The Menace Of The Golden Handcuffs

Merriam-Webster defines golden handcuffs as special benefits offered to an employee as an inducement to continue service. The term was first coined around 1976 following the practice under the name of golden handshakes in place since the 1960s.

The most frequent use is in higher-paying and specialist jobs that are critical to the business’s success. The fear of losing the person leads to monetary incentives that are spread over several years in the future, leading to substantial earnings for the recipient. Earnings that they may not be able to get elsewhere.

The most frequent instrument used is some form of equity. For example, you may get a grant of stock that will vest over the next four or five years. It is continually dangled in front of your eyes. If you stick around just a bit longer, you will get a portion of that in your hands. Stay one more year, and another piece is yours. This may go indefinitely. Not only are you getting more equity, if the company is growing, the actual value is also increasing. The total potential compensation can become very interesting and not easily matched by the market.

By itself, there is nothing wrong with this. Of course, companies do whatever in their power to keep the best and most critical people working for them. Even though it may be pretty expensive for the company, it is still cheaper than replacing the person in question if they leave. And who would complain about being compensated well? So what is the problem?

The problem starts when the promised compensation gets significantly higher than is your actual value on the job market. Then you are faced with brutal facts of the golden handcuffs. If you leave your current company, you will earn less. You will have to accept a pay cut in your total compensation. And that may not be easy to digest.

Having golden handcuffs is fine as long as you enjoy the work you are doing and you feel that you are still getting all that you expect from a career. The moment that is not true, you have a problem. You are locked in a job you don’t like. You get disengaged, your performance suffers, and you feel miserable with your life. But you can’t leave because you are being paid really well. In fact, you know you are being overpaid as no one else on the market is willing to offer you comparable pay.

Employees, especially in the knowledge economy, are free agents. We have the power to pack our things and leave tomorrow if we stop being satisfied with the employer we work for. Getting ourselves handcuffed to a job we may not enjoy is a severe lapse of judgment.

Or is it? Only you can answer that. Just make sure you genuinely think it through. There are those amongst us who would be completely fine with the golden handcuffs because they don’t expect much from their job. For these people, a job is just a job. It is a way to earn money so they can realize their potential and dreams elsewhere. Having a job that pays the most gives them the most freedom outside of work. They are willing to suffer eight hours a day for the rest of their lives to get the chance to do what they enjoy for the rest of their day.

I would argue that even though there are people like that, most of us wouldn’t be satisfied with that. Most people want to live a satisfying life also when being at work. If you want to feel good about what you do, you want to wake up every morning looking forward to the day, you want to contribute, you want your work to have meaning, you want to learn and grow as a person, you want to build a career, the golden handcuffs are a serious menace.

So what are the fundamental problems, and how to eliminate them and get out of the golden handcuffs trap?

The comfort of the known – you are comfortable with where you are, you know that you are being paid well, and there is no reason to do anything about it. You may not be learning anything new, may not be growing, may not have big career prospects, may not particularly enjoy the work, but overall, things are fine.

That is until they are not. If you get stuck in this comfort zone for too long, you will, step by step, lose the joy coming from work, and you become disengaged. With low engagement comes low productivity. With low productivity comes a danger of being fired. And with that comes stress.

Don’t get too comfortable. If you start feeling that the work you do doesn’t bring you any joy and the only reason you are doing it is the money, go and talk to your boss. Ask for something that will challenge you that will bring something new into your life. Or go and start helping others around you, even in things that are not part of your job description.

Stress that you lose the job – the knowledge that you may lose your job is always stressful. It is double stressful when you know that it will be challenging to find a job that will allow you to keep your standard of living. In this particular scenario, the weirdest part is that you are stressed out by losing a job that you hate. That is a complete no-win scenario.

Just leave. If you get to the point that you genuinely hate your job, there is no easier way to relieve stress than to leave and start fresh elsewhere. Of course, before you do that, make sure that you also reset your expectations. What are the actual costs of your lifestyle? Do you really need to make this much money to be happy? It may very well be that you keep asking for more, but you don’t need it. You can still retain the same standard of living.

Knowledge of being paid more than you are worth – this is at the heart of the golden handcuffs. You know deep down that what you are being paid is higher than how the market evaluates your skills and contributions. You might be smart, skillful, but you still don’t want to get on the job market as you feel that even though you may get another job, you will still lose. What is worse, because of the standard of living you got used to, you may take a very long time to find a job. Not necessarily, that you wouldn’t get offers, but because you will keep looking for the one perfect job that you will love with a company willing to overpay you.

Never let the money, or lack of them, stand between you and the job you know would be perfect for you. You may get a pay cut, but your satisfaction with life will skyrocket. And ultimately, isn’t the feeling of satisfaction and happiness one of the big reasons you work? Of course, you want to be compensated fairly. But there is a difference between fair compensation and being overpaid.

Now what?

Smart companies will not only give you golden handcuffs but will go out of their way to keep you engaged and continually challenge you and give you more opportunities. It is those companies and managers who feel that by throwing money at you, they solved the problem. They retained you. Your body didn’t walk away, though your soul and mind might have.

I would suggest you dive deep into your soul and figure out which category of people you belong to. If you take a job just to earn money, and you are willing to suffer through it to get the biggest paycheck possible, then you are good and get yourself locked with the golden handcuffs. However, if you want to live a more integrated life where you enjoy your free time and the time you spend at work, you should be very careful and frequently review why exactly you are still in your job. If you realize that the only reason is money and the rest gives you no pleasure, you don’t enjoy the work, and you are not engaged, start thinking about how to get out. Make the difficult decision and break the golden handcuffs.

What are your thoughts on golden handcuffs? Do you see a danger in them or would you be comfortable if you found yourself in such a situation? In case, you were in this situation, how did it feel and did you break them?

Photo: jplenio /

Follow me on Twitter: @GeekyLeader

Categories: Career, Life

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1 reply


  1. How To Negotiate A Fair Salary In 8 Steps – The Geeky Leader

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