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Type: HR, Report if not a HR topic
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Retention Bond..
Type: HR, Report if not a HR topic
Posted 24-10-2009Reply
Hi everyone,
I would like to know your opinion on compelling a new joinee to sign retention bond in organization for a specific period of time with clauses/term which force him to pay a huge amount in case of any discrepancy.
In some cases it is important because company spend a huge amount of money and time towards training and bridging the gap between actual and desired level of competency of new joinee's.
But there are many organization uses flying paper method for attracting candidates (i.e by showing unrealistic job preview).
Is it ethical???
Thank you for starting this topic Vinay.
Retaining the employees with the help of a bond is not advisable instead of which the organizations should come out with various motivational programmes, performance based incentives or recognition schemes to retain the employees.
It's a different story, if an organization spends lots of money in imparting training to an employee, it expects the employee to make use of that training in their very organization and in such cases a limited period retention bond is not a wrong thing as they have to get the returns out of the employee on whom the organization has spent money.
Therefore, retention bond has got its own advantages and disadvantages but it is always unethical if organizations resort to this tool for exploitation.
Cheers!
Pradeep
Retaining the employees with the help of a bond is not advisable instead of which the organizations should come out with various motivational programmes, performance based incentives or recognition schemes to retain the employees.
It's a different story, if an organization spends lots of money in imparting training to an employee, it expects the employee to make use of that training in their very organization and in such cases a limited period retention bond is not a wrong thing as they have to get the returns out of the employee on whom the organization has spent money.
Therefore, retention bond has got its own advantages and disadvantages but it is always unethical if organizations resort to this tool for exploitation.
Cheers!
Pradeep
Hi Vinay,
now a days bonds are signed mostly with freshers, these guys don't have other option, experienced professionals are not signing any bond until unless they are not very sure about the opportunity.
After training and other expenses company has right to make itself sure that this professional will work with us till getting the expenses made on him/her.
its not advisable to sign bond of longer periods (3yrs or more) for freshers also. one yr bond is ok but more then that i never do favor as asked by priyanka for her friend once working in recruitment firm asked to work temp for 6 months without assurance of permanent i don't advice to join in such case as well.
i m not getting your simple solutions, it has been deactivated, Ram is it possible to shift the topic in other section rather then deactivating.....??
now a days bonds are signed mostly with freshers, these guys don't have other option, experienced professionals are not signing any bond until unless they are not very sure about the opportunity.
After training and other expenses company has right to make itself sure that this professional will work with us till getting the expenses made on him/her.
its not advisable to sign bond of longer periods (3yrs or more) for freshers also. one yr bond is ok but more then that i never do favor as asked by priyanka for her friend once working in recruitment firm asked to work temp for 6 months without assurance of permanent i don't advice to join in such case as well.
i m not getting your simple solutions, it has been deactivated, Ram is it possible to shift the topic in other section rather then deactivating.....??
The subject suscitates interest. You may want to see other members' opinions shared in a topic started by Diana:
http://hrlink.in/topics/what-is-your-idea-about-bond-policy
http://hrlink.in/topics/what-is-your-idea-about-bond-policy
Hi Pradeep I agree with you that its not entical to bind an employee even if he/she is not satisfied with the job otherwise it will effect the productivity. Performance is all about employee's commitment towards the work and organization and if company also have to think in the same manner.
Shipra thanks for your reply. About "Simple Solution" it was a forward mail which I got from one of my friend and I appreciate the steps taken by the forum to reduce the duplication of the post.
Hi Claudia I will surely go through the link.. Thanks a lot..!!
With regards,
Vinay :-)
Shipra thanks for your reply. About "Simple Solution" it was a forward mail which I got from one of my friend and I appreciate the steps taken by the forum to reduce the duplication of the post.
Hi Claudia I will surely go through the link.. Thanks a lot..!!
With regards,
Vinay :-)
Hi! Vinay
We also have retention bonds in our company only for freshers but its bit different. We have a bond for 18 months where in we deduct Rs 4000 from what ever salary is decided till one year.
we have training period of 6 months after which their first appraisal is done and increment is given. After the employee completes one year Rs 4000 is stopped deducting and after he completes the bond period i.e 18 months we given them back the accumulated amount i.e 48000/- before we also use to give loyalty bonus of Rs 25000/- along with 48000/- for completing the bond period but now we have stopped it.
This way neither the company loses nor the employee.
Regards
Chitra
We also have retention bonds in our company only for freshers but its bit different. We have a bond for 18 months where in we deduct Rs 4000 from what ever salary is decided till one year.
we have training period of 6 months after which their first appraisal is done and increment is given. After the employee completes one year Rs 4000 is stopped deducting and after he completes the bond period i.e 18 months we given them back the accumulated amount i.e 48000/- before we also use to give loyalty bonus of Rs 25000/- along with 48000/- for completing the bond period but now we have stopped it.
This way neither the company loses nor the employee.
Regards
Chitra
Hi,
Bonds are not the best retention strategy especially now that I hear that many people even choose to violate the same knowing well that the company will not move the courts (Especially for a fresher or less experienced).
I am working with a trading company and we are primarily a sales organisation. Here the CTC is divided into 2 parts - Fixed and Variable component. The Variable component is released when the minimum KRA's are met at the end of every quarter. I feel that although not directly forced, this strategy helps bind the employee for that extra bit failing which he/she will not be eligible to avail the variable component. This is applicable to the entire staff of the organisation, both sales and support function, although the ratio of fixed:variable differs. I feel that this strategy can be used with freshers as well rather than a bond.
Of course other things like effective "employee recognition" programs, performance-based incentives, good working culture, mentoring and coaching programs also may help in retention.
Bonds are not the best retention strategy especially now that I hear that many people even choose to violate the same knowing well that the company will not move the courts (Especially for a fresher or less experienced).
I am working with a trading company and we are primarily a sales organisation. Here the CTC is divided into 2 parts - Fixed and Variable component. The Variable component is released when the minimum KRA's are met at the end of every quarter. I feel that although not directly forced, this strategy helps bind the employee for that extra bit failing which he/she will not be eligible to avail the variable component. This is applicable to the entire staff of the organisation, both sales and support function, although the ratio of fixed:variable differs. I feel that this strategy can be used with freshers as well rather than a bond.
Of course other things like effective "employee recognition" programs, performance-based incentives, good working culture, mentoring and coaching programs also may help in retention.
Dear all
Signing bonds with the employees as a means to retain them most of the times exist in two cases:
One as already pointed out by Shipra; when freshers join. The main intention behind it is that since they are not experienced Company spends a good amount on their training so that they can gain expertise in their field of work and meet results set to the standards by the company. In this event, in other cases it is seen that freshers take the training after the so called honeymoon period is over they move out of the company; which is very frustrating for any organization. Thus, in this case signing the bonds with the employees is justifiable.
Secondly, in some cases freshers as well seniors are sent to the important technical trainings and thereby spend a huge amount thereby. If we take the example of "SAP certification training", almost all the companies make those who undergo the same sign the bond which also looks justifiable.
Pivotal rule behind signing the bond is making sure that company gets ROI on the amount it spends for the grooming of employees.
Regards
Anup
Signing bonds with the employees as a means to retain them most of the times exist in two cases:
One as already pointed out by Shipra; when freshers join. The main intention behind it is that since they are not experienced Company spends a good amount on their training so that they can gain expertise in their field of work and meet results set to the standards by the company. In this event, in other cases it is seen that freshers take the training after the so called honeymoon period is over they move out of the company; which is very frustrating for any organization. Thus, in this case signing the bonds with the employees is justifiable.
Secondly, in some cases freshers as well seniors are sent to the important technical trainings and thereby spend a huge amount thereby. If we take the example of "SAP certification training", almost all the companies make those who undergo the same sign the bond which also looks justifiable.
Pivotal rule behind signing the bond is making sure that company gets ROI on the amount it spends for the grooming of employees.
Regards
Anup
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