Gold Handcuffs

New perks keep workers loyal

Even for the cash-flush oil industry, employees of Mitchell Energy & Development Co. near Houston enjoy some unusually lucrative benefits. Mitchell will finance homes for new workers through its own mortgage company at subsidized rates for up to six years. Executives marked for promotion can receive stock options worth as much as $500,000--without investing a penny of their own--that are fully redeemed by the company in six years. Some top employees may also receive shares in a company-sponsored oil-well-drilling program. In fact, working at Mitchell has become so profitable that many employees would not even consider leaving.

This is precisely the company's goal. With corporate loyalty as outmoded as the 3-c- postage stamp, Mitchell Energy and many other American companies are examining ways to cut down on job hopping. According to Deutsch, Shea & Evans, a New York executive search firm, most companies expect half of their new employees to leave within five years. Booming industries like energy and computers are among the hardest hit, and some oil companies lose 30% or more of their exploration geologists each year.

The key ingredient of all the new plans is that they give money to employees several years in the future and only if they stay with the company. These ties that bind have become known in industry as "golden handcuffs." While they have long been common for very top executives, the programs are now routinely used for lower-ranking scientists or technicians. "We do not think in terms of locking someone in," says Ed Boches, public affairs director of Data General, a Massachusetts computer manufacturer. "We think that we'd like this person to stay, and this means that we have to do something for him.''

In California's booming Silicon Valley, the center of the computer and genetic-engineering industries, companies actively raid each other's employment rolls. Says Art Young, corporate benefits manager of Hewlett Packard, the electronics firm: "Everyone's concerned about losing people." Hewlett Packard's answer is a program that puts 10% or so of its pretax profits into a long-term profit-sharing plan that pays out fully to workers only after they are on the job for 13 years.

Corey Knapp, 25, left his job as an electrical engineer with California's Lawrence Livermore National Laboratories for nearby Sandia National Laboratories. He received a 10% pay raise, two more weeks of vacation and some golden handcuffs. Knapp got a 12% loan for a new car from the company credit union; it will be canceled if he leaves the firm. Only after three years will he be eligible to receive gifts of company stock, or to receive the entire benefits of company contributions to a savings plan.

Despite the best-laid compensation plans, some companies can always woo away competitors' employees with a job offer that cannot be refused. "There is probably not enough money around to guarantee that a person won't leave," says William James, a partner in the Chicago office of Hewitt Associates, a management consulting firm. "A valued executive can likely get his package matched somewhere else." Thomas Wyman, 51, left his post as vice chairman at Pillsbury--and some complex golden handcuffs--for the CBS presidency last year after the company offered him a $1 million signing bonus, a yearly compensation package of more than $750,000, and a promise of three years of salary if he is fired.

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