The People Paradox

The marketplace for tech-savvy engineers and managers has become so competitive that companies like Yahoo! and Facebook are looking for new ways to find talent. One fresh approach they're taking is to buy high-tech startups and absorb their talent. In May, Yahoo! tweeted about adding 22 entrepreneurs to "our growing mobile team" by buying three startups. Companies looking to make so-called "acqui-hires" in a competitive marketplace need to take steps to hold and integrate their new people, who tend to be entrepreneurs at heart, says Christine Lyon, a Morrison & Foerster partner focused on employment law. "They are often used to having a lot of autonomy, decision-making authority, and the potential of a major upside if the business succeeds," she says. "This presents additional challenges in motivating and retaining these employees, in comparison to bringing over employees from other, more established companies."