Long story short, we witness an egregious act by an executive at valuable firm within the world. Our firm is one that manages billions of dollars for the wealthy and it is one firm that will continue to exist for a while. We know that this firm is likely to stay smart and effective if it retains the right talent overall.
What is this firm?
The firm is mired in an issue of employees and talent retention. That is an issue that none of us would want to face when we run our own firms.
The director they fired was Michalow.
We also know that Michalow is not going to go away without a fight and everyone is digging in to prepare for this specific issue.
Michalow might have thought about using his new found freedom to hire employees.
Before Michalow could enjoy that freedom, DE Shaw took steps to ask its employees to sign non-compete contracts with the firm, which would stop them from joining a competitor for a set period of time. It also told employees that if they do not sign the non-compete, their employment would be terminated with deferred compensation.
The action raised some eyebrows due to its relation to Michalow. But the firm stuck to the decision and simply maintained that it was standard practice to bring the company in line with conventional hedge funds.
Now that the date has passed, it might be safe to assume that while some employees would have signed the non-compete, some may not have liked to trade in their freedom just like that. Since the information might unfold in the next few weeks, it makes for a very crucial period for DE Shaw depending upon how many employees might have chosen to leave the company.
One thing is for sure: the secretive nature of DE Shaw isn’t doing the firm any good. In today’s day and age, it might just be better for the firm to be clear to its employees rather than playing games with them. It only remains to be seen if the higher-ups realize this before it’s too late.