Top Ten Reasons Why It's Better To Stick It Out At A Big Company Instead of Leave for a Start-Up

Although the grass always looks greener, sometimes you're better off sticking it out at a big company over a start-up.

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Dow Jones: More Job Cuts Expected As Motorola Continues To Struggle

By Roger Cheng Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)


Thursday January 15th, 2009 / 17h30

- The bloodletting has only begun for Motorola Inc. (MOT). Fresh off of eliminating 4,000 jobs, many believe the embattled telecommunications equipment maker still needs further cuts to survive, particularly as it feels the squeeze from a faltering handset market and increased competition. Even after the recent cuts, critics believe the company still carries a bloated work force.

"They are still way too overstaffed," said Bill Choi, an analyst at Jefferies & Co. "What you really need is a combination of cost reductions and a meaningful improvement in the portfolio."

Motorola shares recently rose 6 cents, or 1.5%, to $4.17.

While Motorola has been working on better handsets, including more smartphones, analysts don't see anything significant coming out until the end of the year. In the near term, the company can only control the costs.

Motorola spokeswoman Jennifer Erickson declined to comment, saying the company wouldn't speculate on further job cuts.

The cuts are expected to yield $700 million in savings this year. That comes on top of the $800 million in savings gleamed from restructuring actions taken in the fourth quarter.

In the past three months, Motorola announced 7,000 job cuts, with 5,000 coming from the mobile devices division. That's roughly a 25% reduction in the unit, but many believe that isn't sufficient. The company still has roughly 20,000 employees in its mobile handset business.

In comparison, Sony Ericsson, which sells slightly more handsets than Motorola, employs 9,400. The company, a joint venture between Sony Corp. (SNE) and L.M. Ericsson Telephone Co. (ERIC), has said it wants to cut 2,000 workers. While a direct comparison between Sony Ericsson and Motorola is unfair, the difference in staff versus their similar handset sales numbers is telling.

"The issue of the day is cost," said Eric Jackson, managing member of activist hedge fund Ironfire Capital LLC and a former Motorola shareholder. While getting Motorola trimmer was one priority, Jackson believes the company's underlying problem comes from its lack of direction - a problem exacerbated by the co-chief executive leadership structure.

In terms of fixing the cost structure, analysts were reluctant to give specific numbers on the necessary cuts. "It's tough to say what the appropriate level is," Choi said. Motorola's cost structure will look increasingly out of hand as the mobile devices business continues to lose ground and handset shipments fall further.

In addition to the slowing handset market, other handsets are likely to take Motorola's share of the market. A new version of the Apple Inc. (AAPL) iPhone, new Research in Motion Ltd. (RIMM) Blackberrys, and even the Palm Inc. (PALM) Pre could slice into Motorola's high-end device sales, leaving it only the cheaper devices.

Motorola co-Chief Executive Sanjay Jha promised better smartphones. "We are making good progress in developing important new smartphones for 2009 and are pleased with the positive response from our customers to these new devices," Jha said in a statement.

Still, the new handsets aren't likely to arrive until the fourth quarter. "Their products are just not competitive," said Matthew Thornton, an analyst at Avian Securities LLC. "They're left in no man's land." But even if Motorola comes out with a blockbuster handset now, it couldn't turn a profit because its cost structure is too high, he noted. Beyond job cuts, Motorola will have to look hard at other places, including the supply chain, outsourced staff, and other general expenses. "It's a necessary step and the right step, even if it's not pleasant," Thornton said.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

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Why Most Companies are Terrible at Selecting, Retaining and Motivating their Talent

Over the long weekend, I was chatting with someone from a very successful Internet-based company (not Yahoo!). He asked me a little about my consulting business. I explained that we worked with companies who wanted to build programs to increase their ability to select, retain and motivate their top talent.

I didn't have to say any more: "God, do we need your help! We're constantly developing our people and our competitors will swoop in and poach them. We're growing so fast, so we haven't had time to really focus on it. However, I keep telling the folks in HR that they need to get a better plan to stop our bleeding there."

It reminded me of something I read in the most recent 10-Q for Yahoo!. Under the "risk factors" facing their ability to continue to grow the business, they cite the risk: "If we are unable to retain our existing senior management and key personnel and hire new highly skilled personnel, we may not be able to execute our business plan."

Then, they go on to explain that: "Many of our management and key personnel have reached or will soon reach the four year anniversary of their Yahoo! hiring date and, as a result, have become or will shortly become fully vested in their initial stock option grants. Although employees receive additional grants, an employee may be more likely to leave Yahoo! upon completion of the vesting period for the initial option grant, which is generally the largest option grant an employee receives. If we do not succeed in retaining and motivating our existing key employees and in attracting new key personnel, we may be unable to meet our business plan and as a result, our stock price may decline."

So, here are two examples of highly successful companies, who realize that their continued success depends on being able to select, retain, and motivate great people. Yet, at least in the first example (and I would guess the 2nd), they acknowledge that they don't really know what to do.

They're not alone. I can't tell you how many companies I'll go into and hear the refrain: "Our people drive the business" or "Our most important assets go down the elevator at night" or some variation of those. I'm sure you've heard them.

The problem is that most companies stop at this superficial level. They don't actually develop sophisticated programs to actually address the problem of keeping their best people and finding more to further accelerate their growth. And, by the way, the demographics are irrefutable that this problem is just going to become worse in the next 5 years.

As in the first example above, the reference to HR is typical. Many of the 'top talent' executives in our clients rely on HR to solve this problem -- and it certainly is in its domain. However, at many companies (especially the fastest growing ones), HR is chronically under-staffed and having difficulty keeping up with the more nuts-and-bolts aspects of their jobs (i.e., getting payroll out the door, doing basic hiring/promotion, and generally keeping the business moving ahead). True, some of the best companies have HR experts in leadership development who are building and implementing some great programs for talent selection, retention, and motivation. However, this is more the exception than the norm. This is where subject matter expert consultants like Jackson Leadership come in.

In the 2nd example, the reference to stock option vesting is interesting. Many people believe more compensation will solve the "talent problem." However, this rarely happens -- or it's only a quick-fix for problems that will recur. I don't want to be Pollyanna-ish. Money is a factor. But it's usually 4 or 5 on the list -- not 1, 2, or even 3.

So, what is the solution? There are some suggestions here, here, here, and here. But, to net it out: you need to meet regularly with your best people and build an actionable and measureable leadership development plan aligned with their career ambitions. If they feel that you're investing in them and they understand where they want to go in their careers and how that aligns with the company's goals, they will feel attached to the company and likely stay.

Growth can mask a lot of problems. However, you shouldn't neglect the issue of talent selection, retention, and motivation in your company for too long. You only have to go through the experience of trying to replace a "star" once to know what I mean.

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