Employee 1: Hey, whatever happened to Joe from IT?
Employee 2: Who?
Employee 1: You know, Joe! The one that got that big signing bonus when he joined last month …
Employee 2: Oh yea! He was telling us what he bought with the bonus during happy hour last week.
Employee 1: Yea, I wonder where he went? Do you think he had to pay his bonus back? I’m gonna find him on LinkedIn and ask …
Ever had a similar conversation with a coworker?
In the fast-paced world of corporate life, change is inevitable. New hires, departures, or promotions, organizations must adapt and evolve to thrive. And with the average rate of voluntary employee turnover 3X employee terminations (17.3% vs 4.8%) … this is happening quite frequently these days.
But what happens when an employee decides to walk away from a new job AND they take their sign-on bonus with them - leaving a trail of consequences in their wake?
Let's talk about Joe, who left his company pretty quickly after joining, and explore the ripple effect it had on colleagues, morale, HR – shining a light on the overall effectiveness (or lack thereof) of his company’s compensation.
The Joe Saga
Joe was an impressive addition to the company, offering technical skills and experiences that promised to enrich the team and contribute to the organization's growth. His sign-on bonus was a substantial enticement, a gesture of goodwill from the company to welcome him aboard. But the excitement and promise that came with his arrival quickly turned into disappointment as Joe decided to leave the company before the agreed-upon sign-on period.
Seeds of Discontent
When Joe left, his colleagues were shocked. They welcomed him into the fold, and his sudden departure shook their sense of stability and camaraderie. Many began to question their own commitment to the company and whether they should also explore other opportunities. Joe's abrupt exit planted seeds of discontent among his peers, and it began to affect team dynamics and productivity.
The impact of Joe leaving went beyond just his immediate team. It cast a cloud of uncertainty over many of his colleagues and morale took a hit. Employees began to doubt the company's commitment to its workforce. They wondered if loyalty and hard work truly paid off when someone like Joe could walk away with a hefty sign-on bonus in tow.
Perpetual Resource Drain
For the HR team, Joe's departure was more than an inconvenience or worry; it was a full blown migraine. They had to start the hiring process all over again. This involved sourcing new candidates, going through the recruitment process, conducting interviews, and negotiating new sign-on bonuses. This consumed a significant amount of time and resources. The company had to reinvest in recruiting and onboarding - on top of the productivity losses they suffered from his absence (most HR experts agree that onboarding takes at least 3 months for new hires).
Moral of the Story
Joe is a reminder of the importance of employee commitment, ongoing engagement, and effective (retention-driving) compensation. Employees and employers enter into agreements, both formal and informal, when they embark on a professional relationship. For organizations to thrive, they need employees who are dedicated, invested, and constantly engaged. The departure of employees like Joe sends a negative message to the rest of the workforce, raising questions about loyalty and company values.
At the same time, employers need to think proactively about their compensation and how to increase its value and effectiveness. If new employees are leaving and taking cash with them, it’s tanking the ROI of that compensation for the company.
Employers looking to deliver more effective bonuses that drive employee engagement and retention should learn more about smart bonuses from Keep FInancial.