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  • Study: Money Isn’t Everything

Photonics Spectra
May 2001
Cash bonuses and stock options aren't the best way to ensure that top talent comes along as part of a merger or acquisition, researchers at Wake Forest University in Winston-Salem, N.C., say.

Associate professors Michael Lord and Annette Ranft examined business acquisitions in software, communications, networking and biotechnology. In many cases, they said, a primary purpose of the acquisition was to acquire engineers, programmers, scientists and key marketing professionals.

A common tactic for retaining those professionals is offering stock, cash and options in long-term contracts. But the study found that issues related to status, autonomy and commitment were more significant in determining whether those key people would stay.

They noted that in many cases, the key people already had won cash windfalls because of stock ownership or options in the acquired company, so money was less motivating.

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