According to its 2014 survey, “Bonus Programs and Practices,” sign-on, spot, and retention bonus programs are gaining momentum with employers, reversing the 2009 downtrend.

"The uptick in sign-on and retention bonus programs may indicate that the war for key talent could be heating up as the economy improves, leading to an increased focus on attracting and retaining employees," said Rose M. Stanley, CCP, CBP, WorldatWork total rewards practice leader. "In addition, with continually small incremental increases in merit budgets, spot bonuses may be a means to recognize talent for special excellence during the year."

"Organizations are using their money in very strategic ways," Stanley said. "Even though referral bonuses are still very important, it appears that organizations are focusing their strategies on attraction, retention and recognition through spot bonuses. Employers are using the sign-on and retention bonuses to attract and retain the talent that they need. They are targeting spot bonuses as an additional means to recognize employees that are excelling when other forms of cash compensation have been restricted."

Spot bonuses, most commonly given for special recognition, going above and beyond, and project completion, are almost universal for employees below upper management. For example, the WorldatWork survey shows that the number of spot bonuses awarded in the past 12 months has stayed about the same for 67% of organizations, with almost a quarter, tough, showing an increase.

The survey covered 4 types of bonuses:

• Referral: a cash award paid to a current employee for referring a successfully hired job applicant.
• Sign-on: a cash bonus given at the beginning of a service period, usually for accepting an employment offer.
• Spot: a type of informal recognition that is delivered in cash, spontaneously or "on the spot."
• Retention: a cash award typically tied to the length of service or some other milestone.

*Figure numbers referenced are from the 2014 "Bonus Programs and Practices."