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Hlynka-watch. Multi-agent environment.
Employees think about their situation and make choices, too. If they think you're starting to treat them worse, they'll definitely start looking. Decent chance they'll get someone to pay off the clawback, or at least enough of a raise to overcome whatever delta is left.
Plus, when you start treating them poorly, it's not just a direct monetary thing. It's an emotional thing, which is often highly valued alongside money. That is, say that they would owe you $10k. You imagine that you're going to only arbitrarily harm them by $5k somehow. But their resentment is worth $7k to them, so they'd even be willing to eat the $10k and make a lateral move elsewhere. (In the same vein, good will and belief that they know you are a decent employer compared to the unknown elsewhere is a huge reason why people often stay at companies even if they think they could eek out a bit more money elsewhere.)
On top of that, they're likely to be less productive, which is a pure harm for the employer. Especially with only a year clawback (I don't know why, but it does seem like clawbacks tend to be only 1yr, while incentives are more likely to vest in 3yrs). Pretty much as soon as they get a whiff of you treating them more poorly in that time, it's easy for them to go into "coasting" mode, start looking for other work, and think, "I'm only going to stay here until the 1yr mark if I can find any other offer." I know of one guy (not where I work) who I don't even think was treated badly, wasn't even training-related, but he got a signing bonus with a 1yr clawback, dropped his resignation on exactly the one year and one day mark. I have to imagine that a good chunk of that time, he was hardly even trying to contribute to the company. He knew what his plan was, and he went through the motions that he had to go through.
Harming people in arbitrary ways is usually negative sum, and any business that lets too much of that creep in is likely to end up doomed sooner or later. You would really need a surprisingly good business case for how you're actually going to extract additional value by treating them poorly during something like a clawback period.
Businesses that harm employees in arbitrary ways usually do so either
Correct. There are all sorts of dysfunctions that happen in business. Generally, the businesses with more of those dysfunctions fail more. None of those are what you had implied by "the company gets to harm you in arbitrary ways". Now, you're saying that there's just a background of some companies harming people in arbitrary ways, which has nothing else to do with the topic at hand. Presumably all of those things occur regardless of whether you get a degree paid for by the company. Do you think that somehow choosing to not get a degree paid for by the company stops those three things? If so, how?
...would you even dismiss giving someone a raise on the same grounds? "Eh, raises seem sus, because then they can arbitrarily harm you by slightly less than that much..."
It stops it because if you don't have to pay something back to the company, and the company mistreats you, you will leave. If you do have to pay the company, you won't leave unless the harm caused by what the company is doing to you is greater than the amount that you have to pay back.
I suppose technically that isn't arbitrary because it's not infinite, but if the amount you have to pay back is big, so is the harm that the company can get away with doing to you.
If the company gives you a raise, and then harms you, that isn't going to stop you from leaving, unless the raise is to an amount above market rate.
How about deferred bonuses? ...how about just annual bonuses, where you typically expect a significant sum, such as in the financial industry? I'm really trying to figure out the nature of your problem.
...how about penalty clauses in many other contracts? When you're doing M&A, you often agree to something like, "...and if I pull out of the deal for anything other than [acceptable reasons], then I'll have to pay you a penalty." In real estate or other transactions, people often put money down in the same sort of way, basically just pre-paid. Are all these things absolutely terrible, because then the counterparty will just arbitrarily harm them? Why have they stuck around so long, even when there are sophisticated (and possibly well-capitalized) parties on both sides of the transaction?
The problem with the employment contract is that the employee can't leave the job without losing money, and therefore the employer can harm the employee in ways that the employee could otherwise avoid by leaving the job.
There isn't anything similar to this for most penalty contracts. You could sell someone a house and arbitrarily harm them, let's say by shooting their dog, but refusing to follow through on the house contract won't save their dog, while leaving a job does save you from on-the-job harm.
h-What? Leaving a job doesn't save your dog if your employer shoots your dog, either. This makes no sense to me.
There is a class of things an employer can do to you that do get prevented by leaving your job. There isn't something comparable for most contracts that have penalties. Of course killing your dog is an example of something that's not comparable--there's nothing that is.
I don't believe this part. There's literally all sorts of shit that can be stopped (FYI, you actually mean "stopped", because you clearly don't mean "prevented") if you exit other contractual relationships. Perhaps you could start describing some items in the class of things you're thinking about in the employment context, and then we can check to see if there is anything comparable elsewhere. Without any examples (or, I guess, some conceptual description of this class), it's kinda hard to believe.
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