Q. My employer is spinning off one of its divisions into a separate company. I’ve been offered a choice to stay with the parent company or accept a role in the spinoff. I’m torn between the two and would appreciate some Foolish perspective. Any advice?
First of all, congratulations on being given a choice in the matter. In many cases in spinoffs, the option that affected employees are given is: “Here’s your job offer. Take it, or consider yourself voluntarily separated from service.”
Unfortunately, I’m not sure anyone can give you the perfect answer to your question. A lot depends on both the companies involved and your own personal interests and skills. Given that you do have the opportunity to choose between them, however, consider these five key questions that might help you decide which path is right for you.
1. Why is the division spinning off?
There are several reasons why a company will spin off a division. If you can figure out why it’s happening at your company, it may help point you in the right direction. If the division itself is performing poorly, a spinoff may be the company’s way to eliminate jobs without looking like the bad guy in front of the financial media. In that case, not too long after the spinoff is complete, the spun-off business may very well eliminate jobs, putting you in the position of needing to find another one.
In other cases, the parent company itself is flailing, and it’s looking to load up its spinoff with debt to get that debt off its own balance sheet and buy itself more breathing room. If that’s what’s happening in your case, the good news is that the parent company thinks your spinoff is strong enough to handle the debt. The bad news, however, is that too much leverage can sink a company when times turn tough, even if it would otherwise have been able to survive.
The best case for the spinoff, however, is that the company believes that being part of the parent organization is holding back the growth of the division being spun off. For instance, many believe that Amazon.com should spin off its Web Services division to truly maximize the value of that business line. After all, many other retailers avoid using Amazon Web Services specifically because it is associated with Amazon — and strongly encourage their suppliers to do the same.
In that line of thinking, Amazon Web Services could potentially grow faster as a separate business than it could as part of Amazon.com, since it could draw from a much larger customer base.
2. Which job looks like a better fit for your skills and interests?
Ultimately, for any job to work out for you, it needs to be one that you can perform well in and that keeps you engaged enough to deliver results even when you’re working on the not-so-fun parts of it. Take the opportunity of your decision window to talk with your potential managers and co-workers in both companies and see what their visions are for what you’ll be doing. You may find that one role simply speaks much more clearly to you than the other does, making your decision that much easier.
3. What are you getting — and what are you giving up — if you move?
If the spinoff ends up succeeding, taking the plunge and moving to it may very well give you the opportunity to move up through the ranks quicker. After all, the new business will likely launch with less overhead and fewer resources than it could count on in the parent company’s structure. As it evolves, it may discover that it got value from some of those other resources and add them for itself. As someone already on the inside, you may be well positioned to help lead those efforts and thus move up.
On the flip side, bigger and more established companies often have better benefits than their smaller counterparts do. If you expect to rely on part of the parent company’s benefits package, check to see if what you need will continue with the spinoff or if those benefits will only be available at the parent company.
Note that you may also be offered a “signing bonus” or “retention bonus” for either moving to the spinoff or sticking with the spinoff for a certain amount of time. While that money is a nice carrot, think about whether that one-time benefit is really worth the rest of the changes you’ll be expected to make as part of moving to the spun-off company.
4. What will your working logistics look like?
A spinoff to a different company often requires a physical move to a different office location, and in some cases, even moving your home. Your commute time, costs, and methods may change for the better or for the worse, depending on your old and new work location. In addition, some locations have higher or lower tax rates than others, and thus your take-home pay could change with the move even if your salary holds steady.
If your commute time and total costs of working are substantially worse for one option than the other, think seriously about going with the more favorable option, even if the jobs themselves are comparable. After all, time spent commuting is time not spent either working or enjoying yourself and your family and friends. And money spent on the overhead of working is money you’re not going to get back.
5. What do you think of the leadership team at each company?
As the old saying goes, people join great companies and quit bad bosses. Chances are that at least the spinoff’s executive leadership team is known. The people who will be backfilling any retained roles at the parent company vacated by those people may also be known or at least short-listed. Check both lists for people whom you know you would love working with, and for ones whom you know would be a challenge to work for.
The last thing you want to do is make a major life and career choice and then almost immediately regret it because you find yourself in a toxic work environment. With all the related changes surrounding both the parent company and the spinoff, the leadership and culture can shift at both places. Whichever choice you make, go in with eyes wide open for the people you’ll be working with and for, as that can make all the difference in your ultimate success and satisfaction.
Whatever your choice, keep your network strong
The fact that you have a choice to go either way indicates that you have in-demand skills that are valued by your current employer and by its spinoff. Keep that in mind once you make your decision, and keep in contact with folks from whichever company you will be leaving behind. The spinoff is a one-time decision point, but it doesn’t have to be the only choice you make.
I’ve personally seen people move as parts of spinoffs who eventually came back to the parent company. I’ve also seen those who’ve clamored to stay with the parent company at the time of the spinoff later choose to join the spinoff. Keep your network strong and don’t burn bridges, and you just might find doors open to you in the future, no matter which option you choose today.