Golden Handcuffs

Meaning & Definition

Golden Handcuffs

Golden handcuffs are contractual clauses that provide financial and non-financial benefits to executives that are forfeited if the executive leaves the company. Organisations use golden handcuffs to disincentivise executives from moving to competitors.

Frequently Asked Questions (FAQ's)

  1. Why are fringe benefits known as golden handcuffs?

    One of the main goals of a company in today's world is to retain its talent. As a result, the organization provides cash and other incentives to key employees in order to keep them from leaving. These are referred to as 'golden handcuffs’.

  2. How do you put a golden handcuff on an employee?

    You can golden handcuff an employee by incentivizing them through bonuses, stock options, skill development, and flexible working conditions.

  3. What are some reasons organizations should implement golden handcuffs?

    • Reduce the likelihood of top employees leaving early, usually before retirement age.
    • Protect the organization from losing clients, other employees, or trade secrets, if a key employee leaves.
    • Encourage top employees to contribute to the company's long-term success.
    • Thank top performers, after extended periods of outstanding performance.
  4. When did golden handcuffs originate?

    Golden handcuff is a phrase first coined in 1976 and it refers to monetary incentives and benefits designed to persuade highly compensated individuals to stay with a company or organization rather than leaving from one to the next.

  5. Are golden handcuffs worth it?

    Employers use golden handcuffs as a financial incentive to keep employees from leaving occupations that are typically time-consuming, demanding, and never-ending. Essentially, golden handcuffs make it appear as if you have it so good at work that leaving would be unappealing or place you in a worse desirable scenario.

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