Yahoo’s Impulsive Firing Strategy

17 Nov

“To all,

I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward.

Carol”

 

Carol Bartz, the former Chief Executive of Yahoo, didn’t mince her words when she informed the 13,000 employees of Yahoo about her termination. Bartz’s abrupt response to the news, conveyed in a two-line email, is particularly unexpected, considering that it came from the CEO of the fourth largest website in the world.

 

Bartz’s termination is not a shocker to me, as Yahoo’s stock remained flat during her tenure. The Board’s lack of discretion, in this instance, attributed to Bartz’s unprofessional reaction. The Board’s decision to fire the company’s CEO over the phone is a perfect epitome of “how not to fire an employee.”

 

While Bartz may be an ineffective leader, Yahoo’s approach of handling the situation can alienate its employees, stockholders and customers, and potentially damage its credibility. Additionally, Yahoo’s public broadcast of interpersonal differences and unregulated internal communication could turn away prospective recruits.

 

Undoubtedly, employee departure is a very unsettling time for both the employee and the employer. Nonetheless, blind-siding the employee during his or her departure is poor business etiquette. At multiple instances, bad communication practices have not only cost companies millions in lawsuits, but also cost them their reputations. Thus, the companies should follow a principled procedure, and allow a face-to-face meeting at the least, when laying-off employees or terminating a position.

http://www.cbsnews.com/8301-501465_162-20102536-501465.html

Follow me on twitter @vrindagaba

by Vrinda Gaba

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One Response to “Yahoo’s Impulsive Firing Strategy”

  1. Daniel Duggal November 20, 2011 at 9:41 pm #

    I think that Vrinda makes a good point regarding Yahoo’s firing of their CEO. A few additionally things that I think have to be kept in mind are the context that this occurred in as well the company politics:
    – Jerry Yang (Founder of Yahoo) has strong control over his board. More importantly, he is very concerned with maintaining that control. That is why the firm has not implemented any strategic changes in over 5 years. To him, any CEO that is not under his guise is a threat.
    – Jerry Yang, as well as the board, were at this time very worried about a very negative quarterly report that was to be released in a two weeks. Thus, they were panicking to some extent and felt they needed to find a scapegoat. Carol Bartz was the optimal scapegoat.

    I think these factors help explain the abrupt, unique firing of Carol Bartz.

    -Daniel

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