Bonds mostly are instruments employed by the company to reduce attrition. There were various examples given in the case which highlights the various nature and kinds of employment bonds.
Mostly companies use it for their own betterment. But then, my question is... “Is it really so?”
As has been mentioned by various people in this forum, bonds are rampant in case of entry level positions. It’s true that a person has to stick around so as not to pay back some significant amount (mentioned explicitly in the bond), which the company considers as its training costs, recruitment costs etc.
But then, isn’t it more detrimental to the company when a well honed employee of say, about 3 years decides to call it quits when the bond period is over? Isn’t this case more detrimental than a fresher quitting? As here, the firm is no longer just losing its training costs, recruitment costs and various other costs but mostly a skilled employee who had used the company’s resources for 3 years to develop his own skills and now can go ahead and work for any one he likes…worse…for a competitor.
Consider this example: ICICI hires public sector bank employees (read SBI, IDBI etc) with significant work experience (more than 2 -3 years ) at two positions higher. Employee who started their career with ICICI can’t even think of such a stellar possibility. And same is the situation with SBI.
Whereas such a possibility wouldn’t have arisen at all for a person who is a fresher.
So, here, not only the employee is being given an opportunity to sharpen his skills, but in fact having a bond implies creating a poaching ground for competitors. So, the purpose itself is defeated.
Companies themselves are falling in their own trap.
Again it’s not always possible for the company to draw up bonds for the key employees, as they have a high market value and more than one job offers at a particular point of time. So the bargaining power is highly in favour of these highly skilled employees, If a firm is trying to bind these skills through a bond, there is a high probability of it losing out in the highly competitive market place.
In fact, I also feel that these kinds of employment bonds might be useful for some employees, in the manner that, it at least proves as a deterrent to job hopping employees who look around for switching companies in every 6 months or so. At least the bond would act as an arm twisting strategy for them to stay back. Those kinds of people might not like it at all, but then in the hindsight, they might be grateful, for consciously or unconsciously, they did get to learn quite a significant amount from the 2-3 years stint with the company, even if they might not have had any such intention.
Again as many of us have highlighted here, if a person has to leave, he will leave anyways and no bond can stop the person from doing so. In fact, it’s justified the fact that…”There is nothing called a free lunch” For everything one has to pay a price. So, if a person is quitting for better career prospects, then it’s a small price he has to pay. Fair enough!
Keeping all these possibilities in view, it does help the company to give a serious thought to the concept of bonds as a method of retaining back employees. Probably a better work culture, good learning opportunities, healthy competition and a fair play spirit is a more convincing answer than employment bonds.
1 comment:
Yes, I agree with you when you say that it is detrimental to a company when a person leaves the firm after three years. But then, a company cannot force a person to stay on. What it can do is create a better work environment such that the person wants to continue working in the same firm, and does not want to quit it.
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