Training Bond Considerations

To make them sign or not, that is the question... and how.

Training is an important business investment and like all investments companies expect considerable returns. These returns are sometimes measured in terms of successful implementation of the new skills that actually reflect on business results in terms of quality and productivity. Many companies measure returns in terms of the amount of time that the employee is able to utilize the new skill at work, hence companies require employees to enter into an agreement for the employees to return the investment through service tenure.

There are mixed feelings about this issue of having employees sign training bonds or training agreements. There are employees who understand that the companies deserve to recover their training investments and willingly sign and honor the agreements and there are those who feel that they are being forced to stay in the company even if better opportunities come along and are deprived of these opportunities. I even saw a number of web based fora questioning the legality of training agreements. I'm not a lawyer so I won't dabble into the legality issues of training bonds, I'll just cover what I consider as the moral aspects of it and the administrative responsibilities of HRD to ensure fairness of implementation. If you have a legal opinion on this topic, please share with me and my readers by commenting below.

Before I continue, I want to make myself clear that I support the REASONABLE implementation of training bonds or training agreements simply because I agree that companies must secure the recovery of their training investments. When they send people to training and the employees acquire important skills, they naturally increase their market value. They become attractive to other companies who did not invest a single bit on their skills development but are willing to pay a higher price for their services. Without the training bond the companies who invested in their training may easily lose their money to other companies competing for the employees' new found skills and that I believe is not fair. I also believe that this should be communicated thoroughly with employees to help them understand the rationale behind training bonds because I suspect that many employees do not appreciate training bonds and see them as evil contracts forced into them by an equally evil management.

What is a reasonable implementation of training bonds policy to me?
It starts with designing a reasonable policy and supporting it with thorough communication that include employee orientation, inclusion of the policy in the employees' career path and discussing it thoroughly with concerned employees BEFORE they are sent to training. What is unfair? padding and declaring unrealistic penalties for breaching the agreement, Sending people to training and then making them sign the agreement afterward without thoroughly communicating the need for signing a training bond prior to the training.

To prorate or not to prorate, that is another question.
Some companies allow prorating of the penalties. This means that if the employee resigns from the company halfway into the agreement, they get to pay half of the training cost. I personally believe that this is fair and kind. Other companies make the employees pay the whole amount and they have their reason (at least some of them). They argue that when they lose a trained employee prematurely, they are most likely to pay the full amount for the training of the replacement employee, hence a prorated penalty will not return their investment. I'd like to hear your thoughts about this.

Should you bind employees for every training you provide?
My answer to that is you shouldn't but that's just me. In one of the companies I managed we had our employees sign training bond for expensive training and training that takes reasonable time to fully implement. Many companies see training cost as an important consideration for binding employees. PHP5,000.00 and below, no bond, 6,000 to 9,000 = 3 months, 10,000 to 14,000 = 6 months, and so on and so forth. These amounts are not cast in stone. You decide.

What should be covered by the training bond?
If you are sending them abroad for training, you should include a guarantee that they will complete the training and return to work immediately after the training. You should include a nondisclosure clause. You should describe the cost, make sure that this is thoroughly communicated. What happens if you terminate the employee for just cause, do you make them pay for their training or not? How do you want to be paid? You might also want to consider expectations in terms of skills application. Many companies use template document for training bonds, this is ok if you have uniform expectations of employees output after the training. If you are sending an employee to a Project Management Training, would you not want to make sure that the employee is able to implement the newly found project management skill at work by reviewing and improving your existing project management methodologies?

How do you get to keep your employees beyond the length of the training bond?
If your company sucks or if the employment market outside is so attractive, I can already imagine your employees lining up at the starting gate like race horses eagerly waiting for it to open so they can dash out of your company. You need to give them more reasons to stay than to go. They need to see your company as "THE company" for them. More training? why not? Compensation that match their market value? Not a bad idea. Better benefits, continually improving organizational culture, great working relationship, opportunities for career growth, there are so many to consider. Ask Maslow and Hershberg. It is difficult to leave a good company that takes care of your career and enables you to develop friendship and good working relationship. Think along that line when you strategize for employee retention. If you need help, you know how to contact me.