Business owners may question the value of offering new hires a bonus, but a recent study suggests that signing bonuses may provide employers with some long-term positive effects.
Featured in the March/April 2014 edition of The Accounting Review, the study looks at the effects signing bonuses had on employer-employee relationships. The study finds that particularly when there’s an excess of workers in the market seeking jobs, a signing bonus can engender more trust and loyalty between the employer and new employees. This may translate into a new worker who gets a signing bonus feeling more committed to his or her job and working harder.
However a signing bonus can also lead to employers having higher expectations of new employees, which can lead to strained employer-employee relations if the new employee doesn’t live up to them, the study found.
“When there is an excess of supply of labor, employers who offer a signing bonus expect greater effort from their workers than they do when either no signing bonus is offered or when there is an excess demand for labor,” said Jungwoon Choi, the study’s author, according to Business News Daily.
Surveys from global human resources association WorldatWork and other human resources organizations have found that signing bonuses have made a comeback since the Great Recession as the employment market has improved, but bonuses are still not as commonly offered as they were during the dot-com boom of the late 1990s.
However, this new research suggests that offering signing bonuses during tough job markets—like today’s—may provide more benefits to employers than waiting until the job market improves significantly.
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