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Hi All, I definitely am part of the retention bonus scheme.The thought of retention bonus is very good but makes me wonder what is achieved in the end. I was just keen to drill a bit further. Assuming by having a provision or a guarantee for a retention bonus, an employee would want to stay back but the very intention for HR is to retain the person as well as to make the person productive on a long run and not to break even in terms of the recruitment cost. From a different context, in the end, an employee could still stay back and get the retention bonus and could be an average or less than average performer when appraised annually and gaining experience on the CV for a better chance elsewhere. In such a case wouldn't it be better to avoid the retention bonus?

Your insights on this is appreciated.



From United States, Houston

Hi Balaji,
Research proves that the cost of replacing an employee is on an average 3 times the CTC of that position. This includes hiring cost, training cost, time to settle etc.
Also, certain projects require the commitment of a dedicated person & hence the Retention bonus may be useful in such cases.
Other views are welcome.

From India, Mumbai
Hi Pooja,
Many thanks for your comment. I am in total agreement of your view.
The cost of hiring is way high and also in many cases the cost of settling down for a new employee, if added along with certain intangible factors adds a lot to the cost.I presume this holds good for projects esp. in the software industry but how much of an impact will retention bonus have in case of process or product based industries in manufacturing. In such industries the retention bonus holds good for people who gain experience in the indusrty wherein freshers are always unsettled.
I would like to invite all the HR professionals to provide their insights.
Best regards,

From United States, Houston

Could anybody suggest do we mention Retention Bonus in our Payslip/Appointment letter?? right now we are deducting 20%of the increment as a retention bonus payable to an employee after one year.
From India, Gurdaspur
Hi Balaji,
Lots of factors should be considered before putting in place a "Retention Bonus Program", such as:
1) Cost of hiring
2) Cost of training
3) Time to recruit
4) Cost of Temp to do the work (if possible)
5) Cost/Issues with sharing the work until someone is hired
These are just some of the factors. Hope this helps!

From United States, Temple
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