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Cash is king in hiring and retaining talent

Sign-on bonuses, tuition help and increases in starting salaries are among the steps employers are taking to hire and retain talent in a competitive market.

A shortage of workers who drive sanitation trucks has the city of St. Louis struggling to keep up with refuse collections. City officials recently began advertising a $3,000 sign-on bonus for heavy equipment operators to lift and load garbage. The city is far from alone in offering cash incentives to fill jobs. 

According to a survey by Willis Towers Watson, nearly two-thirds of employers are either offering a sign-on bonus, planning to begin offering one or considering it. The advisory firm surveyed 380 HR managers this month, representing firms that employ more than 7.4 million in total. The data was released Wednesday.

During a time some are calling "The Great Resignation," employers in the U.S. are struggling to hire and retain talent. Job openings this month exceeded 10 million, a record high, according to the U.S. Dept. of Labor. 

But a question HR managers might be asking is: Do sign-on bonuses work? The hiring incentive is helping St. Louis, at least.

"We have seen an uptick in applications," said Nick Dunne, a spokesman for St. Louis Mayor Tishaura Jones. The city has 20 positions to fill to "get back to full operation in the refuse division," he said. 

Dollar Tree Inc., which employs about 193,000, now offers warehouse workers a $1,000 sign-on bonus. During its quarterly earnings report Thursday, it told investors that a shortage of applicants "has adversely affected the operating efficiency of our distribution centers and our ability to transport merchandise from our distribution centers to our stores."

Hiring difficulties jump from last year

Some other steps taken by Dollar Tree to hire and retain talent include offering "enhanced wages" in selected markets and tuition reimbursement, Michael Witynski, Dollar Tree president and CEO, said on a call with financial analysts.

Most popular: Tuition reimbursement

One of the most widespread incentives for hiring and retaining talent is tuition reimbursements. According to the Willis Towers Watson survey, about 90% of firms surveyed are offering tuition reimbursement, said Adrienne Altman, managing director and North American head of rewards.

We have seen an uptick in applications.
Nick DunneSpokesman, St. Louis mayor

Employers see tuition reimbursement as a way to attract people "and keep them," Altman said. There's usually a retention "hook" in a tuition reimbursement program to keep employees from leaving, such as repayment if they quit before a specific period. 

Other efforts to attract employees included raising starting salaries and offering workplace flexibility --something cited by 61% of respondents. More than 40% of participants said they were planning or considering raising starting salary ranges.

Employee experience also ranked high in the survey, which Altman describes as "the whole experience" for employees, such as "How do we communicate with our employees? How do we solicit feedback?"

A chance to compete for talent

With high-skilled jobs, particularly in tech, sign-on bonuses have been "practically automatic" for some time, said David Foote, co-founder, chief research officer and chief analyst at Foote Partners LLC. 

The research firm is seeing sign-on bonuses "especially offered to people coming into the workforce right out of college, and higher for hot areas like data science for people with newly-minted master's degrees," Foote said. 

But Foote said many employers do not offer the salaries that enable them to compete with the "aggressive, predatory top-paying competitors on salary alone," or firms with significant cash reserves.

Instead, they use sign-on bonuses and short-term incentive plans, such as spot awards, discretionary bonuses, profit sharing, team incentives, retention bonuses, among other steps, as a way to attract and retain talent, he said. 

To wit: The state of Vermont is offering a $1,000 sign-on bonus for some work, including custodial jobs that pay $12.68 an hour.

"The bonuses help us compete with the private/municipal sectors, especially in geographic areas that are already challenging to fill vacancies in," said Douglas Pine, deputy director of Vermont's Dept. of Human Resources.

"The positions themselves are hard to fill because, aside from the pay rate, they are physically demanding or difficult," Pine said in an email.

Maintenance workers, specifically, have to be on call throughout the winter season, which includes holidays and weekends, Pine said. "The bonuses are split into separate payments so they help with retention as well," he said.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget. He's worked for more than two decades as an enterprise IT reporter.

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