Signing bonus: Good or bad idea?

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In the war to find qualified, skilled talent in the automotive aftermarket, signing bonuses have become a double-edged sword. So are they still a good idea?

On one hand, a signing bonus can attract a talented candidate to your business, one that you desperately need. On the other, as some shop owners have complained about, the person will stay the minimum amount of time required — one to three months for most places — and then leave to a competitor making the same offer.

One talent expert believes the idea doesn’t work at the end of the day. It may get you over the hump, said Linda Brenner, managing director and founder of Talent Growth Advisors, but it won’t give you a long-term solution.

“It’s a little tricky now,” she said at NAPA Expo 2022. “So some companies we’re working with, they are determined not to raise their salaries but the competition is killing them. So they’re paying crazy sign-on bonuses. Crazy.”

She understands it’s a requirement to compete. She told the story of a friend who got a job at a bank that paid a signing bonus and will pay a ‘stay’ bonus if the friend sticks with the company for 12 months and again at 24 months.

These bonuses can’t be replacements for paying low wages, Brenner warned. “If you’re valued, tenured employees are being significantly underpaid, that’s a problem.”

It can also create morale issues in the business if two people working alongside each other and one of them didn’t get an extra $1,000 to work at the company because they’ve been there five years and it wasn’t offered at the time.

Still, there can be a place for bonuses, Brenner acknowledged, such as for jobs that require a specific skill set and for which talent is scarce, such as technicians.

“I think we need to tell people, ‘Look, there are jobs in our company that we don’t feel we can survive as a business. And the trick is, in this talent marketplace, there’s not enough to go around. So we’re going to get super aggressive with technician hiring — we have to,” Brenner said.

Others will feel as if it’s not fair. But if they’re being compensated fairly, then you can lessen the pain.

“You’ve got to make sure you’re looking at what are people getting paid,” Brenner said. “Because all they need to do is have one day with the confidence and the energy to start applying to other jobs and it could have been just a few bucks an hour more.”