Sign-On Bonuses are Back - Emerging Nurse Leader

By Rose O. Sherman, EdD, RN, FAAN

A frustrated CNO recently talked with me about incentives that some hospitals were using to recruit experienced nurses specifically for specialty units. She commented – “I thought we decided as a profession a decade ago that sign-on bonuses are destructive and don’t work in the long run so why are they back.” She is not alone in her frustration. Nurse leaders in many parts of the county are beginning to see large sign-on bonuses being used as recruitment incentives. They are reappearing after almost a decade of limited problems with nurse recruitment and retention. The topic was recently featured in an article written by Ilene MacDonald for Fierce Healthcare titled Can hefty sign-on, retention bonuses solve the nursing shortage?. With new Department of Labor data indicating that there could be a shortage of up to 1.1 million registered nurses by as early as 2022, nurse leaders are clearly beginning to worry about recruitment and retention of experienced nurses who are even now in short supply.

The shortage of experienced nurses is not the only driver for sign-on bonuses. As mentioned in last week’s blog on Generation Y nurses, healthcare organizations are beginning to see high turnover in this group within the first 2-3 years of employment. There is a growing reluctance to invest in new graduates who might receive up to a one year orientation or residency in a specialty area and then leave as soon as their contract is up. Leaders also need to make sure that there is an appropriate skill mix of new graduates and experienced nurses. These are factors along with a concern about the ability to keep services/beds open are leading healthcare organizations to redirect money to sign-on bonuses.

For the individual nurse, a sign-on bonus could provide a much needed infusion of cash to pay off debt such as student loans. It may also compensate for benefits that the nurse left behind at a previous place of employment and allow organizations to preserve internal wage equity. Once the bonus is accepted by a nurse, there is a employment commitment period to receive full compensation is generally 1-2 years. This can be a win-win if the workplace is a good one but if the nurse decides to leave before the contracted period- the penalties can be stiff.

For healthcare agencies, sign on bonuses can provide a much needed rapid infusion of experienced nurses. There are downsides. Historically, nurses who accept these bonuses often leave right at the end of the contracted period so it can lead to a vicious cycle of recruitment. Some leaders express concern about the overall professionalism of nurses who seek out sign on bonuses versus those who look to work for employers who create great work environments. These employers of choice try hard to avoid sign on bonuses. Offering a generous signing bonus can motivate nurses to choose your healthcare agency over others. But if you are already the worker’s preferred choice, offering an incentive may be pointless and money could be better invested in improving the work environment.

The biggest problem that I observed in my leadership practice with sign-on bonuses was the potential it had to demotivate current staff. Unless there are concurrent plans to offer something to current employees, resentment is a potential problem accompanied by problems with retention. An additional problem is that once you begin the practice – it can be difficult to stop it because you have established a precedent.

There are no easy answers regarding what to do if you are in a competitive market where sign-on bonuses become the norm and the amounts of the bonuses continue to build. Wise nurse leaders will need examine the practice from every angle and think through the ramifications.