What are golden handcuffs?
You’ve been working for a company for a while and feel like it might be time to explore opportunities somewhere else. It’s not that your current position is bad, it’s just that you want to progress or branch out. The only thing stopping you is the promise of a bonus at the end of the year... a classic example of golden handcuffs.
Most companies try to retain high-performing employees by offering them benefits and incentives. These can include annual bonuses, extra paid leave, performance incentives, promotions and raises, and even smaller perks like catered lunches and employee discounts. All of these things are golden handcuffs – benefits that make you want to stay at a company when the role itself isn’t enough.
While it can be tempting to remain in a position and continue to benefit from these types of incentives, staying put has the potential to stunt your career growth by stopping you from pursuing other opportunities.
In this article we explore what you need to know about golden handcuffs, including the different types of golden-handcuff benefits.
What is ‘golden handcuffs’?
A golden handcuff, or golden handcuffs, is when an employee is ‘chained’ to their job through attractive benefits. They’re incentives that are offered to keep employees with a company long term. They’re common in industries where employees are likely to receive other competitive offers from other companies, and usually refer to corporate benefits. Examples include financial incentives like stock options, generous retirement plans, big annual bonuses and raises.
These types of incentives are offered with the intention of creating a sense of obligation for employees to stay with a company, helping the organisation retain staff in industries where competitors might offer more training, a more interesting role, or a more senior title.
While golden handcuffs provide benefits to employees like financial security, career stability and peace of mind, they’re not without their drawbacks. Golden handcuffs can result in limited career growth opportunities, the potential for complacency, and feelings of stagnation and being stuck in a role.
What is an example of a golden handcuff?
There are many different examples of golden handcuffs, but they all have one thing in common: they provide some sort of financial benefit, like paid leave or an annual bonus. Another common example of a golden handcuff is an enticing retirement plan.
Identifying a golden handcuff at work
‘Golden handcuffs’ is just another way of framing workplace benefits that might dissuade you from leaving your company – even if your job isn’t quite fulfilling anymore. Here are some examples.
Salary benefits
Many companies offer salary benefits to entice their employees to stay. This includes things like high base salaries, competitive cost-of-living adjustments and guaranteed bonuses. Each industry and position has its own salary ranges – you can use SEEK’s explore salaries tool to see industry averages.
Pensions and retirement plans
In order to encourage long-term commitment from employees, some companies offer early retirement options, alongside generous superannuation contributions, additional to what’s mandated by law.
Stock options
Companies may also offer employee stock option plans (ESOP) that offer lower purchase prices but long ‘vesting’ periods, which require an employee to stay with the company to enjoy the benefit.
Milestones
Another way to encourage employees to stay with a company is to offer performance-based bonuses or milestone incentives. In order to unlock these benefits, employees must remain at their workplace for a specific period of time.
Higher-than-normal performance-based bonuses typically exceed 25% of the annual salary for non-executive roles and 50% for executive roles. These types of bonuses can vary significantly by industry, with finance and high-growth tech sectors often offering the biggest bonuses.
Small incentives
Some companies offer other additional perks and benefits, like tuition reimbursement, wellness programs, catered lunches or relocation assistance. These little extras quickly add up to a comfortable lifestyle, making a position seem more appealing and harder to leave.
How to evaluate if you should stay in your job due to its benefits
When you’re on the receiving end of an attractive benefits package, it can be difficult to know whether you should stay or if it’s worth taking the risk to explore other options. Whether it’s better to stay or find another job is a personal decision that should reflect your career goals and aspirations. Looking at your career plan and professional goals can help you make the right choice.
Consider factors like:
Career development opportunities: is there room for growth and learning within the company, if that’s something you value?
Work-life balance: does the job offer a work-life balance that matches your needs?
Company culture: is your workplace a good fit for your personality and work style?
Passion and fulfilment: does your work bring you a sense of purpose and satisfaction? Do you enjoy what you do?
Financial stability is top priority for most people in the workforce, but once you’ve achieved a level of security, you’re able to make professional decisions based on factors like job fulfilment and work-life balance. For some, the ‘golden handcuffs’ of financial benefits are enough to offset a lack of excitement or fulfilment, while others may leave to pursue career development opportunities, a better company culture, work-life balance, or even a complete career change. Ultimately, the decision comes down to your personal career goals.
FAQs
What is the golden handcuff phenomenon?
The term golden handcuffs refers to financial (and other) benefits that keep an employee ‘handcuffed’ to their job. They’re enticing extras that companies offer employees to encourage them to stay long term. The phenomenon is common in industries where high compensation and competitive benefits are the norm, like the finance, tech and mining industries.
What is an example of a golden handcuff?
Common examples of golden handcuffs include high base salaries, competitive bonuses, early retirement plans, attractive stock options, performance-based incentives, and company perks like flexible working conditions, paid lunches, subsidised travel, private healthcare and extended leave.
What is the downside of golden handcuffs?
The main downside of golden handcuffs is a lack of career growth opportunities, which can lead to low job satisfaction and feeling trapped in a role.
What is the difference between a golden handshake and golden handcuffs?
While golden handcuffs are financial incentives and benefits used to encourage workers to stay at a company, a golden handshake is an employment contract that promises a favourable severance package to executive-level employees when they leave a company, either due to retirement, redundancy or mutual agreement.
Where did the term golden handcuffs come from?
The term golden handcuffs originated in 1976 in the finance industry. ‘Golden’ refers to the lucrative nature of these incentives, while ‘handcuffs’ is symbolic of being cuffed or chained to a job.
I receive a high salary at my current job. Is that always a sign of golden handcuffs?
Taking home an above-average salary can be viewed as a golden handcuff. For many employees who receive a high salary, it can be difficult to leave a job to pursue other career paths, especially if it involves taking a pay cut.
How can I tell if a generous retirement plan is a true benefit or a golden handcuff?
A ‘true’ benefit and a ‘golden handcuff’ aren’t mutually exclusive – an employee perk can be both truly beneficial and incentivise you to stay with a company. When it comes to determining whether a generous retirement plan or any other workplace benefit is worth staying at a company for, it’s important to consider the factors outlined in the article above.
Should I stay in a comfortable job with small perks or push for a more challenging role elsewhere?
The decision to stay in a comfortable position or pursue a more challenging role comes down to your personal choice. You might value progressing toward your career goals or you may choose financial stability. If you have greater ambitions than your current job can fulfil, seeking a more challenging position could provide more job satisfaction.
When evaluating a job offer, how can I weigh financial incentives against career growth potential?
Evaluating a job offer involves reflecting on what you find most important: money or career growth. While a role may offer above-average compensation and attractive benefits, it might not line up with your career aspirations, which can result in a lack of motivation and stall career progression. If your professional goal is simply to reach financial security, then career growth will be less important to you.
What factors should I consider beyond salary when deciding if a job is a good fit?
While salary is one of the most important factors in finding a job that’s a good fit, there are other factors to take into account. Be sure to also consider:
Total compensation package, including leave entitlements
Work-life balance
Working hours and flexibility
Commute
Tasks and responsibilities
Opportunities for career advancement
Company culture
Job security
If you find the type of work satisfying
