What are Golden Handcuffs?

Perks and financial incentives offered to employees to stay with a firm are referred to as Golden Handcuffs. Golden Handcuffs increase employee retention rates by locking in the duration of employee stay with a firm. Golden Handcuffs are common in industries with high attrition rates and frequent talent poaching. Talented software developers in the IT industry and skilled designers in the fashion space are prime examples of employees who are most likely to be chained to brands with Golden Handcuffs.

Why use Golden Handcuffs?

Hiring and training employees requires a lot of resource expenditure. Hence, it is in the interest of companies to retain their employees for longer durations as they are considered assets that the company has invested in. The opportunity cost of hiring and training new employees is much higher than investing in keeping existing employees happy and loyal to the company.

Examples of Golden Handcuffs

Employers might use various tactics like offering employee stock options with yearly vesting periods that finish vesting over a few years, keeping employees tethered to the company. Conditional hiring practices also abound that prohibit employees from quitting until a certain time period has lapsed. Contractual bonuses that include a time duration element is another example of using Golden Handcuffs. While they appear to be lucrative deals on the surface, Golden Handcuffs are designed to stop employees from moving on to bigger and better opportunities, proving very restrictive in the long run.