Labor shortages and high employee turnover rates are two common problems business owners face in the construction industry. Attracting quality talent to the pavement industry and keeping great employees happy may seem like constant battles. Financial incentive programs like sign-on bonuses and referral programs are two tools that can help your company hire and maintain workers and avoid the pitfalls of constant turnover and unfilled jobs.
What Is A Signing Bonus?
A sign-on bonus is simply a specified lump sum payment added onto the salary package for a new employee. This extra financial benefit can help you attract new talent and stand out from your competitors. Generally, it comes with some stipulations, as in the new employee must stay with the company a certain period of time to keep the bonus.
What Is A Referral Program?
A referral program is a financial incentive that refers current employees (and sometimes new recruits) for bringing in new employees. It can be structured many different ways, including a basic lump sum, extra time off, a free service or membership, or a combination of these. The program could also reward the new employee, providing incentive for both the current employee to find possible new talent, and the new employee to sign with the company.
Are Financial Incentives Effective in Attracting and Maintaining Talent?
Financial incentive programs like these can require a lot of money up front from the company, so it’s important to know if they work. Sign-on bonuses are effective as an immediate way to fill gaps in your company if the bonus is attractive, but it may not be enough to retain that employee long term. Employees that take sign-on bonuses may miss the extra cash when the incentive runs out and leave the position after the stipulated time period. However, sign-on bonuses can be effective for simply getting people through the door. Once inside the company, you’ll likely need other benefits to retain quality talent,
Referral programs are different from sign-on bonuses, though. When you ask current employees to refer new people, and reward them for doing so, it encourages employees to think about who might fit the role within the company. It also has the added benefit of simply being a reward on top of a regular salary, without the stipulations of a signing-bonus.
How Should I Structure A Financial Incentives Program?
Sign-on bonuses are fairly straightforward. Start with these steps:
- Choose a position and why you feel you need a sign-on bonus
- Choose an amount likely to entice new hires but that your company can afford. Think through how many hires you need to make and the maximum amount of bonuses you can offer.
- Decide on a time frame. Most companies choose a period of at least six months to ensure the new hire stays in the job.
- Clearly communicate the terms to the prospective employee in a contract and be sure they understand their obligations to the company.
- Evaluate the program after a specified period of time to see how effective it is in both hiring new employees and retaining them.
Referral programs: These are similar to sign-on bonuses with the exception that it involves current employees instead of new hires. Some things to consider are:
- Decide between a financial reward or other benefits, like gym memberships, tickets to events, travel rewards, etc.
- Choose the eligibility criteria the referee (person being referred) must fulfill. This could be education, experience, etc. Also consider adding a time period the new candidate must stay in the job for the referrer to receive the award.
- Communicate clearly to all employees both the referral reward and the criteria their candidates must meet.
- Make it easy for current employees to refer new candidates, and for job seekers to clearly indicate if they were referred by current employees.
- Evaluate the program periodically for success.
Incentive Program Examples From Our Pavement Network Members
Many of our members already use various incentive programs for current and new employees. Below are some thoughts on these programs and how they’re working.
“We have paid up to $2,500 for difficult positions and pay it out in 4 installments to
ensure they stay for at least a year. We include it in their offer letter.”
-PN Member-
“We have done a variety of signing bonuses over the years depending on the need of the position. Below are a few of the examples:
Estimator/Project Manager: up to $7,500
- Paid in 3 payments: $2,500 upon hiring, $2,500 after 90-days, $2,500 after 6 months
Truck Drivers: Up to $2,000
- Paid in two payments: 30 days/90 days
Concrete or Asphalt Foremen: $5,000
- Paid out in 2 to 3 payments
-PN Member-
“We did a $1200 sign on bonus last year for laborer and driver positions and also offered the same bonus to an existing employee who referred a new hire. We paid $600 at 30 days and $600 at 60 days of employment. It was successful for us and helped keep us working last year.”
-PN Member-
‘We have not had to implement it yet this year for laborers but did start it for CDL drivers in our Utah divisions this week.”
-PN Member-
Financial incentive programs aren’t a must-have to attract and maintain talent, but they can be helpful tools, if used correctly and communicated clearly. They can boost new hires and employee retention, as well as morale. If you’re struggling to fill positions and want to harness the collective power of your employee network when hiring, sign-on bonuses and referral programs can be solid additions to your process.