Yahoo CEO Marissa Mayer isn’t exactly wielding a chainsaw, but she’s using performance reviews as a kind of pruning shears as she aggressively trims underperformers from the company’s workforce.
Employees at the company are apparently finding the pressure to perform is growing, and real. If they score a couple of “misses” or “occasionally misses” on their performance reviews within a 15-month period they may be shown the door, says AllThingsD. Additionally, the website notes that Yahoo uses a complex version of the controversial stack-ranking method employed by General Electric under former CEO Jack Welch.
By Mayer’s own acknowledgment, Yahoo has cut roughly 1,000 employees due to its more aggressive performance reviews. Part of that ramping up: Performance reviews are now given quarterly. Previously, they were conducted on an annual basis.
Yahoo’s reviews are based around four key metrics: culture, calibration, company goals and compensation, AllThingsD says. At the Goldman Sachs investor conference earlier this year, Mayer, according to Forbes, said she’s enhanced company performance by instituting a “quarterly calibration of performance” based on quarterly goals in a move to increase accountability.
Although Yahoo’s stock price has steadily risen since Mayer’s arrival a little over a year ago, its revenues have yet to respond. The company’s third quarter earnings performance was nothing to Yahoo about, with net revenues down 1 percent to $1.09 billion, excluding traffic acquisition costs, compared with a year ago. Net profit, meanwhile, was also down, coming in at 34 cents a share compared with 39 cents a year earlier.
Time will tell whether Mayer will be able to get Yahoo’s financial performance to respond like Welch did with GE. During his 21 years as CEO, Welch pushed revenues to $130 billion from $25 billion and net income soared to $15 billion from $1.5 billion.