Melanie Boroosan

In the current healthcare climate, it’s no surprise employers are looking for any way to attract and retain talent. Across the nation, healthcare providers have jumped on an industry-shaking trend: offering massive sign-on bonuses to new hires.

Whether sign-on bonuses work in the long term is still up for debate among employers. Let’s explore the nuances. 

The great sign-on bonus rush

Sign-on bonuses are hugely popular right now — about 67% of hospitals report that they already use bonuses to recruit talent. 

Healthcare leads the charge for signing bonuses, but it’s not the only industry turning to cash incentives. In 2021 alone, the number of sign-on bonuses increased 454% across industries. 

Are sign-on bonuses here to stay?

The future of sign-on bonuses is still hazy. It’s possible that as businesses continue to manage the effects of COVID-19 and see candidates return to the workforce, employers will feel lessened pressure to tack cash incentives onto job offers. 

While some reports suggest that sign-on bonuses are cooling off, they’ve also become a normalized part of healthcare recruiting. In New York, for instance, the state budget recently allocated money specifically for frontline worker bonuses. In the high-pressure world of healthcare recruiting, employers might find they can’t easily shut Pandora’s box of sign-on incentives. 

What can incentives do?

Sign-on bonuses work best to entice candidates who are already on the fence. If candidates are torn between your facility and a competitor, a sign-on sweetener can nudge them toward your offer.

Everyone likes a little extra cash, but in some cases, signing bonuses are vital. For instance, a sign-on bonus might cover relocation fees for a candidate who otherwise couldn’t take a job.

And because signing bonuses can increase job offer acceptance rates, some staff nurses argue that they’re essential for maintaining minimum staffing levels — and preventing wide-scale burnout. 

Since bonuses are typically paid out over a period of months, they also tend to improve retention rates. That’s good for your facility’s reporting, but it also helps your employees feel secure, supported, and satisfied with their jobs.

The limitations of a bonus

That being said, bonuses are not a cure-all. Even sustainable pay raises won’t singlehandedly heal a poor workplace culture. A one-time payment certainly can’t.

Some employers are learning a difficult lesson. If your facility has a poor reputation, even large incentives won’t attract talent.  Ultimately,  employees need to do their jobs safely and well. An extra payment does nothing to fix a work culture where workers routinely leave their jobs exhausted and in tears.

In some cases, bonuses can even make tensions between employees more pronounced. While some healthcare workers strongly advocate for sign-on bonuses, the awareness that new hires are out-earning veteran employees can just as easily erode team unity and drive turnover. And the temptation of high sign-on bonuses can also encourage established employees to think about finding a new job.

The greatest danger of sign-on bonuses is that the employers who use them could confuse a Band-Aid with a cure. They may be useful if you’re already pacing well in terms of compensation and reputation, especially if they come with a contracted employment term. But for a struggling business, bonuses are rarely enough. 

How much Is this bonus, anyway? 

In the eyes of the IRS, sign-on bonuses count as supplemental income, and candidates receiving them are taxed accordingly. 

This is important to keep this in mind if you’re using a bonus to close the gap between your wages and wages offered by a competitor. You may need to increase the amount you’re offering to match or overtake higher-paying jobs.

If sign-on bonuses don’t work, what does?

So, there are problems with this recruiting tactic. What else is new? Healthcare has had plenty of naysaying and too few sources of hope. 

It comes down to this: healthcare workers want to be able to do their jobs safely, well, and with the respect that is due to them. In one survey, a full 70% of healthcare worker respondents reported that they were unable to work safely and effectively. Among nurses, insufficient staffing and its associated stress is the most common reason to quit

Of course, there’s a catch-22 here. Facilities need to improve workplace conditions with better staffing; employers try to improve staffing by offering bonuses; bonuses don’t work if workplace conditions are still poor. To actually boost staffing, facilities will have to balance recruiting with other internal improvements.

You can attract candidates in a more sustainable and meaningful way by also championing:

  • Uniquely robust benefits. Childcare, tuition reimbursement and commuter benefits are all strong options that actually make workers’ lives easier. 
  • Strong DEI initiatives. A sense of belonging is one of the greatest predictors of employee retention. You can push this along with DEI training and support systems — which can also expand your reach among candidates you might be missing. 
  • Mental health support. Healthcare workers do emotionally and physically exhausting work. It’s time employers step up by explicitly monitoring for burnout and excessive stress.   
  • Career planning. If you are able to help workers develop in their careers, you’ll have an immediate recruiting and retention advantage over competitors that don’t invest in their staff.

Compensation is absolutely critical to hiring and retention, but it’s not the only reason for shortages. To attract and hold onto workers, employers need to walk a difficult tightrope. They need to rapidly find new candidates while simultaneously improving their workplaces in any way they can. 

It’s not an easy task, but employers who dedicate themselves to supporting their current workers will be rewarded with easier recruiting — and tremendous loyalty from healthcare workers who have long waited for an advocate.

Over her six years in healthcare administration, Melanie Boroosan has managed human resources, legal, compliance, payroll, and recruitment efforts at a corporate level. Now serving as Director of Healthcare Innovation at Apploi, Melanie draws from her experience in healthcare HR and ancillary long-term care to pursue a vision of holistic healthcare staffing.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.