The US economy has struggled in recent years to retain its workforce. Stress from the COVID-19 pandemic, economic uncertainty, and worker burnout are cited as some of the leading causes of what HR professionals are calling the Great Resignation. The World Economic Forum reported that more than 4.5 million people left their jobs in 2021 alone.
The trucking industry hasn’t been immune to these challenges. According to the American Trucking Association (ATA), the industry reached a record shortage of over 80,000 drivers last year. This is estimated to only get worse as shortages could exceed 150,000 drivers within the next ten years. As hiring managers across the trucking industry become increasingly desperate to secure CDL-licensed professionals, they’ve resorted to offering perks for joining their ranks.
A survey of HR executives from large companies by Conference Board, a research group, found that 80% of organizations with mostly industrial or manual service works say it is very or somewhat difficult to find qualified industry and manual service workers.
One popular strategy within the industry is to offer a sign-on bonus to qualified drivers, sometimes up to $10,000 or $15,000. This begs the question, are sign-on bonuses actually effective in attracting new talent?
Benefits of Offering a Sign-On Bonus
Companies offer sign-on bonuses for a variety of reasons, including competitiveness or even industry expectations. Despite the reasons, there are several key benefits that companies hope to get from offering this incentive to job applicants.
● Entice More Candidates to Apply – Advertising a signing bonus on your job posting can help attract more applicants, which gives you a better pool of potential candidates.
● Budget vs. Salary Expectations – Most employers have a budget in mind when sourcing talent. Unfortunately, this number is sometimes below what the candidate is looking to make. A signing bonus can be a good way to bridge the gap. For example, if the driver you are interviewing would like a salary of $65,000, but your budget is $50,000, you could offer them a $15,000 signing bonus. This helps you meet their salary requirements for the first year at least.
● No Long-Term Financial Commitment – Since sign-on bonuses are a one-time payment, the employer can use them as an incentive to get the candidate to join their company without the long-term commitment of a higher salary. If the employee stays with the company for several years, it likely makes better financial sense to go with a sign-on bonus instead of a higher annual salary.
● Beating the Competition – In today’s job market, the candidates you are interviewing are likely entertaining multiple offers. A sign-on bonus can help sway the candidate’s decision in your company’s favor.
Why Are Sign-On Bonuses So Ineffective?
While sign-on bonuses can help to increase your ability to hire more CDL drivers, there is no guarantee that it will make them stay. Unfortunately, there are other factors at play that diminish or even eliminate the benefit of offering a sign-on bonus in the first place. Companies quickly realize that sign-on bonuses aren’t as effective as they thought.
● Joining for the Wrong Reasons – While sign-on bonuses can be a great incentive for candidates, they can cause them to make the wrong decision when selecting an employer. Candidates who are offered large sign-on bonuses are more likely to ignore negative factors such as poor benefits, toxic management, or incompatible company cultures. Once the excitement of the bonus has worn off, they will likely become dissatisfied with their position and leave the company.
● Higher Up-Front Recruiting Expense – Adding sign-on bonuses to your recruiting arsenal increases the cost to attract talent. If employees are constantly leaving after a short period of time, you could find yourself shelling out thousands of dollars to keep filling the same position over and over. Unfortunately, sign-on bonuses are a dream come true for job hoppers.
● Bonuses are Becoming More Common – According to a Business Insider article published at the end of 2021 the number of sign-on bonuses on Indeed doubled from the same time in 2020. Because sign-on bonuses are becoming more common, they don’t differentiate employers like they once did. If every trucking company is offering bonuses, the only way to be more competitive is to simply offer more money. This can become a vicious cycle where nobody wins.
● Damaging to Existing Workforce – Amazon offering a 3k signing bonus while giving existing workers a $10 coupon caused a worker backlash that made the national news. Your existing employees are likely well aware of sweet deals being offered to new hires. This can cause frustration, dissatisfaction, and conflict between new and old employees. The last thing you want is to secure several new employees while simultaneously losing your seasoned drivers.
● One-Time Payment – Making a one-time bonus payment may make great financial sense on paper, but it can also backfire. Employees are smart enough to understand and take into account that this will not be a recurring perk. Some employers have tried to separate sign-on bonuses into smaller installments paid over several months, but this seems to have little to no effect on the ability to retain talent.
Source Top CDL Talent with Industry-Leading Professionals
Do sign-on bonuses work? No! Get rid of signing bonuses and let the experts at Inflection Poynt help find you qualified CDL drivers. Our team of recruitment specialists will help you develop a recruitment plan that will help you attract and retain the best talent. Contact us today to see how we can make a difference for your organization.