Golden handshake: Easy explanation

In this video, you will learn what a golden handshake is and some pros and cons of it.
#goldenhandshake #employeebenefit #wallstreetmojo #compensation #severancepackage

Chapters:
00:00 – Introduction
00:49 – What is a golden handshake?
01:25 – Why do companies have the golden handshake?
01:40 – To convince people to take the risky senior roles
02:05 – To compete with other companies in terms of compensation offered
02:33 – To provide financial stability to employees during unemployment
03:06 – Downsides to the golden handshake
03:14 – Not based on performance
03:46 – Conflict of interest
04:11 – Golden shove
04:44 – Golden handshake vs Golden handcuffs
05:22 – Conclusion
(Explained in detail in the video)
What is a golden handshake?
Companies enter a clause in their employees' employment contracts that the company shall pay the employee a certain amount when they leave the company and are employed no longer by the company.

The employee can leave for any reason, and the compensation can be in any form.

(Explained in detail in the video)

Why do companies have the golden handshake?
To convince people to take the risky senior roles.
Senior roles in companies come with many responsibilities and require a certain level of risk-taking.
(Explained in detail in the video)
Many people may not be up for it. That’s why companies provide additional compensation for such roles.
(Explained in detail in the video)
To compete with other companies in terms of compensation offered.
Employees can always get better offers from other companies, and there is always the risk of them joining rival companies.

Hence, companies can have a golden handshake with their employees to convince them to stay.
(Explained in detail in the video)
To provide financial stability to employees during unemployment.
Employees who leave the company will not have a salary to live on.

The compensation received from the golden handshake can pay the bills while they can look for another job.

(Explained in detail in the video)

Downsides to the golden handshake
Not based on performance
The golden handshake does not consider performance. Therefore, even if employees perform badly, they can still walk away with the golden handshake compensation.
(Explained in detail in the video)
Conflict of interest
The golden handshake clause in the employment contract may not encourage employees to perform better, leading to conflict of interest.
(Explained in detail in the video)
Golden shove
Companies may use the golden handshake to make employees leave the company.

(Explained in detail in the video)

Golden handshake vs. golden handcuffs
In a golden handshake, compensation is given to the employee when they leave the company.

In golden handcuffs, compensation is given to the employee to remain in the company and not leave.
(Explained in detail in the video)
So, this was all about the golden handshake, and we hope you liked the video. So, show it to us by liking the video, commenting, and sharing it.

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