Even with the major U.S. stock indices hitting new heights over the past two years, many companies have seen their share values plummet.

When the share price is under pressure, CEOs need their teams to stay intact and pull together. It’s also at times like these that the incentives companies typically offer to maintain stable leadership teams and retain top talent may no longer be adequate.

As Meldon Wolfgang, an expert in helping Boards, CEOs and human resources officers make decisions during uncertainty, explains, “When the value of long-term incentive programs shows signs of eroding, companies must re-examine the entire range of incentives they offer—financial and non-financial alike. This is the ultimate strategic HR question. And it applies not only to senior leadership, and to management, but to your entire employee family.”

Fixing The Incentive System

Traditionally, stock awards and option grants—giving employees the right to buy company stock at a specified price—have been the cornerstone of executive and employee retention. The logic is straightforward: equity incentivizes people to stick around and help the company build long-term value.

This works well when the company’s share price is rising—and there’s an expectation it will continue to rise. But when the price sags, especially when it falls below the price at which an employee can exercise his or her option, incentives lose their attractiveness.

That’s the situation some companies face today. In many cases, there will be fixes and turnarounds, and earnings and stock prices will rebound. Until then, however, stock options may cease to function as incentives. Employees may feel the option awards are meaningless and could become worthless, or worth much less.

This is when executives and employees may start looking elsewhere.

While replacing any employee is costly, replacing seasoned, specialized, and executive talent is especially costly, carrying hidden costs in lost productivity, morale, and institutional knowledge. By some estimates, the cost of replacing such workers—both hard costs (recruiting, onboarding, etc.) and soft costs (lost productivity, loss of institutional knowledge, etc.)—can be as high as four times the employee’s annual salary.

Companies that find themselves in such a bind—with valued employees exiting amid falling share prices—clearly need to restructure their incentives. The key is to be creative; while financial incentives are critically important, cultural and other non-economic benefits may be equally important (and more doable for some).