Yahoo Battleground Moves To The Employees

The Microsoft's unsolicited takeover attempt of Yahoo is having an affect, but maybe not the desired one. Yahoo is working to stave off fears of a takeover followed by layoffs of it's employees by setting up golden parachute plans in the event of a change of ownership. Yahoo employees are now where the battle is taking place. Why?

1. Current unrest of Yahoo employees. An unsolicited bid and rebuff by Yahoo's board means a lot of uncertainty for Yahoo employees. Some panic and look for jobs right away. And others brace for the impact, hoping they won't be part of future cuts. Regardless of how employees deal with this uncertainty, productivity within the company has to be taking a big hit. Everyone inside is acting as a water cooler merger analyst, trying to figure if this product would win out over the comparable product, or that division would subsume or displace a current organization or business function. Meanwhile, work output takes a big hit. Announcement of this package helps settle down some of the uncertainty and fears.

2. Parachute packages = employee loyalty. It's a great sign from Yahoo to it's employee's that "you'll be taken care of" if a takeover happens. The best news is the package could kick in if an employee leaves "for good reason" vs. only if dismissed. Nice. Good reason could mean lots of things, and gives the employees some measure of control (maybe a lot) when the package kicks in, rather than only getting it if a pink slip arrives on their desk. The mortgage will still get paid while the job search starts.

3. Parachute packages = poison people pill. As the bidding for Yahoo goes up, if it does, the cuts for the deal to make sense would have to increase proportionally. Now, the golden parachute plans add to the costs after a merger, reducing the efficiencies and cost savings that can be gained. Maybe the merger no longer makes sense and Microsoft will go about its merry way. Gates says Microsoft is not up'ing the Yahoo offer , but I find that doubtful because Microsoft will try and find a deal if one is there that makes sense.

But Yahoo needs to be careful about this kind of a poison pill. If Google continues to take marketshare from Yahoo, and who doesn't think that will happen, Yahoo may end up in a position where it wants to get bought, unsolicited or not. Imagine the uproar if Yahoo has to back out of the golden parachute package in order to get bought. How many employees are going to stay then? A new package would have to be put in place to keep key employees so a merger could actually happen.

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