Key Takeaways
- High salaries address a symptom, not the cause: They are a “hygiene factor,” preventing dissatisfaction but failing to create the deep loyalty needed to compete with the holistic life-value proposition of countries like Australia or the USA.
- True retention is about partnership, not employment: The Intrapreneurship Model fundamentally changes the employee-employer dynamic from a transactional wage agreement to a shared-risk, shared-reward partnership through equity and genuine autonomy.
- Our biggest obstacle is internal, not external: The primary barriers to implementing this model in Nepal are not a lack of talent, but an archaic regulatory framework (specifically the Companies Act) and a traditional ownership culture that is resistant to sharing control and upside.
Introduction
Another resignation email hits your inbox. It’s your lead data scientist, a talent you spent six months cultivating, now heading to Sydney. You made a counteroffer, a staggering 30% raise, pushing your payroll to its limits. It was rejected. This scene is playing out in boardrooms across Kathmandu with relentless frequency. We are in the midst of a catastrophic talent migration crisis, a slow-motion collapse of our human capital base, and our response has been a frantic, unsophisticated arms race of salary hikes. We are trying to plug a structural dam breach with transactional chewing gum.
This is a counterintuitive take on the brain drain crisis afflicting Nepal’s most promising sectors. The conventional wisdom—that we simply cannot compete with the salaries in Dallas or Melbourne—is a dangerous oversimplification. While compensation matters, it is not the decisive variable for the top-tier talent we are losing. The core argument of this analysis is that our reliance on transactional relationships, where loyalty is perpetually rented through pay raises, is a failing strategy. It misdiagnoses the disease. Our best and brightest are not just leaving for more money; they are leaving for more agency, more impact, and a greater stake in their own success. The only proven retention strategy for our specific context is a radical shift in mindset: from hiring employees to cultivating partners through the “Intrapreneurship Model.”
This model, which systematically grants top talent meaningful equity and genuine operational autonomy, is not a soft-HR initiative. It is a hard-nosed business strategy designed to align the financial and psychological incentives of a company and its most critical human assets. It aims to transform a star performer from a high-cost employee, perpetually at risk of poaching, into a co-owner vested in the long-term value creation of the enterprise. It is the only way to build a competitive moat around our talent that a foreign recruiter’s offer cannot easily breach.
The Fallacy of the Golden Handcuffs
The prevailing strategy among Nepali corporates is to combat talent flight with “golden handcuffs”—offering compensation packages so high that leaving becomes financially painful. This approach is not only unsustainable but is built on a flawed understanding of human motivation. To understand its failure, we must engage with Frederick Herzberg’s Two-Factor Theory of motivation. Herzberg posited that workplace factors can be divided into two categories: “Hygiene Factors” and “Motivators.” Hygiene factors, which include salary, work conditions, and company policies, do not create satisfaction or motivation. Their absence causes dissatisfaction, but their presence only brings an employee to a neutral state. A high salary prevents an employee from being unhappy; it does not, by itself, make them loyal or engaged.
Motivators, on the other hand, are factors like achievement, recognition, responsibility, and growth. These are the elements that create genuine job satisfaction and drive high performance. When a Nepali company offers a salary of NPR 400,000 per month to a software architect, it is addressing a hygiene factor. This is a defensive move. The problem is that we are fighting a global war on a local battlefield. That NPR 400,000, while substantial in a Nepali context, is being compared to an offer of AUD 9,000 a month in Australia. After adjusting for purchasing power parity (PPP), the Nepali offer may seem competitive on paper. However, this calculation ignores the complete “life package” on offer. The Australian salary comes bundled with superior public services, social security, political stability, and a globally respected passport. Our salary increases cannot compete with an entirely different operating system for life.
Every time we respond to a foreign offer with a simple pay raise, we reinforce a dangerous message: that the relationship is purely transactional. We signal that the employee’s value is reducible to a monthly bank transfer. This anoints the employee as a mercenary, whose loyalty is permanently for sale to the highest bidder. This creates a vicious cycle. The employee, now conditioned to see their role this way, will inevitably receive another, higher bid. The company is then trapped in a bidding war it is mathematically destined to lose against developed-world economies. The golden handcuffs are not a retention tool; they are a temporary lease agreement on a company’s most valuable asset, with the renewal terms constantly escalating beyond our control.
From Employee to Intrapreneur: Deconstructing the Model
The strategic pivot required is to move from a logic of employment to a logic of partnership. The Intrapreneurship Model is the mechanism for this transformation. It re-engineers the relationship with top talent by focusing on the “Motivators” that a simple salary cannot buy: ownership and autonomy. It is about creating a situation where leaving the company feels like abandoning one’s own business.
The first pillar of this model is autonomy. This is not about superficial perks like flexible work hours or a casual dress code. It is about the devolution of genuine authority and decision-making power. For a lead marketing strategist, it means owning their vertical’s budget and P&L, with the freedom to succeed or fail based on their own strategy, not one handed down by a committee. For a senior engineer, it means having the authority to choose the technology stack for a new project, to architect the system as they see fit, and to build and lead their own team. This level of trust and responsibility fulfills a deep-seated human need for self-determination. It transforms work from a series of assigned tasks into a canvas for personal mastery. When an employee feels their unique judgment and creativity are integral to the company’s direction, their psychological investment deepens immeasurably. They are no longer a cog in a machine, but a pilot in the cockpit.
The second, and more critical, pillar is equity. This is the component that aligns financial incentives for the long term. A bonus is a reward for past performance; equity is a stake in the future value that is yet to be created. For Nepali companies, this can take several forms. The most direct is an Employee Stock Ownership Plan (ESOP), which grants employees the right to purchase company shares at a predetermined price. As the company grows and its valuation increases, the value of their stock options appreciates exponentially. This directly ties the individual’s personal wealth to the company’s long-term success. An engineer holding ESOPs in a burgeoning Nepali tech firm is no longer just coding for a salary; they are coding to increase the value of their own assets. A competitor’s offer of a 20% salary bump becomes far less attractive when weighed against the potential multi-fold return on their equity stake in a high-growth company.
This model fundamentally alters the retention equation. The question for the employee is no longer, “Can another company pay me more?” It becomes, “Can another opportunity offer me a better return on my talent and effort than the ownership stake I already have here?” By making them co-owners, you force competitors to not just beat a salary, but to buy out a vested partner.
The Structural Hurdles: Why Intrapreneurship is Hard in Nepal
If the Intrapreneurship Model is so powerful, why is it not widely adopted in Nepal? The barriers are not in talent or ambition, but are deeply embedded in our legal and cultural architecture. Addressing these is the primary task for business leaders and policymakers serious about solving the brain drain.
The first major hurdle is our archaic regulatory framework. The Companies Act of 2063, while functional for traditional business structures, is ill-equipped for modern talent-centric enterprises. The process for issuing, vesting, and exercising ESOPs is cumbersome, ambiguous, and lacks clear tax guidelines. This legal uncertainty makes both founders and employees hesitant. Founders fear dilution of control and unforeseen legal complications, while employees are unsure of the real-world value and tax implications of their options. Compare this to India, which has refined its laws over the last two decades to create a robust and transparent framework for ESOPs, fueling its startup ecosystem. For Nepal, a specific, targeted amendment to the Companies Act that simplifies the creation of ESOP trusts, clarifies the tax treatment upon exercise, and provides standardized valuation methodologies is not just a “nice-to-have”; it is a piece of critical national economic infrastructure.
The second barrier is the prevailing cultural mindset of ownership. Many Nepali businesses, even those in modern sectors, are run with a “seth-ji” or family-fiefdom mentality. The concept of ownership is absolute and concentrated. The idea of granting a non-family member, even a star performer, a tangible piece of the company is culturally alien and perceived as an unacceptable loss of control. Founders who built their companies from scratch are often psychologically incapable of transitioning from “owner” to “co-owner.” They will pay exorbitant salaries because cash is a manageable expense, but equity represents a permanent sharing of power and future wealth. Overcoming this requires a generational shift in leadership thinking, where CEOs begin to see themselves not as monarchs of their firms, but as chief stewards of a collective enterprise powered by its key talent.
For companies constrained by these legal and cultural factors, there is a powerful intermediate solution: **Phantom Stocks or Stock Appreciation Rights (SARs)**. These are financial instruments that act like equity without actually conferring ownership. An employee is granted a certain number of “phantom” shares. After a vesting period, the company pays them a cash bonus equal to the appreciation in the company’s value over that period. This perfectly mimics the financial upside of real stock ownership without diluting the founder’s equity or navigating the legal maze of the Companies Act. It is a pragmatic, immediate tool that Nepali firms can deploy *today* to align incentives. The fact that SARs are virtually unheard of in Kathmandu’s business circles points to a critical knowledge gap that organizations like the FNCCI and CNI should be actively working to fill.
The Strategic Outlook
Looking forward, Nepal’s private sector faces a stark choice, leading to two divergent futures. The path we choose will define our economic competitiveness for the next generation.
The first scenario is the Status Quo Scenario. If we continue down the path of transactional salary wars, the hollowing out of our talent pool will accelerate. Mid-sized enterprises, the backbone of any dynamic economy, will be the biggest losers. They can neither match the local salaries of MNCs nor the life packages of foreign countries. This will lead to a dangerous consolidation of the market, where only the largest, cash-rich family conglomerates can afford to retain top-tier talent, stifling innovation and competition. The “brain drain” will become a permanent, structural feature of our economy, relegating Nepal to a training ground for talent that ultimately creates value elsewhere. In this future, our most valuable export is not pashmina or hydropower, but human capital.
The alternative is the Intrapreneurial Shift Scenario. A critical mass of pioneering firms—perhaps 20 to 30 market leaders in tech, finance, and consulting—publicly and successfully adopt formal Intrapreneurship Models with real equity. These firms become “talent magnets,” demonstrably reducing their attrition of key personnel. Their success will create intense competitive pressure, forcing rivals to follow suit or risk becoming irrelevant. This will spawn a new sub-industry of legal and financial advisors specializing in ESOPs and valuations, deepening our capital market expertise. The visible success of this model will provide policymakers with the political leverage needed to push through the necessary reforms to the Companies Act. This creates a virtuous cycle: better laws enable more intrapreneurship, which creates more resilient companies, which in turn fosters a more dynamic and innovative economy capable of retaining its best minds.
The Hard Truth: The Intrapreneurship Model is not a universal panacea. It is an elite strategy for an elite group. This model is designed for the top 5-10% of your workforce—the “linchpins” whose departure causes a disproportionate loss of value. It cannot and should not be applied to every employee. The broader, systemic issue of mass migration for mid-level and blue-collar roles requires different and far more complex state-level interventions in education, public services, and industrial policy. Furthermore, even with the best model, some talent will always leave for personal reasons. The goal is not zero attrition. The strategic objective is to build a powerful enough value proposition—rooted in ownership and agency—to make your most critical talent think twice, and to win the retention war more often than you lose it.
