Skype rears their ugly side: nullifies employee options

June 26, 2011 § 2 Comments

I’ve been an avid user and fan of Skype for the better part of the last seven years. To me, they offered everything a customer wants: great customer service, quality product, and constant improvement and innovation. Over the years, they have managed to carve themselves a niche market in telephony – built on a solid reputation and brand that appears to stand for good things… that is until I saw the headlines this week about how they’ve treated their employees and leadership team immediately prior to their successful sale to Microsoft.

If you haven’t seen the reports yet, a quick scan of Reuters, CNN, TechCrunch, and Bloomberg will fill you in. For a more personal account, one of the employees affected, Yee Lee, has posted his experience on his blog, FrameThink.

The short synopsis is that as Skype (and its private equity firm, Silver Lake) prepared for its sale to Microsoft, the company began firing their senior executives. The industry saw it as a strategic move to avoid mass pay-outs upon deal closure: A practice, which if true is unconventionally underhanded, as those same executives were probably the reason for Skype’s high valuation, and the reason there could be a deal in the first place. Skype and Silver Lake protested, saying that wasn’t the case. However, since then, what has since come to light is the nature of their employment contracts as they pertain to employee options.

Not only are the contracts so vague and jargon-ridden that they become incomprehensible, but when the lawyer-speak gets translated, a claw-back clause is revealed. Basically any options an employee receives as part of their employment, vested or not, can be taken back by the company at the original purchase price (not current value) upon an employee’s departure. Essentially, having the options is worse than not having them, because there’s a strong chance you’ll lose them regardless of if they are vested or not, and if you do, and the company purchases the options back from you, it will mean more taxes. Lose-lose.

Awful.

From the perspective of social responsibility, this kind of practice is unthinkable. To actively plan for and so severely undercut its employees for (personal) investor gain – and likely not even that significant a gain, considering the $8.5 billion sale price Microsoft paid – is on another level of poor business practices. It’s unfortunate that Skype and Silver Lake will likely get away with this in the short-term. Skype is being bought by Microsoft, so after this, the brand and management disarray from the mass departures is Microsoft’s problem. But in the longer term, Silver Lake is establishing a precedence and reputation for ruthless violation and abandon of the basic integrity the industry generally expects. It’ll be interesting to see how they’re doing years from now.

Apple’s social responsibility nightmare

May 24, 2010 § 1 Comment

Sun Danyong committed suicide last year. (Photo credit: Brisbane Times)

Apple is making the headlines again lately, and this time, it’s not with good news. Foxconn, a major electronics manufacturer that assembles Apple’s iPhones and iPads, has seen yet another employee suicide: the eleventh suicide attempt in the last year, and ninth successful one. Nan Gang, a 21-year old employee of the company, died after jumping off the four-storey building. But wait – this isn’t new. We’ve seen this before. The question is why is it still happening, and happening so frequently.

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Corporate social responsibility: Employee satisfaction

April 8, 2010 § 3 Comments

Back to the topic of corporate social responsibility – but this time from an introspective corporate perspective. Social responsibility is so often thought of as being synonymous with philanthropy, community relations, and sustainability, but it’s just as much about the internal attitudes and behaviors within an organization as it is about the external.

Organizations can sometimes fall victim to hyperopia and fail to see that their largest potential advocate base exists just under their noses — often under the same roof. Employees that love their companies are contagious, and spread the positive word to other potential employees and customers. Of the companies that recogize this, only a small percentage successfully align their internal behavior and actions with their goals in a way that embodies internal CSR. Social responsibility within an organization translates into policies, behaviors and organizational cultures that spotlight the employee and emphasize their well-being.

Employees that feel valued, cared for, a sense of belonging, and empowered in their contribution to the greater vision will work harder and more effectively. Aside from this, the creativity and innovation from a happy, committed employee is far superior to one who has fallen into an indifferent routine. I know this is obvious, but looking around at the number of inspired corporations, it makes me wonder: is it obvious? I think it’s considered common knowledge that satisfied employees mean better productivity and ideation, and lower costs of hiring, training, and lost productivity in onboarding. So where’s the missing link?

For me, I think it’s in congruency: An alignment of what’s on the wall with what actually happens in the trenches. From employee hire to employee departure, what do you communicate, how to you behave, do you have a plan? Do you set your teams up for success on a regular basis? Do you have an infrastructure and culture established that fosters discourse, ideation and innovation? What about your management style? Communication style? Conflict management and resolution style? Are these ones that encourage open dialogue, mutual understanding, and win-win solutions?

More on these individual topics later – but for now, it’s food for thought, because you can’t mobilize positive change if you don’t know where you’re coming from in the first place.

 

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