Lucent Technologies' plans to enhance employee perks could help stem a brain drain at the cash-strapped company, although one analyst expects the moves to be effective only in the near term.
This week, a spokesman for the telecommunications firm confirmed that Lucent will pay bonuses on a quarterly, rather than a yearly, basis and issue additional stock options. The changes take effect in fiscal 2001, which began October 1.
Meanwhile, a recent earnings warning has sent Lucent's stock into a tailspin, as the share price hovers in the low 20s, well below the company's 52-week high of $84 per share. Two weeks ago, Lucent also replaced its CEO.
"In a crisis situation, organisations have to respond with a high-profile [retention] program," said Kazim Isfahani, a senior analyst at Giga Information Group.
Howard Rubin, a research fellow at Meta Group said Lucent reacted to a public relations crisis by finding ways to improve loyalty and morale.
Analysts said Lucent's 20 per cent employee turnover rate is average for the industry but noted that recent departures from the company include key senior executives.
Earlier this year, Lucent introduced a policy to allow employee stock options to vest over time rather than all at once, according to spokesman Bill Price.
"We're trying to give more immediate rewards for [employees'] progress against our turnaround goals," he said.
But Isfahani said that although Lucent's strategy may retain some people in the short term, an effective long-term retention program should include nonmonetary incentives, such as challenging work and new technologies.
"You can't just buy people with money," Isfahani said. "It's never been proven to work."