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A collection of financial incentives called golden handcuffs is designed to encourage employees to stay with the company for a specified period. Employers offer golden handcuffs to key employees to retain them and increase their retention rates. In industries that have high-paying employees, golden handcuffs are very common.
You can offer golden handcuffs on a gradual basis to employees who reach certain milestones or you can offer them all at once with specific conditions. There are many options for golden handcuffs. Stock options, supplemental executive pension plans, large bonuses and vacation homes are just a few examples.
These incentives come with terms. They usually state that bonuses and other forms of compensation can only be paid out if an employee stays for a specified period of time. If they are paid first, they must be returned to company if the employee departs before the deadline.
An example of golden handcuffs
Charles has been with company XYZ five years. The company has invested a lot of money and time in developing Charle’s skills over the past five years. Charles has shown his extraordinary talent and ability to excel for the company in that time period. Charles’s work ethic and training has paid off many times. He will continue to be an outstanding asset for the company for many years.