When Marissa Mayer took over as president and CEO at Yahoo! Inc. (YHOO), investors were eager to see what the Google alum was capable of. However, Mayer has failed to steer the failing Internet company in a brighter direction, and many blame the decline of Yahoo stock on her mismanagement.
That negative outcry grew a little louder on Wednesday, as YHOO announced that fourth-quarter revenues missed, earnings only matched Wall Street estimates and that the company suffered an overall net loss of $4.44 billion thanks to a goodwill impairment.
Moreover, the company said it was cutting workforce by 15%, listening to offers for its core assets and also planning to spin off core assets.
The news sent Yahoo stock down 6%, bringing YHOO’s losses to some 40% over the past year. Investors are calling for Mayer’s head, and they have a few good reasons.
Here’s a look at Marissa Mayer’s worst management missteps during her three-and-a-half-year tenure at the helm of Yahoo:
Banning Telecommuting
Just seven months after Marissa Mayer was given the role of CEO, she set to work changing the company’s corporate culture. Her first major management decision was to do away with the company’s remote workers.
In February 2013, Mayer oversaw a personnel change that required the firm’s many remote workers to come into the office or find another job. Many praised Mayer’s decision, saying it was a good way to cut down on the workforce without conducting mass layoffs and that forcing remote staff to come to the office would increase productivity.
While both of those things may have been true, Marissa Mayer’s decision to eliminate telecommuting did very little to foster trust between management and employees.
In fact, the new human resources policy did the exact opposite, causing many to resent Mayer — especially since she had recently installed a brand new nursery next to her office in order to care for her newborn son during working hours, which the typical Yahoo employee isn’t capable of.
Destructive Employee Feedback
Another of Marissa Mayer’s management shortcomings was her disastrous effort to improve Yahoo’s employee evaluation system.
Mayer implemented a quarterly performance review (QPR) system that forced employees to be ranked between 1 and 5, with only a certain number of 4s and 5s available to each team.
That meant talented employees didn’t want to work together on a team, and many were reluctant to shift focus to a new project for fear of getting a lower score. When employees complained about the process and asked that Mayer address their concerns at a company-wide meeting, she complied but diverted the focus of the meeting by reading a children’s book that she said symbolized her experience at Yahoo so far.
Now, her ranking system is being put to the test as a former employee is taking Yahoo to court over the QPRs. This week, former Yahoo editor Gary Anderson filed a lawsuit in a California Federal District Court alleging that the ranking system was easily manipulated by senior managers and that the firm was firing people without any just cause.
Anderson claims that Marissa Mayer cut 1,100 employees in a matter of months — something which would normally require Yahoo to give those workers advanced notice. However, under the guise of a performance review, the company was not required to give any notice before trimming its “underperforming” employees.
If the rating system is found to be arbitrary, Yahoo could be forced to pay hefty fines and ex-employee compensation at a time when the firm is already strapped for cash.
Poor Decisions
Marissa Mayer is well-known for her affinity for using quantifiable data to make decisions regarding technology products.
The same cannot be said of her decision-making skills in other areas like staffing.
In 2013, Yahoo found itself producing a video series called “Katie’s Take” in which Katie Couric interviewed experts on topics like parenting and health. The videos received very little attention, but Mayer still decided to sign Couric on as Yahoo’s “global anchor,” paying the former newscaster over $5 million per year.
Meanwhile, other Yahoo execs said that Mayer was against hiring successful blogger and cookbook author Gwyneth Paltrow as an editor for Yahoo! Food despite her growing following because Paltrow didn’t hold a college degree.
Katie Couric’s contract was just a drop in the bucket of bad hiring choices for Mayer — she also quickly hired Henrique De Castro as chief operating officer soon after taking over at Yahoo despite several warnings about him being a poor fit for the job. She was later forced to let him go after just 15 months due to his inability to get along with other senior execs and failure to make any positive contributions to Yahoo’s ad business.
De Castro ended up doing very little to earn the rumored $109 million that he cost to hire.
Any Hope?
Of course, some argue that Marissa Mayer is simply doing the best with the hand she was dealt. When she took over at Yahoo, the company was already on a downhill trajectory; the question is whether she’s accelerated that decent or simply held on for the ride.
Now, Yahoo stock investors are more concerned about how to effectively break the company apart and whether Yahoo’s core business is actually worth any money at all than whether or not Mayer will ever deliver on her pledge to revive the troubled firm.
Mayer, who joined the YHOO team on promises to turn the company around, is now fending off calls to put the firm up for sale and turn over the reins to new management. Despite her efforts to convince investors that it isn’t time for the company to surrender just yet, much of the public has lost confidence in her ability as a leader — a good indication that her days are numbered.
As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities.
