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Battle for Talent

Happy Hello's and the battle for top talent

Thu, 28 Feb 2008 11:09

Last year almost every senior management professional placed in the financial services sector by leading SA executive headhunting firm, Jack Hammer, received a sign-on bonus.

And hand-in-hand with that came a significant increase in recruitment expenditure last year.

So says Madge Gibson, a partner at Jack Hammer Executive Headhunters who says figures show that certain candidates received sign-on bonuses from between 30% and 100% of their annual package.

However, she clarifies, it must be remembered that sign-on bonuses are often paid in lieu of a forfeited bonus that a candidate would lose when leaving their current job to join a new organisation. It can also be used to compensate candidates for the loss of share options.

“In the past, it was certainly not taken as a given that top professionals would be offered a sign-on bonus as an incentive to accept a job offer. However, in late 2006 we began to see the increasing use of joining bonuses as companies began to feel the pressure of skills shortages in certain sectors.

This approach became an imperative part of the negotiation process as candidates were unwilling to walk away from hard-earned bonuses or share options, no matter how enticing the role or basic offer,” says Gibson.

“Last year, the asset management, investment banking and stockbroking sectors had good returns and many employees stood to receive substantial bonuses because of this. Companies seeking the right talent had to factor this into their offers in order to secure the right skills,” says Gibson.

She adds that in addition to compensating for lost income, some companies would sometimes pay a ‘pure’ sign-on bonus, or a ‘welcome to the company’ bonus: “Although it is rare, when a candidate’s expertise can make a significant contribution to the bottom line, a ‘happy hello’ is sometimes deemed worthy of the financial layout.

“This year, however, with economic instability and market volatility, it remains to be seen whether companies’ pockets will be so deep.

“There has been some concern that an expectation has been created amongst highly-skilled individuals that a sign-on bonus is now the norm, but people should be realistic about market conditions and give full consideration to the bigger picture of the career opportunity, before contemplating making a move,” concludes Gibson.