Golden Handcuffs: Understanding Employee Loyalty Incentives

Golden handcuffs refers to loyalty incentives for employees. After an employee has worked at a company for a certain amount of time, the company may fear a competitor will attempt to lure the employee away with a high salary offer. Typically, outside offers come in higher than the existing company would be willing to pay. To counteract these external offers, companies can offer alternative incentives, such as employee stock plans, increases in vacation days or enhanced benefits for employees the longer they stay with the company. This can prevent an employee from quitting his or her job even if another great offer comes along.