To say that the job market right now is ‘candidate-driven’ may be an understatement. It may be more accurate to say that the current market is a recruiter’s worst nightmare. Simply put, employers just aren’t getting the volume of applications they once did.
In normal circumstances, re-evaluating your Candidate Attraction strategy would be the obvious solution. However, even with an amazing Employer Brand and perfect job description, employers are still struggling to attract candidates to their vacancies.
Why is it so hard to hire right now?
The unemployment rate in Canada has returned to the same level it was before the Covid-19 pandemic, which is just below 7%. So if the unemployment rate is the same, what’s changed?
Firstly, statistics show that the labour market participation rate is at the lowest it’s been since the 1990s. This means that more people of working age are deciding not to work.
Secondly, according to RBC, the number of people retiring from their jobs fell by 20% during the Covid-19 pandemic. It can be assumed that this hesitance to retire was a result of the uncertainty of the past year or so. Now that the pandemic is nearing the end, those who delayed retirement may decide that the time is now right.
Another reason why we’re experiencing a labour shortage may be due to a decrease in immigrants entering the country. During the pandemic, the Canadian government limited immigration into the company for public health reasons. Considering the fact that every year approximately 300,000 people immigrate to Canada, it isn’t a surprise that the lack of immigration negatively impacted the number of workers to choose from.
Finally, let’s not forget The Great Resignation. In short, this term refers to the boom in resignations that has been happening since early 2021, as a result of people’s changing attitudes and priorities during the pandemic. It seems workers are no longer going to work in a job that does not fulfil them, and will put much more consideration into which jobs they apply for.
What is a signing bonus?
Given the current state of the market, signing bonuses have been seen as a potential resolution to the increased competition between employers. A signing bonus is simply a lump sum that will be given to an candidate when they sign on as an employee.
In the past, signing bonuses were mainly offered to executive level employees. However, given the shortage of workers being experienced by more and more organizations, signing bonuses are becoming increasingly popular for roles of all levels.
One of the industries experiencing the greatest shortage of workers is the retail sector. With this in mind, it’s no surprise that retail organizations are leading the way when it comes to signing bonuses.
Executive search firm Korn Ferry surveyed 50 major US retailers this year, and 94% said they were having difficulty filling vacant roles. As a result of this, 29% of those surveyed said they had implemented a signing bonus to help with hiring. According to Reuters, advertisements on Indeed UK that included signing bonuses increased by 75% this year.
Some of the organizations offering signing bonuses include Amazon, who are offering a $1000 bonus for warehouse workers, and McDonalds, who are offering $500 to new cashiers signing on to work with the chain.
Should I be offering a signing bonus?
It may seem like a no-brainer to offer a signing bonus, given the increased competition between employers. However, there are pros and cons to this Candidate Attraction strategy.
Signing bonuses can work well for organizations who are limited in terms of what salaries they offer. Larger organizations may have to stick to predetermined pay bands, and offering a hiring bonus may work to your advantage if a candidate is dissatisfied with the salary being offered.
An impressive signing bonus can also be a good way to attract a passive candidate that you may be trying to headhunt, but who may be hesitant to move roles. A cash injection may be exactly what it takes to nudge the individual to take the leap of switching jobs.
Signing bonuses sometimes come with terms and conditions attached. For example, a signing bonus may only be paid out if the employee stays with the company for a certain period. For example, the bonus may only be paid out following 3 months of employment. If employee turnover is something that your organization struggles with, this may be a short-term solution. If you are having issues with turnover, we suggest working on Employee Engagement, reanalyzing what benefits you offer, and improving your Employer Brand.
On the other hand, offering signing bonuses may be something that your current employees take issue with. If a worker discovers that a new employee, particularly one in a similar role, got a signing bonus, and they did not, they may feel hard done by.
Finally, offering a signing bonus, especially one without clauses relating to length of service, you may find candidates applying to the role for the wrong reasons. Someone in dire need of cash may be tempted to take the role, even if they don’t feel confident that it’s the role and employer for them.
Signing bonuses are a short-term solution.
Given the adoption of signing bonuses by large organizations such as Amazon and McDonalds, it’s obvious that the strategy has some merit when it comes to attracting candidates in a competitive market.
However, we advise proceeding with caution when it comes to signing bonuses and continuing to work on longer-term solutions when it comes to our Candidate Attraction strategy, such as increasing Employee Engagement, and developing your Employer Brand.
