The case against retention bonuses

Alexis Kayser (Email) –  Becker’s Hospital Review

Many health systems are zeroing in on bonus packages to stand out to potential recruits and incentivize current employees to stay — but some have their doubts about this tactic.

Sign-on and retention bonuses have become increasingly popular in hospitals, according to recent surveys. Over the course of 2023, 70% of hospitals implemented or bolstered sign-on bonuses to address talent recruitment and retention. Nearly one-fifth of jobs in the industry offer welcome or sign-on bonuses: more than any other sector, averaging $10,867 each.

However, this strategy might come with an expiration date, Christin Stanford, vice president of client solutions at AMN Healthcare, told Becker’s in March. For example, if a nurse receives a big retention bonus after three years, what is incentivizing them to stay on for a fourth?

“[Bonuses are] definitely going to help with that retention for a period of time. And I do think that is the period that we’re in right now,” Ms. Stanford said. “But how long will that last? How long will that nurse continue to stay?”

Ms. Stanford anticipates some level of churn after bonuses are doled out — and she’s not the only one. Thomas Quatroche Jr., PhD, president and CEO of ECMC Hospital, shared a similar sentiment during an April 8 panel session at Becker’s 14th Annual Meeting.

Nurse feedback deterred the Buffalo, N.Y.-based hospital from implementing a sign-on bonus, according to Dr. Quatroche. Many indicated that they did not want to be tied down to a single organization for a designated number of years.

Rather than focusing on compensation-based incentives, ECMC has been implementing culture-based ones. In the spirit of flexibility, the hospital recently began offering nurses 13-hour shifts, which allow for four full days off. This added option has been embraced with open arms, Dr. Quatroche said.

Ms. Stanford encouraged hospital leaders to examine the longevity of their retention tactics: “What’s the true stickiness? What’s the long-term outcome?”

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