy. Keep it as an individualized employee incentive that is used in demanding offer situations that require additional interventions. There are several kinds of situation where you might want to offer individualized sign on bonuses, which address very specific needs and concerns of each candidate such as:

1. Lost stock or bonus. An employee may be joining you at a point, which means they will lose entitlement to a bonus or stock that has not yet vested. A sign on bonus can mitigate this loss and encourage them to move.
2. Bridge a salary gap. Now the current employer or a competitor may be offering a salary that is higher, which busts your pay structure and/or which you cannot commit to for the long term. A one time, up front bonus can be enticing even if it is smaller than the differential being offered by the competition as part of a package.
3. As a differentiator. The candidate may be choosing between equal offers and if a sign on bonus would be the differentiator, it could be worth offering one. However, try and gauge whether upfront cash is a key motivator for this particular candidate before offering as it could appear like quite a cheap gesture. For example, have they just made a large purchase such as a house, or just got married, or just had a child? These are all things which can put a strain on the purse and make them more open to a cash incentive.

If you do want to offer sign on bonuses as part of a general policy to actually attract talent (not just as an individualized incentive to close on in demand talent), avoid offering it company wide as this could look desperate and make candidates think there is something wrong with your firm. Just focus in on niche areas where there is a recognized high demand/low supply of staff – and only offer sign on bonuses for these ‘shortage skill areas’. This will help to protect your brand.

Also be careful to link some conditions to the sign on bonus as you don’t want to appear a soft touch. For example, if the new hire  leaves for a performance related reason or they resign in the first year, then you should expect some kind of reimbursement. This will mean they respect the sign on bonus and don’t take it for granted. Or think about paying the sign on bonus in two tranches with the second tranche being dependent on their satisfactory performance.

Done well, a sign on bonus can be an excellent way of greasing the wheels and can encourage an undecided candidate to lean in your direction. Done badly, it can make your organization look a little amateurish and desperate, so tread carefully.