This is not a new management buzz but it is a term associated with a valuable commodity Gold so how golden is Golden Handshake we need to understand that and also its intricacies. We can Define Golden handshake is a large payment made by a company to a senior executive upon termination of employment before his/her contract ends.
We can also define golden handshake as a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses their job through firing, restructuring or even scheduled retirement. This can be in the form of cash, equity and other benefits, and is often accompanied by an accelerated vesting of stock options.
Typically, "golden handshakes" are offered only to high-ranking executives by major corporations and may entail a value measured in millions of dollars. Golden handshakes are given to encounter the risk inherent in taking the new job, since high-ranking executives have a high likelihood of being fired and since a company requiring an outsider to come in at such a high level may be in a precarious financial position. This business term dates from the mid-1900s and is closely associated to golden parachute- a generous severance agreement for an executive in the event of sudden dismissal owing to a merger or similar circumstance.
In the changed scenario of globalization, cost cutting by public sector undertakings and Government departments has become the order of the day. The first victims of the economy measures are the employees, who are being made to pay with their jobs.
Be it any sector Railways, Banks, Textile Industry, Aluminium plants, Steel Plants, you name any industry - Thousands of employees are going out of employment everyday. If we ask the companies one question - who is going to buy the products, if everybody is thrown out of jobs a vast majority become burden of an employed few? We know nobody will answer it. The facts prove that there are no buyers even after unbelievable gifts are offered with some products. Go through newspaper ads on any day the industry itself is getting a handshake - not so golden. Let us see what happens to the employees who receives "Golden Hand Shake”.
1. Those employees either start his own venture
2. The money gets spend on their children's education
3. The money also gets spend on their daughter's marriage
4. Some money or amount is used for saving
5. Most of the time it is found that the money results into expenditure affairs
Now if we see various issues how many people can get success in their own venture if they get started with business, very few so result is loss. Only exception is perhaps if you start the business at very small level where you think there is less investment and income is guaranteed like having a General Store or you turn out to be Vendors. Otherwise you are totally bankrupt.
The result is trauma all around. Spending days in utter frustration jobless seen as a spent force an outcast an object of pity. Those who kept some money in savings schemes discovered in 4/5 years time that the good amount of interest earned in yesteryears is nothing today due to inflation. If things go by the same rate what will be left over is only horror.
There is no government at the centre worth the name. Is there anybody to review it to retrace the steps? Most unlikely. So "downsizing" will continue. Market will further shrink. Industry will face a fresh bout of crisis. The employees will still feel deprived.
They would find themselves in a helpless position and their future appears bleak. Most of the times they cannot even decide what to do with the few lakhs of rupees they get in by way of compensation package. Many of them end up burning their fingers by starting business ventures without proper planning.
There are several instances of employees, who had taken VRS, being harassed by their kith and kin and family members for money; Some VRS people have utilized the money to discharge their duty by their family. However, many of them who have been used to a busy life do not find it easy to sit back and relax at home. There is also a chance of some of them going into depression due to constant nagging by their `near and dear' ones that they are sitting idle at a time when they should have been working. So Golden Handshake can never be a golden opportunity.
A golden handshake is a hefty severance package which is offered to senior executives and other high ranking employees. Often, the terms of a golden handshake are included in a hiring contract, and they are viewed as insurance against sudden or involuntary job termination. A golden handshake may also be offered to an employee to encourage him or her to retire; this is common in systems like schools, where long-term employees make more money, and it can be more cost efficient to hire entry level teachers.
The specifics of a golden handshake vary, depending on the position. Typically it includes a lump sum of money, and it may also include stock options or securities, continued insurance coverage, or payment into retirement accounts. A golden handshake also typically includes a few weeks of full pay, especially if the employment termination was sudden, allowing the former employee a chance to recover.
Corporate executives are especially subject to shifting allegiances and company restructuring. As a result, many demand golden handshake contracts to ensure that they will be compensated if their positions suddenly evaporate or radically change. Executives can also be made obsolete through rearrangement of departments, or they may be fired for poor performance or due to other issues with the company. Most executives are aware that their job security is very low, especially if they were brought into positions of high authority.
Golden handshakes can also be sweeteners for mandatory retirement. In industries where retiring long-term employees is a cost effective business decision, a golden handshake is almost used like a punishment. If the employee declines to retire, the offer will be retracted, and the employee may take a loss. Employees may also be asked to retire due to declining job performance or age, in which case a company may wish to provide recognition of the employee's years of loyal service.
In an instance where a golden handshake is part of an employment contract, it pays to read the terms carefully, and to clarify questionable terms. Employees may want to ask whether golden handshakes will still be offered if companies liquidate or go into bankruptcy, for example. It is also important to ask about conditions in which the severance package will not be offered. If a golden handshake is being offered to you to convince you to retire, read the offer carefully and don't be afraid to bargain; you may be able to get a better deal by being forward about your desires.
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