Hot job market?
I’d say so; in fact, it’s an understatement.
The amount of open jobs is far outpacing the number of job hunters, making the market more competitive than ever. Many companies have turned to wages and bonuses to gain the upper hand and why not? Money talks. But before you go boosting wages for new hires and hanging a signing bonus flag out front, let’s take a look at why this might not be the best idea for your organization.
I recently saw an announcement for a large national employer who began offering a $10,000 signing bonus for their most critical roles. They needed to hire more than 100 people for that position—that really adds up!
The greatest caution here is similar to when companies start trying to win by underpricing their products to win business against their competitors. One company does it, then the company responds by lowering its prices. Repeat et al, until the product is commoditized and no one makes a profit. It’s a race to the bottom. Trying to win only on price or, in this case, only on salary cannot be your long-term strategy.
When most companies are choosing to go the wage and bonus route right now, you have to begin to ask—what keeps your employees after they get the sign-on bonus? Sure, most companies have parameters and requirements: must stay 6 months, payouts are incremental and will total the advertised signing bonus, etc. The problem here is that your new hires are going to feel like you offered a bait and switch and your current employees are going to wonder what their reward is for their loyalty. Those are both really tough questions to navigate.
Not to mention, what stops your new employee from grabbing that bonus and then skipping out to take a check from the company next door? When you pay out the bonus in 3–6 months, there will likely be other organizations still offering signing bonuses. If you haven’t made them happy in the last 6 months, they can leave and now they have more training from you, making them even more desirable.
While these are important challenges to ponder, another perspective to take is how long can this go on? It looks like the labor shortage is in for the long haul. The blue-collar labor shortage has been predicted for years. With the last two generations flocking to college over attending trade schools, going directly to the workforce, or taking advantage of the few apprenticeship programs that remain, there is no one to learn or replace the majority of workers preparing to retire from their skilled labor positions.
In 2019, it was calculated that around 10,000 baby boomers reach retirement age every year, and 5,900 of them are leaving the labor force. Undoubtedly, COVID-19 expedited a lot of those retirements which, as research surfaces, will likely account for many of the vacancies we are seeing in industrial manufacturing, transportation, construction, and other industries that rely on skilled-labor employees.
So, other than those bonuses, how can you attract, hire, and retain good talent? Here are some options you should consider:
Culture is not basketball courts, ping-pong tables, forced fun, and telling your employees they are like “family.” Culture is who you are as an organization, what you are doing to show your employees that they are valued, and then telling a compelling story about why that matters.
Understand and communicate what truly matters to you as a company. Do you know your vision, voice, and values? What are you doing to show employees that they are valued? Are you offering the wages, benefits, and perks they want? You might be surprised at the information you could gather if you surveyed your employees; few are going to say organized team sports. Some standouts are likely to include:
- Consistent and fair wage increases
- Clear training and career paths
- Following through on promises made during the interviews, one-on-ones, and annual meetings
- Communication and transparency at all levels of the organization
Topics that many people are considering when taking jobs and staying at companies go beyond money. People are looking for more than money—they are looking for meaning. They want to know that their work is impactful. A simple way to do that is to have your customers explain how they use your product, or share a story about a time your organization went above and beyond to deliver on a critical task or item. Help your team members see they are a part of something bigger than the widget that passes by. Some other things to think about:
- Freedom. People want autonomy. They want to feel trusted. Connect with them, discuss their tasks or responsibilities, and then let them use their skills and experience to deliver without micromanagement.
- Flexibility. This can be tough in the skilled labor world where scheduling is critical to delivering your product or service. But take a look at your hours through a different lens. You might not be able to offer flex time but you may have the flexibility to offer other shifts or weekend hours.
Perhaps you have read through this and still think that signing bonuses are the way to go for your company. That is OK! We can still consider some simple and some low-cost takeaways on how you can attract talent in addition to cash:
- Be transparent in job posting and throughout the interview process
- Share salary, hours and overtime expectations, and benefits in the job post or early in the interviewing process so you do not waste your time or theirs.
- Move quickly, keep their attention
- There are so many opportunities right now that if you are not quick to respond, you will lose their interest and your chance to hire a great candidate. Do not sleep on those candidate applications and inquiries!
- Yes, people will always want money but they also want stability
- Why not offer incremental increases based on training or growth milestones. Having something to work toward with milestones keeps attention and excitement in our careers. This is proven to work in the apprenticeship model and can be a win-win situation for you and the candidate.
Not every company has $1 million in signing bonuses to wave around and attract the next phase of their workforce, nor should all companies want to. Create some actionable and impactful steps to make your company stand out from the crowd for reasons other than a bonus. You likely have a great story and amazing employees that can help differentiate you from the rest of the market so you can attract the right people to grow your organization. Let’s uncover those stories and get going!