There is no escaping the fact that the UK is currently contending with a severe skills crisis. Official figures, released in August 2021, show that unfilled job vacancies topped one million for the first time ever. The latest data from the Association of Professional Staffing Companies (APSCo), meanwhile, indicates that demand for both permanent and contingent candidates has risen by 47% and 79.5% respectively year-on-year.
Against this backdrop, businesses are increasingly offering sign-on bonuses, or ‘golden hellos’, in an effort to entice top talent to join their ranks. However, smart talent acquisition professionals are thinking beyond just financial reward - and certainly one-off payments - to provide the things that today’s candidates really value.
The rise of the golden hello
The practice of offering jobseekers a cash incentive to join a business is nothing new – but never before has this trend been so prevalent, or so widespread. Back in 2014, Tesco made headlines for offering its incoming CEO a cool £3.8 million golden hello. At the time of writing, the retailer is offering every new lorry driver a £1,000 joining bonus amid a chronic nationwide shortage of these professionals.
Tesco isn’t the only company experimenting with sign-on bonuses in an effort to attract hard to source skills: big name brands including Sainsbury’s, Amazon and M&S are all reportedly putting their hands in their pockets to lure talent away from the competition. In August 2021, a survey by job search engine Adzuna found that almost 5,000 vacancies across the UK were being offered with joining bonuses of up to £10,000 - for in-demand roles such as care workers, chefs and nursery staff. But attraction bonuses are not a long-term solution to plugging skills gaps.
Why sign-on are bonuses are (mostly) ineffective
In most instances, businesses are clearly turning to sign-on bonuses out of pure desperation. However, this is not a sustainable solution to talent attraction problems. Aside from the additional costs incurred at the point of hire, stunts like this are very unlikely to attract talent that is the right fit for your business.
At the most basic level, the worry is that individuals attracted by a one-off cash incentive might leave for another employer offering a similar perk as soon as they are contractually able to. More importantly, though, candidates sourced in this way are unlikely to have objectively considered if the company they are joining meets their needs as an employee, shares their values, or if it is a place where they can grow and thrive professionally.
Of course, in some scenarios, a one-off financial incentive may well be an appropriate and sustainable tactic. For example, employers that can’t offer the most competitive pay rates in their sector might use an up-front payment as a way to support first time home buyers who want to live locally but couldn’t otherwise afford to. Similarly, an employer might provide a one-off sum to pay for the training required to bring an unemployed person back into the workforce. In these instances, a financial incentive is being used to invest in the right people, help them build a career with the organisation, and foster a lasting commitment.
But, in general, decision makers would be wise to direct time and resources into building a robust long-term talent attraction strategy instead of pursuing quick fixes.
Tackling talent shortages in a better way
Of course, remuneration will always be a deciding factor for candidates looking for their next role. However, our own research suggests that candidates value an attractive compensation package built around a competitive base salary over one-off perks. Our intelligence also suggests that jobseekers take into account a whole range of other factors when choosing which opportunities to pursue. These include:
- learning and development and mentorship programmes
- progression opportunities
- hybrid or remote location and general flexibility
- fast onboarding, and
- paid time off benefits.
With this in mind, talent acquisition teams must work with other functions within the business to build and promote an authentic and compelling employer value proposition (EVP), through sharing stories of existing employees who are already enjoying these perks.
The most successful employer value propositions are holistic, people-focused and culture-driven. Gone are the days when the core pillars of an EVP were limited to remuneration, bonus, and holidays. Expectations have changed dramatically, especially as millennials and Generation Z become an integral part of the workforce. Cultural aspects have come increasingly into play, aspects such as:
- supporting a company’s purpose-led mission
- being part of a high performing team or working in an inclusive environment
- flexible working practices
- remote work opportunities
- wellness programmes, and
- a desire to be part of businesses that work for more than just profit.
Remember, your EVP acts as a consistent platform for all employer brand communications to ensure that any potential new hires are absolutely clear about what it’s like to work at the business. An honest EVP prevents mixed messages and can reduce attrition linked to poor corporate fit, for example. It is also a business’s opportunity to show how it’s different from the competition, and to positively influence how it is perceived as an employer.
No quick-fix
In a candidate-driven market, it can be tempting to seek quick-fix solutions to staffing challenges. However, short-sighted strategies such as the introduction of sign-on bonuses are only likely to result in short-term resolutions.
Research by Gartner shows that organisations that effectively deliver on their EVP can reduce the compensation premium by 50%, and reach 50% deeper into the labour market. Here at Guidant, our Talent Marketing Team is well-versed in helping our clients define their EVP or refine it for specific talent categories.
The skills shortage we are facing today shows no sign of easing, and without a clear employer value proposition, businesses will find it increasingly difficult to attract, hire and retain the talent they need to drive success. The time to honestly and clearly define who you are and why somebody should choose you, is now.