Stay Packages

Youv'e been downvoted. Give hand. Good dog.

Impending sale is a unique situation where some of the other motivators are in serious doubt (control, status, etc.). No one can be credibly offered the other motivators when there's a chance of complete ownership change in the near future. ("The new owner might promote you; they might fire you. We can't guarantee either outcome because what we're selling is the option value.")

None of the studies of motivation I've seen have specifically addressed such a situation. They concern motivating good work, not sticking around through a foreseen ownership discontinuity.

A stay package may not make people happy and productive, but it does contractually keep them around, giving the new owners a reasonable chance of receiving the knowhow and functioning business, before eventually making their own personnel/motivation decisions.

(That's why even though Fred Wilson is right about the stay packages' propriety and value, I don't think there's anything wrong with calling them 'bribes'. That's a vivid analogy for the sort of purchased-but-not-necessarily-enthusiastic compliance they can achieve.)

But money can get you over that hiccup that a sales causes. The worries of going into an unknown environment can be enough to cause people to jump ship. But if you pay them, you get a year to sell your company to them as a long term solution.

Cash may be an inefficient motivator. Perhaps an extra monitor (~$700) motivates some engineer more than a $2k/year raise. That doesn't mean that cash, especially in large quantities, has no motivational power.

A decade ago, when the company I worked for was sold, I was given a sizeable retention package; one-third was paid thirty days after the sale closed, the rest six months later. My extant stock options were made given excellent strike prices. All told, it was roughly a six-figure package and it kept me with the company another fifteen months until it was clear that the new owners were, indeed, incompetent.