The name is bond ....employment bond

The issue of relevance of an employment bond sparks off a ceaseless debate. Both employers and employee’s perspectives taken into account it’s hard to say who is wrong. We invariably tend to have an inclination or a soft corner for the employees who would like to have a career of their choice. It’s perfectly fine to move out of the job if you do not like (for whatever reason) because you would be nothing more than a Non Performing Asset if you choose to stay. This is detrimental for both the employee as well as the company.

However the above scenario has its implications. The company has invested in the employee during the traineeship period and would like to reap benefits with the service that the employee offers post training. If the employee wishes to move out of the job immediately after the training the cost is sunk. The problem becomes multi fold with IT companies where the amount of induction and attrition is way higher than core sector companies. Thus the accumulated losses from attrition have a serious bearing on the company’s performance and balance sheets.

The problem gets augmented with companies which provide the best training in the industry. Competitors tend to take advantage of their high attrition rate and use their training against them.

However it is worthwhile noting that in all the cited examples one thing becomes pretty clear that the company is not interested in the employees money per se. The employment bond is only to create a mental barrier. The employee thinks twice , thrice before shifting job.To strengthen the point we may consider the case of Rumdal steel which pays a loyalty bonus after three years of service(and the bond also expires after that period). It also becomes necessary in case of Pity Group Financial Services who would quite obviously like to avoid inside information from leaking and thereby prohibiting an unfair advantage to the employees (who have the information), their spouses or relatives.

I would like to share a personal experience here. I was working with an original equipment manufacturer who claimed to believe only in a “BOND of trust” for the induction of management trainees. The trust however did not last long since the salaries did not commensurate the expectations post promotion due to recession. Since jobs were available outside it lead to a mass exodus (mainly from the employees who had just completed their training period). The company changed its policy form the next year. The management trainees were offered a higher pay package which came with a Rs 1 lac employment bond for three years.

Thus we find that since the business houses are into profit making the enforcement of an employment bond cannot be termed as unjustified similar to the longing of an employee for a better job.