Bonds:A case of Bad Implementation

The issue of attrition is a major concern for companies, particularly those in the IT sector where attrition is among the highest for any sector. Companies spend a considerable amount of money and time on training its new recruits and thus they ask their trainees to sign bond agreements to be able to retrieve the cost and achieve their motive behind the training.

I was made to sign a bond when I joined FIS in August 2006. The company, during campus recruitment, had explicitly mentioned that our batch of recruits will not be required to sign on any bond agreement. However, as soon as our training period got over, 4 of the new recruits left the company which forced them to introduce a bond to make sure that those who haven’t left yet are retained for a few more years.

FIS is a product based company engaged in developing products for banks and other financial institutions. The company structure has been built around products and thus recruits receiving product training are valuable for the company. Employee commitment and loyalty is valued and nurtured and has helped FIS achieve attrition rates well below the market average for the IT/ITES sector. The resignation of new recruits created a panic situation within the company and the HR head decided to introduce a 2 yr bond for the remaining trainees with a settlement amount of Rs 2 lacs if the bond period was not served. Although it was a one sided bond, which is not recognized by law as has been rightly said by chinmoy, the need for an experience certificate forced me to serve the bond period. For some companies, It was mandatory for applicants to show a release letter from the previous employer before they could be granted employment. This forced many others to stay with the company even though they had better employment opportunities in hand.

The way the company went back on its word and introduced the bond created frustration and disillusionment in the 2006 batch of recruits. The company, in this case, failed to build the culture of loyalty that it had been proud of.

Even though an employment bond is considered to be an evil by many, it is a business necessity for companies like FIS. This necessity should have been identified and addressed much earlier by the HR department. By taking proactive steps such as disclosing the bond during campus recruitments, as done by most of the other software companies, the company could have protected its reputation while meeting its business necessity.