Can employment bonds help to retain the bond with the employee?

Posting late in the forum, is a little disadvantageous, because most of the important points would have been exhausted or worse reiterated a number of times. But it also has its own merits, I had the opportunity, to go through a number of views, which exhaustively covered the analysis of the topic. So, I will use this opportunity, to put the analysis in a concise format, adding my own views in between.

Objective of bonds:

The main motive behind employment bonds is employee retention. Companies want to reap the benefits of training them or sending them offshore.

But why do employees want to leave the organisation:

The main reasons why an employee chooses to leave are because of low salary, less job satisfaction, people wanting to switch verticals or people wanting to do higher studies. The basic underlying reason is that the employer is not satisfying the needs of that employee.

Is the objective met?? ?

In any of the above cases, the employee will either be willing to pay the money and leave the organisation right away, or instead of paying the money, they can simply perform poorly and then get terminated (reverse constructive discharge). I have seen my own friends from Infosys, who wanted to leave and did not want to face the wrath of bonds, so started performing poorly in all the tests and got terminated. There are also people who wait for the contract period to get over and leave the organisation. In any case, the company is not retaining the employee. The company just defers their movement, with the objective of utilising all the skills the employee got out of the organisation.

But, what happens is that, the performance of that employee deteriorates because of low satisfaction, and the company ends up paying a poor performer. The benefits gained out of trying to maximise the utility of the employee is neutralised by their disinterested performance.

What is the solution??

As it does in marketing, in employment relations too- a pull strategy works better than a push strategy. Instead of forcing the employees to stay, employers must find positive ways of retaining the work force. i.e The employees must be themselves motivated to stay in the organisation. Even if they leave the organisation, due to some unforeseen reason, they must have some motivation to come back to the organisation in the future.

For example, in my case, I did not have a bond in MindTree. MindTree’s policies are that, they trust their employees and a bond is not required to make them stay with the organisation. I joined the company, because I was waitlisted around 108 in XIMB and there was no chance of clearing it.(until the seat increase in the last minute) I had to leave in two months; right after the training, the benefits of training me was lost. But I was so much impressed with the culture and the workplace of MindTree, that even in future, I would be very happy to go back and work there. If my friends, do ask me, I would motivate them to apply for MindTree. Probably, that should be the edge companies should be aiming it.

As pointed out by Sarang, employee bonds cannot be totally avoided in very intensive and highly specific high end training. But, it can be totally eliminated in entry level training, especially in case of IT companies, where the cost incurred is lesser than the benefits reaped by the organisations.

From a psychological and economical perspective, positive ways of employee retention are in any case better than bonded labour. Specifically, we are talking about knowledge workers here and it becomes even more important to motivate the employees to stay rather than to force them to stay. As Ashutosh has crisply put it, at the end of the day, company’s work culture matters the most for employee retention.