Reduce Your Talent Shortage… By Offering Candidate Incentives (The complete guide to recruiting incentives)

In a talent shortage, when you must increase participation in recruiting, learn to pay for it!

During these extremely challenging recruiting times, there is ample proof that even small incentives will increase participation rates during important recruiting steps.  “What gets rewarded gets done.” When looking at the big picture, it’s important to realize that incentives are used throughout every corporation because of their effectiveness. For example, they can be found to encourage product sales, employee suggestions, reporting safety problems, and even successful employee referrals. 

Unfortunately, incentives and rewards are only infrequently used in recruiting. When used, they seem to disappear quickly after the end of a talent shortage. So given today’s extreme talent shortage, smart recruiting leaders have already begun to apply them once again. And not just to increase applications and interview participation. But also in multiple other areas of recruiting.

How Candidate Incentives Improve Participation Rates

Most are accustomed to “being taken advantage of “from the candidate’s perspective.” Even a small incentive will have a powerful impact. It at least acknowledges the candidate’s significant voluntary investment in the company. So if you are unfamiliar with the benefits of incentives in recruiting, here is a list of the many reasons your organization should offer incentives throughout the recruiting process. 

  • Being the only one means that your job will immediately stand out – among all job postings. Being the only one that offers incentives to applicants/candidates will make your company and your open jobs stand out. So it makes sense to act before others can catch up in the incentive game. 
  • Incentives remove barriers to job search participation – with so many companies soliciting each candidate’s applications. A small reward for applying may be all that’s needed to spur an application from your target candidates. For example,  today’s high gas prices make candidates think twice about something as simple as the cost of attending an interview. Offering to pay for their gas will quickly remove a real attendance barrier, a barrier that will still cause hesitation at all other hiring companies.
  • It shows that you respect their time and understand their need for more money – of course, not every candidate is primarily motivated by money. However, you will find that today a larger percentage are job searching. In part because high inflation and gas prices increase their need for more money. Candidates who are simultaneously working and looking for a job will be especially impressed when, for example, you show respect for their time and the need for money by offering to pay them for the work hours they will miss while attending your interviews. 
  • Your empathy and understanding of their needs will be projected into the future – by being willing to contribute to alleviating part of the costs of their job search. You make it clear to candidates that your company places a high value on candidates and new hires. Once a new hire begins working, they will expect their new employer to continue to fully understand and have empathy for their needs after experiencing that empathy during the hiring process. And that future anticipation will make them more willing to accept an offered job. 
  • It will also help build your employer brand – by offering these unusual but highly appreciated incentives. You will likely cause most of your applicants and candidates to mention it on social media. In particular, as part of their positive review of your company that they post on sites like glassdoor.com. In addition, you may also get both local and national media attention (as others have in the past) because paying for interviews and other recruiting incentives is so rare. 

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The Range Of Incentives That Are Available In Recruiting 

A wide range of incentives has been successfully used throughout the last three decades in multiple recruiting areas. That wide range includes the following list of possible incentives.

  • Expense reimbursements – numerous companies have offered local candidates expense reimbursement in various areas, including local transportation costs, missed meals, and other out-of-pocket expenses. Free parking and prepaid transit cards are also common.
  • Small cash incentives – during tight economic times, the fastest growing monetary incentive has been a reward for showing up for interviews, followed by a small reward for successfully submitting a complete application. 
  • Product-related participation rewards – companies that offer consumer products and services often offer participation rewards related to their product. Those include free product samples or trials and, of course, product discounts. 
  • Rewards that can be used in the local area – stimulate participation in several key recruiting steps. Those locally-focused rewards have included prepaid Starbucks cards and gift cards from a local retailer or restaurant. A book of free movie tickets for the family or tickets to close by sporting and community events.
  • Reimbursement for their time – when companies are primarily recruiting those that are fully employed. It’s not unusual for the company (especially in high-tech) to reimburse local candidates for their hourly wage loss when they must physically come in for interviews. This is perhaps the fastest-growing area of recruiting incentives.
  • Rewards for referrals – in addition to the traditional employee reward. Several companies have offered cash (or equivalent donations to their favorite charity) rewards for nonemployees that make successful candidate referrals.
  • Rewards for pre-hire take-home projects – some corporations and many startups ask recruits to work on an individual or team project as part of their candidate assessment. If that take-home work involves more than a couple of hours. That work should be paid for at a rate that is agreed to in advance.

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Examples – WOW Illustrations Covering The Bold Use Of Recruiting Incentives

In the first example, in 2021, one branch of McDonald’s offered a $50 incentive for candidates simply for completing a job interview. Another bold example was during that same year, the country of New Zealand offered a free all-expenses-paid trip to any interviewee for a professional job in New Zealand. But perhaps the boldest incentive example was provided by FirstMerit bank. Years ago, they uniquely rewarded each failed finalist with a $25 gift certificate that could only be deposited to a newly opened account. They called it their “Regrets Program.” It softened the blow for all rejected finalists so they wouldn’t hold a grudge. However, treating candidates right during and even after the hiring process made this program the most successful customer attraction and retention program at the bank.

What Recruiting Activities Have Been Rewarded? 

Throughout this article, I have tried to mention the many recruiting steps that have been incentivized. However, below you will find a recap of the wide range of recruiting steps where incentives have been offered. With the most common ones listed first.

  • Showing up for an interview – during the last two years, this incentive has grown rapidly. Interview incentives can be offered for attending all interviews or only for those where the candidate must physically show up. It’s also possible to limit the rewards to only those attending finalist interviews. If you’re targeting an extremely valuable top candidate. The company should also consider negotiating a fair reward for agreeing to an interview directly with the candidate when appropriate. You can learn more about the practice of paying for interviews here.
  • Submitting a qualified application – applicants have been rewarded for simply applying in the past. However, with the ease of modern job board-assisted applications, I would stipulate that only applications that meet a specified percentage of the job requirements be rewarded. 
  • Rewards for accepting an offer – nothing really matters if the offered candidate doesn’t say yes. It makes sense during tough recruiting times to offer the candidate that accepts a significant “show up bonus.” And if you’re nervous about whether the new hire will stay. The bonus can be offered in the form of a loan that is automatically forgiven after six months on-the-job. Another example of bold incentives occurred recently when one startup offered a $10,000 salary increase to a top candidate if the candidate would hold off from accepting another offer for one week until the final interview was completed. They agreed, and the delayed candidate got and accepted the job. 
  • Incent participation in your job fair booth – if you want job fair participants to find a way to your booth quickly. Offer a small incentive or reward for participants that register at your job fair booth. 
  • Reward non-employee referrals – at an increasing number of companies, nonemployees can be rewarded for submitting either complete or “name only” referrals. Several companies have also offered an added bonus to everyone that makes a successful diversity referral that is hired. 
  • Offer incentives for providing feedback – realistically, it’s almost impossible to continually improve your recruiting process without honest feedback from potential applicants and interviewed candidates. So it makes sense to provide those you survey about their candidate experience with an incentive for participating.
  • Reward candidates for completing the hiring process – finalist candidates can be given a small reward for remaining until the end of the hiring process. Even if they weren’t selected. That gesture may increase their likelihood of reapplying in the future.
  • Incentives for attending recruiter information sessions – if you hold recruiting information sessions for the public or colleges. A small incentive will certainly improve attendance. And if you hold these subtle recruiting events at industry conventions, offering a great meal is appropriate.
  • Incent your finalist to stop looking – when you are about to enter negotiations with a top candidate that you simply can’t afford to lose. Consider offering them an incentive to “stop actively looking” for an agreed-upon period of time.
  • And don’t forget to reward your recruiters and managers – I am a champion of perhaps the highest impact omission when it comes to recruiting incentives. And that omission is not providing internal recruiters with a bonus for successful hires in key and executive positions. These recruiter bonuses are, of course, common in external recruiting agencies. And if you require more information about how to offer recruiter incentives, it can be found here. Incidentally, the bonus criteria for your managers that hire should include excellent team performance and quality hiring and retention results.

Final Thoughts

In my view, it’s time to realize the current severe talent shortage. It should be the prime factor that drives smart recruiting leaders to eliminate any of their reluctance or fears around offering incentives during recruiting. I predict that soon almost all recruiting leaders will at least begin to realize that a variety of incentives will now be required. Today, even average candidates have so many job choices that you must proactively do things that will allow your company and its jobs to stand out and get noticed. 

For decades I have stated that “recruiting is simply a type of marketing with a crummy budget.” In the case of incentives, recruiting can directly learn from sales and marketing. For years, in those functions, it has been quite common to give incentives to both customers and employees to change the way they act. Fortunately, for recruiting leaders, I have found that most of their incentive practices can be quickly and inexpensively adapted to recruiting. Some will still resist adopting incentives because they can involve some added costs. However, those resistors should stop and realize that the ROI for recruiting incentives is extremely high. And if you choose to only offer product discounts as your incentive. Not only do the costs become negligible. But the practice may actually draw in new customers and increase sales. Are there any questions?

If you can only do one thin – during this tight labor market, you must do things that make your company stand out from the competition. Start with a simple first step, which is to offer to pay full reimbursement for the transportation costs each time that a candidate must physically come in for an interview. And then track over time whether your interview acceptance rates increase after the incentive is implemented.

Author’s Note

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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