Eighty-two percent of employers say they perceive a talent shortage — many of whom offered signing bonuses to new employees as a short-term fix for this shortage, according to a new Salary.com survey. More specifically, hourly employees received a median signing bonus of $1,000, and salaried employees received a median bonus of $5,000.
The survey also reports that 21 percent of companies used retention bonuses — on average, hourly employees received $1,000 after six months of service, while salaried employees received $7,500 after 12 months.
Going forward, however, only 20 percent of employers expect to continue offering signing bonuses at the end of 2021, and only 13 percent of employers say they expect to use retention bonuses.
Instead, more than 62 percent of organizations are planning to increase base salaries to attract new hourly and salaried employees within the next six months — and 67 percent of employers said their starting base salaries are above their market reference point.
“The prevalence of signing bonuses to attract workers in high demand and short supply has proven to be a short-term phenomenon, as organizations move to a post-pandemic reality,” said Salary.com compensation consultant Garry Straker, who also co-authored the study, in a press release. “The shift to salary increases for new hires will have greater long-term impact, so organizations will have to move with care to attract new hires while retaining existing employees.”
Because labor market dynamics evolve rapidly, Straker and co-author Chris Fusco, who serves as the senior vice president of compensation at Salary.com, offer the following salary-related tips:
- Ensure salary structures are adjusted appropriately.
- Don’t let salary compression (when an organization has negligible differences in pay between people with differing skill sets and/or experience levels) become a pay equity issue.
- Pay attention to your total value proposition. Pay is important, but it’s not everything. Make sure your employees feel valued at every opportunity.
Jessica Mulholland, Managing Editor, CalChamber