From Employer’s Perspective:
The objective of Employment bond is to arrest the attrition of the employee and cost minimisation. In other words the organisation is concerned about their return on investment made in an employee.
The objective of Employment bond is to arrest the attrition of the employee and cost minimisation. In other words the organisation is concerned about their return on investment made in an employee.
This is the story of a public limited company situated in Punjab, In January 2005 they have recruited around 30 Management Trainee, 7 of them are my friends as we have graduated from the same college. The organisation made them to sign a surety bond for a period of three year, failing which the surety concerned will have to return the stipend they received during the training period. As per the bond the organisation can extended the training period of the employee if the candidates are unable to complete the training successfully.
The Organisation has been able to retain only one employee out of the seven who has successfully completed the term as per the employment bond. The candidate who has successfully completed his bond is still with the same organisation. Rest of the people have left the organisation after one year.
All the candidates who left this organisation have joined the different competitors after leaving this organisation. The Organisation has sent them a registered letter mentioning them about their surety bond, but nothing happened there after.
According to the candidates exploitation was the main reason due to which they left the organisation also their training period was extended without giving them any prior information and there was no revision in their stipend.
I am sure that the implicit objectives of the bond to arrest the attrition of the employee and cost minimisation have not been fulfilled by the employment bond. Further they have trained the people to work for their competition. So the bond may not lead to lasting employment relationship. Perhaps the terms of bond were not as reasonable in employee’s opinion as perceived by organisation.
In another story two individual Mr. C. P. Gupta & Mr. Vivek Gupta joined Vijya Bank at different time interval. They have signed a bond to serve the bank for some minimum tenure failing which they have to pay a bond amount of Rs. 40,000 to the bank. C.P. Gupta has resigned Vijya bank before completing the minimum tenure to join IDBI bank; he has paid the Vijya bank the amount as per bond before joining the IDBI bank. Mr. Vivek Gupta has also resigned Vijya Bank and paid back the amount as per bond to join SIMB, Pune.
According to both the candidates they have paid back the bond amount because the term of bond was reasonable. Since the organisation has provided them the requisite training and a platform to grow further.
There are several examples where potential employer pays the bond of the potential employee. Due to increase in demand for skilled worker the organisations are trying to woo the best talent. In this context the employment bonds serve very little purpose. Some time employment bond may work in favour of employees especially in volatile business cycle which is industry specific as well.
The Organizations should try to create bonding without employment bond. Some times bond may be necessary for the organizations but the validity of the bond will remain only when it seems reasonable to both the parties concerned .
The Organisation has been able to retain only one employee out of the seven who has successfully completed the term as per the employment bond. The candidate who has successfully completed his bond is still with the same organisation. Rest of the people have left the organisation after one year.
All the candidates who left this organisation have joined the different competitors after leaving this organisation. The Organisation has sent them a registered letter mentioning them about their surety bond, but nothing happened there after.
According to the candidates exploitation was the main reason due to which they left the organisation also their training period was extended without giving them any prior information and there was no revision in their stipend.
I am sure that the implicit objectives of the bond to arrest the attrition of the employee and cost minimisation have not been fulfilled by the employment bond. Further they have trained the people to work for their competition. So the bond may not lead to lasting employment relationship. Perhaps the terms of bond were not as reasonable in employee’s opinion as perceived by organisation.
In another story two individual Mr. C. P. Gupta & Mr. Vivek Gupta joined Vijya Bank at different time interval. They have signed a bond to serve the bank for some minimum tenure failing which they have to pay a bond amount of Rs. 40,000 to the bank. C.P. Gupta has resigned Vijya bank before completing the minimum tenure to join IDBI bank; he has paid the Vijya bank the amount as per bond before joining the IDBI bank. Mr. Vivek Gupta has also resigned Vijya Bank and paid back the amount as per bond to join SIMB, Pune.
According to both the candidates they have paid back the bond amount because the term of bond was reasonable. Since the organisation has provided them the requisite training and a platform to grow further.
There are several examples where potential employer pays the bond of the potential employee. Due to increase in demand for skilled worker the organisations are trying to woo the best talent. In this context the employment bonds serve very little purpose. Some time employment bond may work in favour of employees especially in volatile business cycle which is industry specific as well.
The Organizations should try to create bonding without employment bond. Some times bond may be necessary for the organizations but the validity of the bond will remain only when it seems reasonable to both the parties concerned .
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