A fast food worker hangs a sign for job openings in Miami, Florida. More companies are adding sign-on bonuses or other creative perks as they continue to struggle to fill jobs. (Photo by Joe Raedle/Getty Images)
To help attract people to come work for a tech platform whose customers are restaurant and hospitality companies—both industries hit hard by the pandemic—SevenRooms chief people officer Paul McCarthy knew he had to think outside the box.
The company already offered sign-on bonuses for some tough-to-fill jobs and cushy perks like unlimited paid time off, but despite new areas of growth for the company, it had trouble getting candidates who were feeling uncertain about the prospects of its industry during the pandemic, he recalls.
So McCarthy decided to try something a little different: Having all new employees take their first two weeks off, providing pay and benefits while setting their official start date 14 days before they begin doing real work. The “Fresh Start” program is, in one sense, a twist on a sign-on bonus—but one that also underscores its commitment to employees’ time.
“I started to think about … what could we do for people coming in?” McCarthy says. “Why don’t we just say that people who are coming in have the opportunity to just take time off from the very beginning—from the first day—to recharge, refresh?”
In a tight labor market where candidates hold much more power, companies are increasingly pulling out all the stops, trying new time-off programs, investing more in wages and benefits and adding more or bigger sign-on bonuses for positions from the very top of the organization all the way down to the front lines.
“Companies are really trying to get creative,” says Don Lowman, who leads the global total rewards practice at Korn Ferry, which found that nearly 20% of companies it surveyed were using sign-on bonuses more than before the pandemic. Companies, he says, are “going further down in the business than they would have done before, using [signing bonuses] more for front-line employees.”
United Airlines is advertising for jobs such as part-time ramp agents or baggage handlers in Denver that offer $10,000 sign-on bonuses, issued in monthly increments that require a year of service. Target said Monday it would be setting a new starting wage range that goes from $15 to $24 and expanding access to benefits, lowering the average minimum hours worked to qualify as well as reducing waiting periods for new employees to join health and 401(k) plans.
Amazon has offered $3,000 signing bonuses to warehouse workers—and in February, more than doubled its maximum base pay to $350,000 for corporate and tech employees, citing “the need to remain competitive for attracting and retaining top talent,” according to Bloomberg.
In top executive jobs, particularly for hard-to-fill finance, human resources and technology roles, companies are dangling increasingly lucrative amounts to draw top talent. Larry Emond, a senior partner with Modern Executive Search, says that in a recent meeting, a chief human resources officer at a mid-sized company shared that she had just given a $1 million cash signing bonus and $1 million in initial equity to a vice president of finance.
“Sign-on bonuses and significant equity has blown up,” Emond notes. At that level, “companies are also a lot more willing to do significant buyouts they haven’t been willing to do before, for vested equity or potential bonuses that aren’t even guaranteed.”
In one survey, 27% of companies said they were offering signing bonuses that are larger than previously offered.
Several surveys show that companies are turning more and more to sign-on bonuses to help lure workers amid the talent crunch. GlobalData, a consulting and analytics company based in London, reported in September that job ads featuring sign-on bonuses grew by 454% between August 2020 and August 2021. Data from Aon shows that lower level software engineers hired recently are receiving sign-on bonuses much more frequently than those in managerial roles or those hired in the past. Gartner’s surveys of its clients, meanwhile, found that 27% said they were offering signing bonuses that are larger than previously offered.
To keep up with the higher pay companies are using to draw new candidates, more employers are increasing how frequently they examine market rates and reset employee pay, doing so not just once but sometimes twice or more per year. Meanwhile, some are making across-the-board wage increases to keep up with escalating inflation.
Toronto-based 1Password, a password management company that competes for technology workers, said in January it was giving all employees a 7.5% cost of living adjustment, in addition to merit-based increases. “Just going out to buy two liters of milk gets more and more expensive, especially as you go down the line to people who work on the front lines in customer support,” says chief people officer Katya Laviolette. “It was simply done just to rectify [that] situation.”
At SevenRooms, McCarthy wanted to do something for existing workers, too, to help prevent burnout. While the company has long had “unlimited” paid time off, it now asks employees to take at least one “recharge” day per month, as well as requiring them to take five consecutive days off in the first half of the year and five consecutive days in the second half, in addition to other days they may choose. (After five years at the company, they’re required to take two consecutive weeks off each half of the year.)
For Alana Steinberg, who joined SevenRooms as a product marketing manager in January, the two weeks off was a draw. While she says she would have taken the job without it,, it helped underscore the company’s commitment to work-life balance; taking a job at other companies she considered would have meant taking time off between jobs unpaid.
Steinberg used the time off to pursue a certification in wine expertise she’d long wanted to earn. “It’s the framing of it,” she says. “There’s a difference between having this free time given to you versus having to take time to do something.”