Do You Require Your Employees to Repay Bonuses?

repay bonuses

Sign-on bonuses can entice candidates to take a second look at your openings, but if the candidate decides to leave before the terms of the bonus are met, insisting on a bonus being paid back can have a detrimental effect. Do you require your employees to repay bonuses?

Candidates Read the Fine Print

You can rest assured that most candidates on the current market are educated about the sign-on bonus and the potential inconvenience of having to pay it back if they move on sooner than anticipated. In the mobile culture we are currently experiencing, candidates are somewhat anticipatory about the potential for a future move just around the corner. If your sign-on bonus terms are too long, that is not less than the two-to-three years of a candidate’s move cycle, there’s a good chance your perfect hire might look twice. Examine closely whether or not having the perfect hire who can really grow the organization in the 18 months they’re there is worth the $25,000-$50,000 to get them there.

According to Indeed, some companies will apply a clawback. Clawbacks are contractual allowances that authorize companies to recover a set portion of their funds during special circumstances. This can be extremely beneficial for companies that need to respond to cases of fraud, unexpected profit loss or employee misconduct. Learning more about clawbacks can help you understand why companies use them and what their purpose is.

Forcefully Negotiating a Repayment Can Hurt Your Reputation

In the wake of sites where candidates and employees can rate what it is like to work for and with a particular company, asking for the sign-on bonus back can create waves in your online reputation. As much work as you spend trying to recruit the best fit, it would be a shame to add additional reputation management to your recruiting list. If you are going to require that the employee pay back that bonus, be mindful of how clear you are in the beginning and how carefully you go about collecting the repayment. Be willing to negotiate with the employee and perhaps even suggest that the new firm could help them pay back the bonus as part of the terms of their hire there.

Bonuses are a good tool to interest and acquire new hires – if they are well managed. Hiring an executive search firm is one way to ensure that all terms are understood before the papers are signed. We can help you find the right person and also make sure that your reputation and terms are handled with care; contact Artemis Consultants. We will make our exclusive pool of talent available for you.

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