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Referral, Sign-On, Spot and Retention Bonus Programs Continue to Rise

The use of bonus programs is increasing among organizations, with sign-on bonuses remaining the most prevalent.

July 14, 2016 — WASHINGTON, D.C. —The use of referral, sign-on, spot and retention bonus programs continues to rise as organizations seek other forms of cash compensation to reward employees, according to a new survey released by WorldatWork.

The survey, "Bonus Programs and Practices," reveals a modest increase between 2014 and 2016, with more than 60% of respondents indicating that bonus programs positively affect employee engagement, motivation and satisfaction (Figure 37).

"Organizations are increasingly finding additional ways to compensate their employees as merit budgets continue to remain stagnant," said Rose Stanley, senior practice leader at WorldatWork. "We have seen a big increase in organizations using all four bonus programs as needed compared to 2010 when the majority of organizations were only using one program. As merit budgets remain flat, employers aren’t standing still and doing nothing in regards to compensation. They are using bonus options as needed to recruit and retain top talent."

Percentage of Companies Using Bonus Programs

Key findings include:

  • Among the trends in bonus programs and practices identified in the survey, sign-on bonus programs are the most prevalent bonus programs today, with 76% of organizations using this bonus method.
  • 32% of organizations use all four types of bonus programs, while the remaining 10% of organizations have no bonus programs in place.
  • While many organizations do not budget for bonus programs (particularly sign-on and retention bonuses), 55% of companies do budget for their spot bonus programs, and 44% budget for referral bonuses.
  • Sign-on and retention bonuses are least prevalent among small organizations (fewer than 100 employees) and most prevalent among larger organizations (greater than 20,000 employees).
  • Private-sector, publicly traded companies use all bonus types more than other sectors, with sign-on bonuses being the most prevalent.

"As with many of the total rewards elements, organizations continue to use different tools in their total rewards toolbox as they deem necessary to create an engaging employee value proposition,” Stanley said. “These four different types of bonus programs can assist organizations in a variety of situations. They allow them to respond to different situations that they may find themselves in due to influences both internally or externally."

For the purposes 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 length of service or some other milestone.

Methodology:

Survey invitations were sent electronically to 5,200 WorldatWork members on March 16, 2016. The survey closed on April 1, 2016 with 726 responses, a 14% response rate. The dataset was cleaned and analyzed using statistical software. WorldatWork conducted similar bonus programs and practices surveys in 2014, 2010, 2008, 2005 and 2001(Retention Bonus Survey, Referral Bonus Survey, and Sign-On Bonus Survey).

WorldatWork bonus experts are available for comment. Interested media should contact Melissa Sharp Murdock at Melissa Sharp Murdock to schedule an interview.



About WorldatWork®

The Total Rewards Association


WorldatWork ( www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 70,000 members and subscribers worldwide; 80 percent of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.

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