A company that I left a little over a year go was having severe retention issues since their recent IPO. People didn't feel appreciated or compensated for their hard work and there were many new opportunities elsewhere. This company has been historically very stingy with their promotions. People would work hard and not be rewarded, and told to wait another year. Many who were passed over quietly stayed with the hopes of an imminent IPO, and they were able to string people along for quite a few years until the shares issues reached a critical mass where they would have been soon forced to go public anyways.
I believe Senior Management got cocky in believing that their employees would stay regardless of how poorly they are treated. This would have worked in the beginning of the crash and the company placed their bets on the fact that we are still in a recession, so there would be little job opportunities.
Unfortunately, the company did not anticipate that SF is on the verge of another tech bubble -- a social media bubble. This media bubble valued greatly anyone who has online marketing experience. Funny enough, the company I was at became a great training ground for people who would learn the trade there, then move on to a much higher paying job. In fact, this greatly reminds me of how Solomon Brothers was treated in the book 'Liar's Poker'.
The only thing keeping people there was the value of their stock options. Since the company had recently IPOed, there was a 6-month lockout period that was extended to nearly 9-months. When this last tie was cut, there was a "brain drain" where the best and brightest left in droves to better and more well compensated opportunities.
Ever since the departure, the company's stock has ebbed higher and lower. Missing the ever popular "social" media tag, the stocks were very thinly traded from the beginning. For a period of time, I sold some of my shares in October, 2-month after the lockout period and realized my limit order was setting the market price of the stock. Pretty impressive considering I was selling a total whopping 100 shares. Even people who on the surface looked loyal to this company were sniffing out new opportunities under the table. I myself have been contacted many times by individuals at my old company looking for opportunities. I sensed something had fundamentally changed and decided to sell all of my shares at the time which fortunately turned out later to be near the 52-week high.
Most recently, my suspicion came to reality as the Senior Management of said company had to announce publicly that they were going to likely miss their Q4 earnings. This sent their stocks in a nosedive and caused even more panic among the remaining employees. Nothing like having your stock go from a high of $24 to $10 in a matter of 4-months.
Several weeks after this announcement was their employee annual review period. From my inside knowledge, almost everyone found out they have been promoted. This promotion announcement happened much quicker than before: a good month before when it normally occurs. Remember, this is from a company that has historically been VERY stingy with their internal promotions and very slow with their promotion process. In the following weeks, my LinkedIn account was "blowing up" with people from this company actively updating their profile with their promotions.
What happened? Did Senior Management finally learn from their past mistakes and decide to right the wrong, or is this a last ditch effort to try to retain the remaining valuable employees that were looking to leave? The most interesting dilemma I have is, if things are going so great there, why are all of their employees immediately updating their LinkedIn profile? LinkedIn, has historically been used by everyone I know as a passive job search tool.
I think the answer is written on the wall. Along the same path as Education Connect, Internet Brands, IAC, and Monster, this company has no real staying power. Their actions show the last act of a struggling company trying to retain their employees with across the board promotions. Unfortunately, what Senior Management doesn't realize is that they provided the exact tools that their "soon to be former" employees needed: a bargaining chip to get a better position... elsewhere.
I am proud to be a member of the team (since inception 5-years ago) that worked on strategic acquisitions to help the company go public, unfortunately, there is a very good chance now that this very company I helped bring public will itself soon become an acquisition target. The company generates good revenue, positive cash flow, and is smartly managed to a 20% EBITDA. I am certain there will be many out that will be, if not already, actively sniffing around.
So what's the moral of this story? What managers and employers need to understand is that their valuable employees are everything. They, not you, are the ones who made your ideas a reality and created the company you have now. If you treat them well, they will be loyal, if you treat them as a disposable and easily replaceable cog in the wheel, they will soon leave. The thing is, bad employees are generally hard to get rid of, but good employees are even harder to retain. The reward may differ depending on the individual. Money is a good start, but title promotions never hurts either, and many times is cheaper than other monetary compensation.
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