Money Can't buy love in a high-tech merger.

• Position: Brief Article

Michael Lord is an assistant professor of management at Wake Forest University's Babcock Graduate School of Management. He recently co-authored a study that found that social, not financial, incentives are critical to retaining key employees after a merger made to gain knowledge. The study included 89 high-tech acquisitions, each valued from $10 m million to $250 million and completed in 1994 and 1995. Twelve of the deals involved North Carolina companies.

BNC: Given the spate of recent high-tech layoffs, is your study irrelevant until the next boom?

Lord: No. Regardless of these booms and busts, these key people, whether technical or managerial or entrepreneurial talent, are just as important. They re not the marginal ones who are going to be laid off in times like these, and they're just as important, if not more important, as ever.

You found that top managers in an acquired company rank third in importance to the acquirer. Who's above them?

It's the key technical people, usually. They're the core of the value of the firm. In many cases, these companies don't necessarily even have patentable or patented technologies, or that is not the main source of value. It's more complex than that. It's socially complex. The value is usually in key groups of people and how they interrelate. So it's very fragile.

You found that social incentives -- employee autonomy and status, plus commitment shown by t e acquirer -- are more important than financial incentives.

By the very fact of acquiring this company, you have probably made the key people much more well-off because they probably had some stake in the company. So even if they're a scientist and they only have a 1% stake, if you've just paid $100 million for that acquisition, they at least are $1 million wealthier.

So they're less d dependent dent financially.

These people aren't starving to begin with. We're talking about people who are in the 75K-and-above range. Then, by the very fact of you making an acquisition of their firm, they probably got at least some stock and options.

The flip side is they may feel they have less control over their destiny?

That's where it gets into the softer side. Now they're not dependent on money. They're not as motivated by money. I know that sounds ridiculous, but these are people who are much more concerned about doing fulfilling work, about discovering a cure for cancer or inventing some new technology. They do want to be compensated well, but they want to be...