Use of Sign-On and Retention Bonuses at an All-Time High

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The use of sign-on and retention bonuses appears to be at an all-time high, according to a recently released WorldatWork survey on bonus programs and practices.

The research, which highlights the practices of 713 organizational participants, is the fifth iteration of a series that dates back to 2001.

Among other things (like the volatility of today’s labor market), these findings tell us that an increasing proportion of the reward dollars needed to attract and retain talent are being channeled into things other than fixed base salaries.

A doubling of retention bonuses since 2010

WatWsurveyTake a look at these trend lines (see left). You should  note in particular that the overall use of retention bonuses has nearly doubled since 2010!

Here are some of the most notable outtakes from the new WorldatWork research — beyond just the current trends that are in use — and they include the following:

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Sign-On Bonuses

  • More organizations are giving flat dollar amounts (greater than three-fourths) than in 2010 except for executive roles.
  • Generally speaking, it looks like not only are there more organizations offering sign-on bonuses, but they are also paying out at higher rates with executives being paid the most (41 percent receive greater than $50,000).

Retention Bonuses

  • Most organizations (seven of every 10) base the decision to award a retention bonus on discretion. The remaining minority (30 percent) base their decisions on formal eligibility criteria and guidelines.
  • Participants report that most employee groups are eligible to receive retention bonuses. Clerical employees are the least likely, but still eligible at nearly half (49 percent) of the participating organizations.
  • A lump sum payment (versus regular intervals or a progressive time frame) remains the most common practice for delivering retention bonuses, used by roughly two-thirds of organizations.

You can find more information on the WorldatWork research here. Comments? Observations?

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

Contact her at abares@alturaconsultinggroup.com.

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