Yahoo has endured a downward spiral for quite a while now and it’s a combination of vacant leadership and a poor economy. Slimming down to survive is the company’s focus right now, and Yahoo has invented a creative severance package that requires recipients to stay in touch in case the people taking over old roles have questions.

But that’s not the only unique part of the severance package. Yahoo has also added a provision where if laid-off “employees” behave themselves, they can qualify for an additional three to four months of severance pay. That means no bad mouthing and prompt responses to phone calls from survivors still working at the company.

This is occurring in the midst of Yahoo’s search for a new CEO and sets a very cold tone for those still working a the company. Investors won’t be satisfied either considering the company’s stock performance. But then, that’s the trend in most sectors right now.

Yahoo was also recently spurned by Google, who decided that a deal between the two search engine companies would raise too many questions from the government and potentially regulatory actions. Rumors of possible deals with Microsoft and AOL have surfaced periodically as well, but nothing concrete has resolved.

The real shame here is even Yahoo’s significant market share in search, and sprawling technology solutions, the company is struggling to find its way back to innovation and leadership online. Maybe it’s time to consider breaking the company into several smaller parts that are more able to react in a strained market. That’s what Sun Microsystems is considering amidst a slowdown in its enterprise server sales.

It’s interesting that while Yahoo can’t seem to innovate in the Web technology space right now, it’s severance package is pushing the envelope in multiple ways. It’s too bad the business and IT departments can’t take a cue from Yahoo’s HR department.

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Entry was posted on Friday, December 12th, 2008 at 11:01 pm under Internet, Yahoo!.

Read more entries by Matt Jansen.
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