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WorldatWork Survey Finds Employers Still Offer Referral Bonuses

Jan. 13, 2009 — A new WorldatWork survey, “Bonus Program Practices 2008,” found that referral bonuses are the most prevalent type of bonus used by employers in the United States. 

Bonus programs organizations offer (by type):

• Referral bonus* = 66%
• Sign-on bonus = 58%
• Spot bonus = 49%
• Retention bonus = 30%

*This represents a 10% increase from 2005. A majority (67%) of organizations indicate that executives are not eligible for referral bonuses and nearly half (46%) say neither is upper management.

“The growth and prevalence of referral bonuses may come as a surprise given the rising number of job cuts,” said Alison Avalos, research manager for WorldatWork. “Keep in mind that referral bonus programs were put in place during a tight labor market when employers were willing to reward employees for helping to attract the right talent. And in spite of employee retrenchment, referral bonus programs will continue because tight salary budgets mean employers have to focus on quality not quantity.”

For the purpose of the survey, each type of bonus was defined as follows:

• Referral bonus: a cash award paid to a current employee for referring a successfully hired job applicant.
• Sign-on bonus: a cash bonus given at the beginning of a service period, usually for accepting an employment offer.
• Spot bonus: a type of informal recognition that is delivered in cash, spontaneously or “on the spot.”
• Retention bonus: a cash award typically tied to the length of service or some other milestone.

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