• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 4. Employee Recruitment and Comp... > Incentives to Tie Employees to the C...

Incentives to Tie Employees to the Company

Over and above the monetary compensation, many companies invest considerable efforts in creating a work environment that will bond the employees with the company and encourage them to stay with it. Recruiting a talented employee is only the first stage in the battle to keep him or her with the company. In times of prosperity on the capital market the demand for good workers is high, thus increasing the turnover rate of employees. Companies are required to make significant investments to train employees for their positions in the company, and employees reach their maximum productivity only after a certain period of adjustment. Therefore, the departure of a skilled worker translates into a significant loss to the company, far greater that the loss resulting from a failure in recruiting new employees.

Many companies have been forced to increase their employees' compensation several times a year in order to keep them with the company. Option packages were an effective tool when companies managed to raise capital based on ever-increasing values. However, this effectiveness diminished when the value of the companies dropped during 2000 and 2001. Such impact was visible not only in startups, but also in more established companies. For instance, in late 2000 approximately two-thirds of Lucent Technologies' employees held options with exercise prices higher than the price of the share.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint