The Quest for Growth

By John Pallatto  |  Posted 2005-06-01 Print this article Print

The company is even offering to reimburse legal fees and expenses employees incur through litigation to enforce their rights under the retention program, according to the statement. A Siebel spokesman declined additional comment on the intent and meaning of the retention program.
Guaranteeing these benefits up front makes this program potentially expensive if Siebel is ultimately bought out.
Its somewhat reminiscent on a much smaller scale of the customer assurance program that PeopleSoft put in place to help support sales during its protracted takeover battle with Oracle. The program was also designed to make PeopleSoft unattractive as a takeover target, but it meant little when the two companies finally agreed to terms. Its questionable whether Siebels promises to employees would be enforceable after a takeover. Once another company took control of Siebels board, it presumably would have the authority to change the terms or do away with it altogether. However, the buyer would naturally have an interest in retaining key employees and would no doubt offer some kind of incentives to for them to stay. The new owners would also likely offer severance package to employees who are let go. But whether it would be as generous as what Siebel is offering now is still an open question. But does the fact that Siebel is offering the retention program mean that its inevitable that Siebel will be bought out? Its not a sure thing. But its looking more likely with every quarter Siebel fails to achieve consistent growth. To read more about what new Seibel CEO George Shaheen plans to do to get the company back on a growth track, click here. Wall Street is unlikely to look with favor on an employee retention program that only adds expense without adding shareholder value. A few weeks ago, takeover rumors sparked a modest rise in the price of Siebel shares. But by the end of May with no indication that anyone was showing an active interest in Siebel or that Siebel was involved in talks with anyone, shares prices settled back. The bottom line is that Siebels CRM products are facing plenty of competition from Oracle, SAP, Microsoft and a swarm of smaller companies, including RightNow Technologies and, that are offering hosted CRM services. IT managers are being more selective than ever in how they acquire new applications. To keep their own jobs, they need to find applications that can be deployed faster than ever, at the lowest possible cost and that deliver a quick return on investment. The retention program is Siebels attempt to deal with uncertainty. But the retention program alone wont keep the employees in place unless they believe that sales of Siebel software are going to take off and the company is going to start growing for months and even years into the future. John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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