Once a common tool for recruiting talent at all employment levels, signing bonuses fell out of favor outside executive level positions in the 90s and 2000s to the point that by 2019, less than 2% of all US job postings listed the availability of a signing bonus.
This trend saw a reversal during the COVID-19 pandemic impacting the labor market and the “Great Resignation” such that by March 2022, 8% of all job postings and 15-20% of job postings in particularly in demand sectors such as healthcare, listed signing bonuses as employers vied for candidates in a highly competitive labor pool.
As the pandemic’s effects begin to fade and companies look to a “return to normal” as well as a tightening labor market, the signing bonus trend is slumping again with the number of job postings listing signing bonuses dropping to 5%, as of June 2023. But even this higher than pre-pandemic number is skewed by the ongoing fierce demand within the healthcare sector, and when evaluating all non-medical jobs, less than 3% of job postings feature signing bonuses.
This rush to return to “normal” risks throwing out a very useful tool in the talent recruitment playbook as signing bonuses provide several advantages in recruiting top talent:
- In a labor market where signing bonuses are the exception and not the rule, they can provide a valuable enticement to top tier candidates that may be considering multiple offers.
- With a push to get more people back in offices in person, signing bonuses can help to ease the concerns over increased expenses for candidates that would need to be in person instead of remote.
- In a post Great Resignation job market, employees across all sectors are more willing to make a change than pre-pandemic, particularly in the first 6-12 months of a new position. Signing bonuses generally come with requirements of remaining with the company for at least 1-2 years or otherwise having a requirement to pay back the signing bonus. This enticement can lead to employees staying on and becoming more invested in the long term with the employer.
As we are seeing some cooling in markets, a concern arises with maintaining higher base salaries used to recruit talent during peak levels. Signing bonuses allow employers to offer lower base salaries that are easier to maintain and provide room to grow, even as markets cool.