Rajesh Batra (name changed), a senior HR professional, joined an MNC in 2021 with an irresistible offer—attractive stock options and performance-based bonuses that would only vest if he stayed for at least five years. What started as a golden opportunity, soon felt like a trap. “The first three years were exciting. I was setting up the team, leading transformations, and driving change. But as my passion for the job dwindled, the last two years felt like being caged. The incentives kept me locked in, but my growth and motivation were declining.”
This is the paradox of what has come to be known as Golden Handcuffs. The term generally refers to benefits by employers to discourage employees from leaving. “High performers are provided a golden chance for creating wealth, as well as recommitting themselves to the firm. When properly designed, golden handcuffs are a second incentive beyond salary, which makes the individual want to create long-term gains while tying the success of the individual to the success of the firm,” says Kartik Narayan, CEO-Staffing, TeamLease Services.
Employees are sometimes trapped—particularly when a desirable outside opportunity arises, but quitting would mean forgoing substantial financial rewards. In industries like technology, BFSI (banking, financial services, and insurance), and Consulting, the competition for top talent has led to the widespread use of golden handcuffs. Karthikeyan Kesavan, Director of Permanent Recruitment at Adecco India, says, “These days there is a constant war for talent in tech, BFSI, and consulting organisations. Some of the top companies use Golden Handcuffs as a retention tool to reduce attrition, especially where they want talent to stick with them for a minimum of 4.5 years for Rate of Investment (ROI). ” Kesavan adds.
According to Aditya Narayan Mishra, MD CEO, CIEL HR, organisations must tread carefully when using financial incentives as a retention strategy. “Competitive pay, bonuses, stock options, and other financial incentives can undoubtedly attract and retain talent. However, if these come at the cost of work-life balance, mental well-being, or a toxic work culture, employees may struggle to perform at their best,” he says.
Saumitra Chand, career expert at global hiring platform Indeed, says that golden handcuffs can only be effective when paired with a fulfilling work environment. “Golden handcuffs—whether in the form of high salaries, stock options, or exclusive benefits—are powerful tools for retention, but their true impact is maximised when paired with a fulfilling work environment,” he says.
For Natasha Singh, Vice President of People and Culture at EMotorad, the issue is particularly acute for senior-level executives. “For senior folks, the stakes are much higher in terms of money and time invested in recruitment, training, relocation, adjustment with teams, and more. To safeguard the interests of both parties, options like bonuses, stock, and retirement incentives are taken into account, keeping in mind short- and long-term visions,” she explains.
Sonal Arora, Country Manager at GI Group Holding, emphasises that while golden handcuffs can be effective in preventing talent attrition, particularly in critical roles or during transitions, financial incentives alone are not a sustainable solution. Relying solely on financial incentives won’t ensure
long-term commitment. A lack of positive work culture and meaningful growth opportunities can result in disengaged employees who stay purely for financial reasons rather than job satisfaction.
“This lack of emotional connection to the workplace can ultimately impact productivity, innovation, and overall team morale, reducing the efficacy of any long-term incentive policy,” she explains.