I like Lawrences approach to what you should do.  As for how many times they can try to pass the test, it depend on the code you are working to.  D1.1 says you can test twice and if you fail the second time you have to go somewhere and receive training and bring back proof of the training.  If you are training in house, I guess you could keep training and working with them until they pass, but that takes a lot of time and money.  If they're not union, you can wack them and put adds out for welders that are qualified in the areas you need them to be and test them when they come in.

Welcome to the club!  We typically hire a guy and give him (or her) 2 chances to get through a typical cert.  The practical test we give in the interview generally weeds out the ones who are incapable.  With RT costs going up and up, we draw the line at twice.  If you can't get it through the second time, run off.  Good luck.

On a side note, it sometimes takes more than just cash to motivate a good worker.  This is a theory that I am working with right now to develop a new incentive program.  Fun stuff.

It would be hard to add much to the above post by Brent,  I echo all of his sentiments and agree he has hit the nail on the head.  I was trained in the Alaskan oil fields by what I believe to be some of the best Craftspeople imaginable.  One of the Journeyman who trained my had welded on 2 different space shuttles FWIW.  When I was a pup 20 yrs. ago welders had respect and so did the rest of the trades,  it was an honorable ambition to seek a career as a Journeyman.  Then they took the Vo-Tech out of schools in a lot of areas,  many of our blue collar jobs have gone to Mexico and elsewhere.  We have also "dumbed down" our public schools enough to where if you can find a motivated youth that managed to get a diploma he/she still usually doesn't have a rudimentary grasp of math.  But I digress,  Pete I highly recommend a monetary incentive and it doesn't have to be a large one but there needs to be a degree of separation.  Most places will pay more for additional certs.  i.e. a guy with one cert. makes X amount. Every other cert. gains them X amount per hour.  Good hands will eventually all go where the money is.  I've said it before and I stand by it,  nobody cares how much fun it is to work for the guy who buys them beer every friday.  It's only fun until you can't make your bills.  Motivated, good people will go to where the money is and that is the bottom line.  If you do not constantly offer ways for a motivated, upwardly climbing person to better themselves within your organization they will leave.  It is a win, win situation because by contributing to their success they will most assuredly contribute to yours.  Now that I have the time with 6 months off a year I am in the process of setting up a fab shop on my property.  I will slowly start to hire and at the one year point or so they will become part owners in the company if I can get it set up like I want.  Good welders are not cheap and cheap welders are not good. . . . .