Winning the Talent Game: Sign-On Bonuses & Bonus Guarantees
As bonus season approaches and candidates are due to receive bonuses in their current roles, hiring talent can become particularly challenging for hiring managers. Top talent is often hesitant to move without being compensated for potential financial losses, making it essential to carefully consider how to approach sign-on bonuses & bonus guarantees.
Some key strategies to keep in mind:
• Compensating for Lost Bonuses: Candidates who are on the verge of receiving bonuses are often reluctant to forfeit them. Offering a sign-on bonus or bonus guarantee is the most effective solution to offset a loss, and can give candidates the confidence to make the transition whilst keeping negotiations smooth.
• Choosing Not to Offer Guarantees: For some firms, not offering a bonus guarantee is a strategic decision. However, this can drastically narrow the pool of candidates and exclude those unwilling to lose out on a substantial part of their compensation.
• Postponing Hiring: Another option our clients sometimes consider is delaying making the hire until after bonus season, avoiding the need for a costly buyout altogether. Postponing hires comes with its own drawbacks, particularly if there is an urgent need to add firepower to a team.
• Timing is Critical: The timing of hiring efforts can significantly impact a candidate's willingness to move. The later it gets in the bonus cycle, the harder it becomes to convince professionals to walk away from upcoming payouts. Hiring earlier in the cycle allows for smoother negotiations and minimizes the need for large buyouts, as candidates aren't as close to their bonus payments.
• Worth the wait? Getting a candidate to accept an offer and sign, with a view to resigning after receiving their bonus, means they are locked in - even if the hire is made a few weeks before they receive their bonus. However, if the candidate receives a promotion, bigger bonus, or salary increase in the meantime, they could be at risk of dropping out.
At Laz Partners we have hundreds of data points on bonus guarantees, sign-on bonuses, and deferred buyouts for the top talent we placed. If you are a hiring manager facing challenges securing top talent asking for a guarantee or buyout, feel free to send me a DM and I would be happy to share insights on how to successfully handle candidate comp negotiations (both with internal and external stakeholders).
