The reason I ask is, a Fortune 500 company has been courting one of my engineers for about six months. About three months ago, the engineer told me he would probably be leaving within 30 days as soon as he negotiated a contract with the Fortune 500 company. But then negotiations stalled. I've been waiting three months in limbo, not really knowing if he is staying or going, and he doesn't know either. He's been distracted and reluctant to start any long-term projects, because he doesn't want to leave us hanging. But I can't stay in limbo forever. I really want him to stay or go, so I can plan accordingly. I told him I needed an answer by the end of the month, and his answer was, "Yeah, me too." I don't think he's taking it seriously. So, I'm thinking about telling him I want a one-year employment agreement with. Either he signs it, or I'm letting him go, and he can hang in limbo by himself. Is that the best way to handle it? If so, what penalties should I use if he violates the contract? Loss of stock options? Really, I don't want him to feel like I'm pushing him into a corner. He is a good engineer, and I actually hope he stays. I just need him to make up his mind!
It's great that this employee has been transparent about the fact another company wants him. The problem is that this employee is ambivalent about his connection to your Company. Really, under 100 employees at least, this is unacceptable.
I would first reflect on why you think he's looking elsewhere. Then, I'd ask him that, admitting that you have failed to create an environment in which he has stayed engaged and motivated on what he's working on. If his answers seem reasonable and you can commit to making the changes necessary, then you won't need an employment contract, he'll stay on his own desire, because you listened to him and improved his situation.
If his requests seem unreasonable or you know you won't be able to make those changes, fire him *today.* This situation can contaminate your entire company quickly. Yes, swapping someone out will always be a bit of a setback, but you want *everyone* on your team, feeling motivated and excited by what they're doing. It sounds like you're making your decision out of fear (having to find and hire another engineer) versus what's best for the Company, long term. Happy to talk to you in a call. Problems like this are within the sweet spot of my skills and passion.