Yahoo Aggressively Prunes Underperformers

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.

Pruning ShearsEmployees 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.

Performance Metrics

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.

4 Responses to “Yahoo Aggressively Prunes Underperformers”

  1. Yahoo! Building a corrosive culture one day at a time. We can only assume that quarterly reviews, and pressure to weed out individuals will make managers more likely to single out individuals for the sake of keeping their own jobs. A fault finding culture, will eventually become full of faults.

  2. And here I thought she was a talented leader. She is adapting the same horrible and abusive system that I was subjected to before I finally had enough and retired. When a large percentage of employees need anti-depressants, and industrial strength sedatives to fall asleep, you have a problem. Wake up witch, all this bad karma and gratuitous cruelty isn’t going to get Yahoo anywhere. If I had any of that stock I’d certainly be selling it now.

  3. I do not work for yahoo and I never did , but I used to use their email. They changed their email system, as you may be aware of it, with an inferior email service. Even after more than 10,000 customers requested their email to switched back to the old version only during the 1st night after they switched, by the morning they just deleted the feedback subject.

    This shows that the management does not even care about its customers opinion! I think the management is new and like a kid who just learn how to drive and wants to show his peers how good he is, he puts metal to the pedal and thinks driving fast is the same as good driving. The only hope is the passengers in the car have a chance to get out of car, before eventual outcome.

    One the biggest tasks of the management is to motivate the people in the company, not to create the environment of fear. In the environment of fear, all the good and creative people who can leave, leave — like the old soviet union under Stalin — and the system will be left with the people who can not leave but wish to and lots of yes man. The disgruntled employees also start sabotaging the company, and that is going to be a big mess!