Golden Handcuffs
What Are Golden Handcuffs?
Golden handcuffs are an assortment of financial incentives that are expected to urge employees to stay with a company for a stipulated period of time. Golden handcuffs are offered by employers to existing key employees for the purpose of holding onto them as well as to increase employee retention rates. Golden handcuffs are common in industries where exceptionally repaid employees are probably going to move starting with one company then onto the next.
Grasping Golden Handcuffs
Employers invest huge resources in the hiring, training, and holding of key employees. Golden handcuffs are planned to assist employers with holding onto employees that they've invested in yet additionally to guarantee that their best employees and top performers don't leave the firm. Sometimes golden handcuffs have a negative meaning as they are frequently associated with people remaining at a job they are troubled in however not ready to leave in light of the fact that the financial loss would be critical.
Types of Golden Handcuffs
Golden handcuffs can be offered on a graduated basis when employees meet certain milestones, or they can be offered at the same time with certain limitations. Golden handcuffs can take various forms. A few models incorporate stock options, supplemental executive retirement plans (SERPs), large bonuses, vacation homes, a company vehicle, insurance policies, etc.
At the point when these incentives are offered, they accompany certain terms. For the most part, they state that bonuses or different forms of compensation are possibly paid out assuming that the employee stays for a defined period of time, or on the other hand in the event that they are paid out first, they must be returned to the company assuming that the employee leaves before a certain date.
Different forms of golden handcuffs incorporate contractual obligations that determine an action that an employee might perform, for example, a contract disallowing a network TV have from showing up on a contending channel.
Illustration of Golden Handcuffs
Charles has been working for company XYZ for a considerable length of time. In those five years, the company has invested a lot of energy and money in training and fostering Charle's range of abilities. Inside that equivalent time period, Charles has exhibited his excellent ability and ability to perform well for the company. Not just has the cost in training Charles been returned to the company many times over due to his hard working attitude, yet he will be a surprising asset to the firm for a long time to come.
Since Charles is a particularly excellent employee, XYZ is stressed they might lose him to a contender that might offer more money or different incentives. To keep this from occurring, XYZ offers Charles a huge financial incentive through employee stock options. Be that as it may, the stock options don't vest for a very long time, guaranteeing Charles will remain with the company for those five years and not pass up a critical cash windfall.
Features
- These incentives accompany agreements that specify an employee will receive them solely after a certain period of employment or they should return them in the event that they leave before a certain date.
- Golden handcuffs are financial incentives given to employees to deter them from leaving a company.
- A negative implication is frequently associated with golden handcuffs as they keeps individuals from leaving jobs they would somehow empty however don't on the grounds that the financial loss would be large.
- Incentives that can be viewed as golden handcuffs incorporate large bonuses, school payments, stock options, and a company vehicle.
- Employers offer incentives to hold people that have performed well for the company or those that have excellent or indispensable skills.
