Earlier quoted context omitted.
> No, an ultimatum is a choice between two options; she offered Google a choice, and they selected. Expecting them to try to carve out a 'third way' is just unrealistic. But you're claiming that for a company there shouldn't be a choice, it should just lead to termination.
Well, the company is in slightly different position from the manager. They can abrogate the manager's authority, but that would permanently undermine that individual. On the other hand, they can also choose to accept the subordinate's resignation. They could try to transfer the subordinate somewhere else, but that's also risky, and wouldn't really address the ultimatum in this case. Accepting a resignation achieves t…
In every employment contract there is a balance of things and employee is willing to do and an employer is willing to provide in exchange. If my boss said that they wouldn't pay me anymore I would rightfully respond with an "ultimatum" of "pay me or I quit". That's the ultimatum they respond to every day by paying me; they look at the balance of things I offer, consider what I provide to the company to be adequate, and then give me the money I ask for. The same is true for any ultimatum: you come to the table with one final negotiation; the negotiation of "do you value me? Then you must provide me this". It's an entirely transactional exchange.
Now, ultimatums are general to be discouraged not because they undermine some sort of authority, but because they are a sign that negotiations have broken down on both sides. As a manager, your goal should be to try to reach a compromise far before that point–not only does to hurt your relationship if you don't, even when the ultimatum is "successful" from the point of the employee, but by letting a conflict reach an ultimatum point you're exposing yourself to significant risk and often poor deals. The way to handle an ultimatum is to forestall "pay me x or I quit" with "I'll pay you almost x if you show good performance for the next three months". If you are at the point where the argument is "I'm going to quit" then yes, you may have to carry through with the termination if you think what they provide is less valuable than what they want from you, but you should really be looking at what you did to get to that point instead.