XPG Insights

Staffing industry recruiting news, advice and thought leadership.

XPG Insights

Staffing industry recruiting news, advice and thought leadership.

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The “Please Don’t Go” Bonus

There are several new tactics to attract and secure talent, many of which I support as progressive approaches to an evolving workforce. But one I cannot get behind is the new “stay” bonus for simply not quitting.

A stay bonus, often referred to as a retention bonus is commonly used to incentivize an employee to stay and not move on to a new job. Usually there are reasons for a retention bonus such as: a company has been acquired and an employee is needed through the acquisition; there is a transition to a new employee and assistance is needed from the retiring employee through the process; there is a special short-term project where it is critical for all players to remain in place. But never have I seen a stay bonus used to temporarily overpay someone to simply stay in their job and show up every day.

Because that is what a salary is for.

A salary is designed to pay people at market value for the basics of employment. And one of the basics of employment is coming to work and doing your job. On the other hand, a bonus is designed to reward an employee for extra contribution or excellent performance. The word bonus, by definition, means something extra. And a bonus is special – it is a celebration of exceeding the norm.

Remaining in your job – simply showing up to work – is not bonus worthy.

I am not the only one who has never heard of this new application of a stay bonus. In a recent survey we conducted, 100% of our respondents had never heard of a stay bonus being used this way before.

I understand how this has come about in these crazy times. With a rapidly changing work environment due to the pandemic, the resulting talent demand has exposed a number of problems for companies who have had a hard time holding on to their best talent. In an employer driven market, some of those issues can be masked. But in a candidate driven market where talent is precious, cracks in the organization become more visible because people have less tolerance for an undesirable environment. When leadership doesn’t know how to fix those cracks or refuses to correct the problems, more and more people leave. In an attempt to stop the flow of talent out the door, management’s quick fix is money. Turnover itself is expensive, so it is easy to justify a temporary compensation increase to keep people from leaving, especially in a time when budgets have already been upturned.

But cracks don’t stay small – they only get bigger. And the reality is, if you are already paying a competitive salary to employees along with good benefits, a stay bonus would only be necessary if there are other problems in your organization that need fixing. Throwing money at the situation in the form of a stay bonus will only stem the tide in the short-term but will not fix the issues.

We are seeing these stay bonuses used in varying degrees of attempts to keep employees in their current positions ranging from a small bump up to a whopping 100% of their current salaries. The amount seems to be a direct correlation to how badly a company needs employees to stay or to how badly the problems are for which they are trying to compensate.

When this temporary increase in compensation is over, the same problems that existed before will still be there. In addition, it adds a couple of new problems as well.

  • When companies take away this additional money that they have been paying employees over a period of time, will it feel like a pay-cut?
  • Because it is a formal stay bonus to a group of people, the compensation bump will all end on the same date. Will the result be a mass exodus?

If companies do not take away this money, they will have to make it a permanent part of the salary, which is expensive and still does not fix the problems. And at some point, the money is simply not enough and people will leave, new talent will need to be found and the cost of turnover is still incurred.

From my background as a CHRO that developed training and leadership programs globally, I believe companies need to work to build an experience that people do not want to leave. If you need to offer a stay bonus, you have a problem somewhere in your organization, most likely within your leadership or culture. Those are tricky areas to fix and require a long-term vision, but I believe there is nothing more important than leadership and culture. From those stem trust, communication, confidence and belief. They tie to the goals and aspirations of employees. A stay bonus is a quick fix that aligns with nothing other than short-term goals. And in a time when talent is looking for companies to align with their futures, it is far better to invest in a culture where real bonus winners want to work and can partner with the organization to be successful.


About the Author

Rich Thompson, CEO of XPG Recruit, is an expert on staffing, human resources, training and leadership development. To get your copy of the XPG Recruit Ebook The Great Rehire, simply request it here or send an email to info@XPGRecruit.com For consulting to increase engagement and/or retention, check out the services of our sister company, Xtra Point Group.