You are being thick. $word is a variable that's scoped to the generate_password() subroutine. Of course, you can't print it out. Try printing the value returned by calling the subroutine, as seen below:

#!/usr/bin/perl
 
{
   my @words = qw( perl monk vroom );
   my %convert = (
      i => '!', e => '#', s => '%', o => ')',
   );
 
   sub generate_password
   {
      my $word = $words[rand @words] . $words[rand @words];
      $word =~ s/(.)/$convert{$1} || $1/eg;
      $word;
   }
}
 
print generate_password(), $/;
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