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RESET EXPECTATIONS

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Tech Firms Look Beyond Options to Motivate Workers

Two years ago, the prospects of getting rich on dot-com stock was just about all the motivation employees needed at Aliso Viejo-based buy.com Inc.

A lot has changed since then. In the past year, the online retailer has shed itself of employees and assets in an acute bid to reach profitability.

The online retailer also has seen its stock delisted from Nasdaq for failing to stay above a buck. As of last week, buy.com’s stock was trading around 31 cents,a far cry from its high of nearly 30 in January 2000.

Motivation, these days, is rooted in reality, according to one company official.

“We’re no longer in the dot-com heyday of three or four years ago where all you had to do is attach dot-com to the company and you got rich off stock,” said Brent Rusick, senior vice president of operations at buy.com. “Rather, people understand the reality of working hard to build the value of the organization.”

Around Orange County, technology companies are faced with an all-too-familiar song involving underwater stock options, pink slips and little to no funding options.

It’s a starkly different picture from two years ago. Back then executives and employees were riding scooters down the hall, rolling in venture funding or watching stock prices skyrocket.

Who needed to ask about employee morale?

Now, it’s a reasonable question for any tech company, even established players such as Kingston Technology Co. in Fountain Valley. Until recently, the maker of computer memory products hadn’t seen a hiccup (not to mention a layoff) since it was founded 14 years ago.

That changed when the privately held company had its first round of layoffs in February (19 people lost jobs when two divisions merged). Another followed in April, when 43 employees were let go due to the slow economy and slackened demand for memory products.

Thirty-six of the 43 left voluntarily with “nice” compensation packages, according to Heather Jardim, public relations manager, who’s been with Kingston for 10 years.

“The morale was OK,” Jardim said. “I was a little worried about it from a PR perspective.”

But she said John Tu, Kingston’s co-founder and president, always has communicated with employees and taken the time to explain things, which was key when the market took a dive. Jardim said Tu personally sent notes of apology to those let go in April, which “meant a lot to a lot of people.”

“All the employees knew that if we ever had to do this (layoffs) it was the last resort,” Jardim said. “They were very well taken care of. They just didn’t get a pink slip.”

Even before current market woes hit, Jardim said Kingston had implemented programs geared toward boosting employee morale and perpetuating a positive company culture.

She said there’s a meet-and-greet lunch once a month, and a so-called superstar program, where employees nominate co-workers for exceptional work. Winners get a prize or lunch with top executives.

The programs have been key to keeping employees “pumped,” Jardim said.

Newport Beach-based Conexant Systems Inc., which cut 1,500 jobs worldwide in March, plans to continue to offer its own breed of employee incentive programs, including company-sponsored graduate courses, rewards for referring new employees and retirement-savings matching, according to a company spokeswoman.

The company also gave employees two chances,one last year and one last quarter,to receive stock options, the spokeswoman said. As of last week, Conexant’s stock was trading at 8.45, down from a 52-week high of 60.81.

Stock options have taken a back seat to a focus on survival at buy.com, according to Rusick.

After the company reduced its workforce by 150 people in two rounds of layoffs earlier this year, Rusick said it outlined a path for profitability for remaining employees.

Rusick said the staff left is critical to buy.com’s success and has taken a sense of “ownership in the company,” even though the days of “fun” type of events are long gone.

“They feel a strong sense of satisfaction and ownership in the success of the company and that tends to squash any type of poor morale,” Rusick said.

Plus, he said there’s been a “resetting of expectations” as it applies to stock ownership across the board.

“If they’ve had outside investments in other organizations, they’ve seen significant reductions in the value of those equities as well,” Rusick said. “They realize that it’s not just happening at buy.com, that truly the grass is not greener anywhere else.” n

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