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WorldatWork’s 2021 “Bonus Programs and Practices” survey revealed that organizations have heightened their bonus activity to attract and retain employees during an especially active labor market.
The four types of bonus programs measured in the survey were: sign-on, referral, spot and retention. More than one in three (38%) of 957 organizations surveyed use all four types. Overall, the trend is increasing among use of all four bonus types, and of those without a program currently implemented, consideration is also growing. Only 7% of organizations reported not using any of the four types of bonus programs.
Sign-on bonuses are the most prevalent (79%) of the four types of bonuses, and roughly half have increased (52%) the number of sign-on bonuses awarded in the past 12 months. Over half of employers offer an additional sign-on bonus amount for hot/hard-to-fill/critical roles, with another 21% considering it.
The WorldatWork survey gathers information to learn more about bonus program and practice initiatives in organizations. A total of 957 responses were received, representing U.S. organizations of different sizes and across multiple industries.
“In today’s extremely competitive labor market, employers are being aggressive and creative in their use of incentives to attract talent,” said Sue Holloway, director of compensation content at WorldatWork. “Many are paying greater referral and sign-on bonuses for hard-to-fill roles, and a few are offering higher referral bonuses for candidates from underrepresented groups to help improve diversity.”
Retention bonuses saw significant increase in interest, with 22% of organizations reporting they are considering using them, which is an all-time high and more than double the rate considering in 2016 (10%). In the past 12 months, 49% of organizations have increased the number of retention bonuses awarded and 30% have increased the amount of the retention bonuses. Further, 57% of the organizations responding reported using retention bonuses.
- Most organizations are not measuring the effectiveness of their bonus programs, but of those that are measuring, referral bonus programs are the most likely at 19%, with 30% considering.
- Referral bonuses jumped to 75% from 65% in 2016, which was the greatest increase among all four bonus types. Executives are typically not eligible for referral bonuses, and 51% of organizations exclude HR employees.
- About one-third of organizations offer a higher referral bonus for hot/hard-to-fill/critical positions, with 13% considering adopting this practice. Only 2% of organizations offer a higher referral bonus for candidates from under-represented groups; 12% are considering adopting this new practice.
- Only 28% of organizations have formally defined retention bonus criteria and rules/guidelines, with most (72%) reporting programs based on management discretion. The 13% of organizations measuring the effectiveness of their retention bonus programs all measure retention/turnover.
- 61% of organizations use spot bonuses and consideration of adding this program has increased for the past several years. Of the 7% of organizations measuring program effectiveness, 81% of those organizations are measuring by employee perception/satisfaction and 74% by performance.