Golden Handcuff Incentives in Employment

Golden handcuff incentives given to employee to stay

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Employers have long used various strategies to retain top performers, including benefits like sick pay, overtime, and health insurance. The term “golden handcuff incentives” refers to perks designed to keep key employees with a company, especially those who greatly contribute to its success. 

In this blog, we will delve into what golden handcuffs are, the different types available, and their benefits for your organisation.

What is a Golden Handcuff Incentive?

A golden handcuff is an incentive offered by organisations to encourage long-term employment. These tools are important for retaining high-performing employees within the team or the broader organisation. Companies often use these incentives in industries where employees have in-demand skills and deep knowledge of niche products and services. 

Examples include bonuses, share options, company cars, and tuition reimbursement programmes. A well-crafted incentive plan can be challenging, if not impossible, for competitors to match. 

Here are some benefits of using golden handcuff incentives:

The Benefits

Increases Employee Retention

Golden handcuffs encourage long-term commitment by tying valuable benefits, like share options or pensions, to continued employment. This makes it financially advantageous for employees to stay, creating a sense of security and future reward that deters them from seeking new opportunities elsewhere.

Highlights Appreciation for Employees

These incentives demonstrate appreciation for employees’ hard work and dedication. This recognition fosters a happier, more motivated workforce, reducing the likelihood of employees looking for better opportunities.

Makes Recruiting Easier

A robust compensation package with attractive incentives can help attract high performers to your organisation. Benefits such as a company car, annual bonuses, and healthcare make your business stand out against competitors, encouraging the best performing candidates to apply.

Reduces Staff Turnover

Staff turnover is costly, affecting a company’s expenses, income, efficiency, and culture. Golden handcuffs are important for employee retention. For instance, offering shares to key employees encourages them to stay and invest in the business’s long-term success. This keeps turnover rates low and retention rates high.

Promotes Flexibility

Flexible golden handcuff agreements, such as share options or company cars, allow businesses to be creative with their contracts. Companies can decide the duration of these agreements, which can range from six months to over ten years, based on the company’s goals and capabilities.

Types of Golden Handcuff Incentives

Employees typically need to meet a service length to receive monetary rewards. For example, share options may take years to fully earn, and a five-year service bonus requires just that. Another type involves employees receiving a reward that must be repaid if they leave before a specified period. For instance, a relocation fee or personal development courses might need to be repaid if the employee leaves within a year.

Here are more types of golden handcuff incentives:

Milestone Incentives

This involves rewarding employees for reaching specific milestones over time. For example, senior professionals might be attracted by a benefits package that includes quarterly incentives, healthcare, and a free gym membership. After six months, the employee becomes eligible for these perks, incentivising them to stay. Similarly, a company might offer incentives only to employees who have been with the business for a year or more.

Share Options

Many companies offer employees the chance to own company shares, linking their financial gain to the company’s success. This motivates employees to work hard and stay loyal to the organisation.


Salary bonuses are a well-known golden incentive. These additional funds, offered quarterly or annually, reward employees when the company meets revenue targets. High-ranking executives might receive substantial bonuses to persuade them to stay with the company.

In conclusion, golden handcuff incentives are powerful tools for retaining high-performing individuals, encouraging loyalty, and ensuring long-term success not only for the individual, but for your organisation.

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