Yahoo Does Layoffs, Should its CEO be First?

This time of year is a very difficult because if a company is having problems its executive management is financially motivated to do layoffs. This is because they can take the related costs against revenues in the current year and create a better financial foundation for the following quarter.

However, the employees are put under massive stress, both those being laid off and those remaining, and the end result may be the inability to turn around the company anyway. In short the behavior in this quarter really separates the CEOs who understand people and are leaders from those that do not and simply manage humans as if they were another asset.

They aren’t and let’s explore that this holiday season.

The Vietnam/Zulu Lesson

Back when I was doing my graduate and undergraduate work in manpower management we spent a lot of time studying successful and unsuccessful military officers as examples of good and bad leadership. The lesson that has stuck most firmly in my head was that of war in Vietnam, a war in which the officers were asked to perform as managers and treat the soldiers underneath them as assets.

Management was by the numbers and battles were fought against acceptable losses. The officers generally stayed behind the lines in safety and there is little surprise that the term “fragged” was popular and fragged was what often happened if one of these officers got close to the lines -- they were shot by their own people. It wasn’t a successful war even though it was between what was the strongest army of that time against a relatively small and underfunded portion of vastly smaller country.

A generation or so before this the then strongest army, belonging to the British Empire, faced off against the Zulu nation. This was rapid-firing guns against spears and yet the Zulu’s won a decisive victory largely because that army was using management techniques rather than leadership at the time as well. In that case it was the guys handling the ammunition that got shot by their own guys.

While being swarmed by thousands of pissed Zulu warriors, soldiers had to fill out requisitions for ammunition that was kept in anchovy-like containers and there were few keys. This was done to keep ammunition costs down.

There are actually two decent movies on this Zulu Dawn which showcases the failure of the superior British force and their slaughter, and Zulu which showcases how a vastly smaller and better led group actually won against overwhelming odds shortly thereafter.

The clear lesson is the good leaders can overcome incredible odds, while excessive “management” can offset the strongest advantages.

There is a lot of military precedence for why you lead rather than manage and this goes to the core of why Yahoo is failing.

Yahoo vs. Best Buy

You really see the difference between how Yahoo and Best Buy are being run this week. Yahoo is clearly on this “management” kick while Best Buy’s CEO is demonstrating leadership.

Even though Best Buy had a disappointing quarter last quarter their CEO is praising his employees for the great work they did, while Yahoo is doing layoffs. The end result is that Best Buy will be in better shape come the new year and execution during the critical end of year sales will be better. Yahoo will be struggling to restore employee and investor confidence yet again and after so many failures to execute there is a finite limit to trust. Yahoo may have crossed that limit with both groups.

At the core of this was a clear mistake by Yahoo’s board in their selection of a CEO. Carol Bartz came from a sustaining CAD/CAM company, which is a unique market selling to a very professional type of customer. You likely would find it difficult to find a market farther removed from Yahoo’s consumer-focused portal advertising-funded market and still remain in the technology segment. This would be like hiring a good oral hygienist to do major surgery on a critically injured elephant and the result would be no better than this one.

The end result is Bartz is currently ranked as the most overpaid underperforming CEO by Glass Lewis & Co. but a lot of the reason is due to her being the wrong person for the job. Best Buy’s CEO is playing more the role of a leader, taking the blame for the poor performance while crediting his employees for the great work they did. Best Buy is clearly struggling with online sales and Amazon is doing better as a result but this isn’t because the store employees didn’t step up and he isn’t letting them take the blame for it.

In-store customer satisfaction and other stats are up sharply and that demonstrates that these employees stepped up and he is giving them credit for that. That’s leadership and while Best Buy will still need to address its online competitive issues its CEO isn’t exacerbating the problem by creating in-store issues as well.

Wrapping Up: Learn from Good and Bad Examples

As an industry we seem to forget regularly that managing and not leading employees ends badly and folks like Mark Hurd get to CEO positions and act like a cancer in firms, trading short term financial performance for the long term health of the company and its employees.

I’m a firm believer that a good part of a CEO’s job is to ensure the loyalty and effectiveness of his or her employees and you don’t do that by betraying them with year-end layoffs. Today Brian Dunn gets credit for being a great leader during a difficult period while Bartz once again earns her underperforming status. I think this is a lesson we all should take a moment to understand this holiday season.