When we spoke with Greg Erman, President and CEO of Lexington, Mass.-based MarketSoft Inc. in mid-May, it was mighty quiet in his company's software engineering department. Not one of the 35 engineers who normally would be hard at work developing software that uses the Web to connect trade-show-generated leads directly to sales representatives was anywhere in sight. No, they hadn't been lured away by a competitor. They and their families were enjoying the work of the company's Funmaster, who had engineered a trip to Antigua to reward them for bringing MarketSoft's "e-offers" product to market on a tight deadline.

Technology Meetings: What prompted you to take everyone on vacation?

Greg Erman: We've been around for two years, we have 75 employees, we're venture-backed. [In August 1999] we were in the throes of hiring - basically doubling the size of the company every three months. When you're going through that kind of high-volume hiring, you try to understand what works and what doesn't. We'd always used stock options as the lure for new talent, because this company is a hot company in a hot place solving very compelling problems.

Stock options were a great way to attract talent, and we built a terrific team that way. But last fall, it became clear that everyone was using the same recruiting tools to get the same people. We'd interview someone, and by that afternoon they'd have offers from three other companies.

In the jubilant market we had, anybody could go public, and anybody could say that their stock options were going to be worth millions of dollars. There was no discernment of quality; job candidates weren't able to tell good companies from bad ones because every company had the right to claim, realistically, that they could go public. We knew we needed something different.

TM: And that's where the Funmaster idea came in?

GE: Yes. I asked if someone in the company would volunteer to be a Funmaster, to try to create a fun culture that would attract great people right from the get-go and differentiate us from all the other companies. Lynne Pettit, who is director of one of our engineering teams, volunteered. She's done an extraordinary job with it.

TM: What's happened since then?

GE: Recently, the market has turned sour, and nobody can realistically claim to be ready to go public soon. So this fun element is even more important now than it was.

TM: Now you're really differentiating yourselves.

GE: That's right. Last summer we rented a big sailboat and took the whole company sailing around Newport, R.I., for a whole day, with a clambake at the end. We have regular pizza parties and chili cook-offs and margarita nights. We have a large game room with pool tables, Ping-Pong, foosball tables, big couches, and one of these new very large flat-screen Sony video monitors with a Sega Dreamcaster and DVD player with surround-sound. The engineers can escape there to play games, listen to music - it's really a great stress release. We even have movie nights on Friday for people who want to work late. Our VP of development, John Mandel, actually took his whole engineering team to the movies. There's nothing like seeing a bunch of engineers come back from seeing Galaxy Quest, really pumped up.

TM: In a way, you're giving them options for a social life.

GE: We're trying to create fun during working hours, but we're also trying to make people feel comfortable at work beyond normal hours. If you're here late, just frazzled over an engineering problem, it's great to be able to go down the hall and play Dreamcaster. Once in a while if I'm there late, I'll go play video football for 10 or 20 minutes. Then I feel great and I can go back to work. People don't usually camp out here on weekends; I think they have pretty full personal lives, really. But certainly people put in late hours and it's nice to have something fun.

TM: We heard you had a rather unusual promotion for the Antigua trip.

GE: I told John that the engineers would be working really hard for the next three months on this new product we'd just announced. To show the engineers we appreciate their hard work, we wanted to do some kind of incentive. He and the Funmaster, Lynne, came up with the idea of taking the engineers and their families to Antigua for several days, all expenses paid. So John and Lynne had pictures of the Caribbean strewn around the engineering conference room at the meeting where we announced the trip. We sat down and started the meeting, and they were looking at the pictures making comments like, "Gee, why aren't we there right now?" At the end of the meeting, John said if we shipped our latest product, "e-offers," by the end of April, we were all going to the Caribbean. Everybody was floored.

TM: Didn't that cost a lot to do?

GE: We looked at the budget, and I basically said, "You can't put a price on morale, let's go ahead and do it." We paid for everything from the shuttle buses to the airport to the food, the vacation itself, and we're grossing up their income to offset the tax they'll have to pay on the value of this trip.

TM: Lynne planned the whole trip in her spare time?

GE: You can always make time for something like this, and she loves doing it. It paid off a zillion times over. First, the morale in the engineering team has never been higher. Engineers come into my office and say they've never worked for a company where morale is this high. Having that kind of motivation is incredibly important for a number of reasons: People will work hard and meet their deadlines; they feel good about the company; and, when we're recruiting people, that energy and enthusiasm shows. It's a great recruiting tool, because everyone who comes to the company hears about the Antigua trip, and they want to come work here. And we did ship the product on time!