Yahoo’s Mayer Fails At Performance Management, Again

It hit the news wire last week Yahoo’s embattled CEO, Marissa Mayer, is set to fire 500 lower performing employees.  Sounds all well and good, right?!  It’s about time!  The HR blogging community as a whole kills managers and executives for not moving fast enough on getting rid of under performing employees.  Mayer is finally doing it! Well, not so fast…

From Business Insider:

“The reviews were part of Mayer’s plans to trim the Yahoo workforce “very surgically, very carefully,” according to a source close to the company.

Now, Swisher reports, Mayer is planning to let go any employees who were rated “misses” or “occasionally misses” at least twice during the past five quarters.

Swisher says as many as 500 employees could eventually be effected. She says that some Yahoo employees are already being let go.

Yahoo has many thousands more employees than many industry experts believes it needs to have.”

Here’s what will happen in reality.
Anytime you ‘decide’ to make cuts based on a large group is rated, as Yahoo is doing above, you’ll always end up with rater error.  Hiring managers are going to know what’s going on.  “Oh, so if I rate Timmy “occasionally misses” on completing projects on time, you’re going to make me fire him? No problem, Timmy “never” misses, now.”  What you’ve done is completely take out your managers ability to develop talent through your performance management process.  You’ve decided to use your performance management process as a weapon.  This will not end well.
When you begin down this path, you end up in a death spiral corporately.  You’ve handcuffed your managers’ ability to manage their teams. “Well, I can’t deliver effective performance messages because you’ll just fire the person. So now, everyone is ‘completely’ average or above!”  Even when their not.  You’ve taken away your ability as an organization to get better internally, and driven home the message “You either be a rock star or we will hire a rock star from the outside”.  No longer can you ‘work’ to get better in our environment.  Most people do not want to work in that type of environment.
How should Yahoo handle this issue?
First and foremost you can’t have a ‘black and white’ cut off.  This doesn’t work anywhere!  What is an employee had two “occasionally misses” three quarters ago, but since has been great.  Under your plan, they’re gone anyway.  Does that really make sense?  Ultimately you need to let your individual leaders make these decisions and hold them accountable to the budget.  This is real world stuff, the budget is desperately important in Yahoo’s case.  Leaders get paid the big bucks to make tough decisions.  Make them, make those decisions.  If they can’t, or won’t, you know who really needs to be replaced.
I get it, Yahoo is in a really bad position.  They need to get leaner and they are attempting to do this by letting the weak performers ago first.  I actually admire that.  Way to many companies just layoff based on seniority and end up cutting great talent and keeping bad talent.  This is better, but I think they could have made it even more effective with a little more leadership influence to the decision making process.

3 thoughts on “Yahoo’s Mayer Fails At Performance Management, Again

  1. Using performance ratings to differentiate employees and make decisions about them is perfectly appropriate. Those at the top of the rankings will get a higher investment and those at the lower end a lower (or no) investment. Is it perfectly objective – of course not. But, if you ask every manager at yahoo to rank their employees today independent of their last performance review, I would bet there will be a high correlation between those ranked lowest and those who had the “occasional miss”.

    What’s highly likely is that, like most companies, Yahoo’s performance management system over- rated almost everyone at the company. If you received an “occasional miss” it’s likely that your performance was actually not acceptable but your manager wasn’t willing to tell you that.

    High-performing companies regularly take action on lower performers. It’s unfortunate that we in the HR community aren’t more supportive of driving clear differentiation and action on a regular basis. We should be the ones leading the charge to identify the bottom 10% and either rapidly improve their performance or rapidly move them out. Then CEOs wouldnt have to step in and do cleanup work that we should have done ourselves.

  2. Great post Tim – a concise and irrefutable argument against this type of performance management.

    We can appreciate that Meyer is in a tough position and maybe there isn’t a perfect tool to do the volume of cuts she is looking for, but this approach destroys the ability of managers to manage. The rating system now becomes a precursor for being fired – useless for performance improvement and terrible for morale.

    Love to see a contrary argument for it.

    Keep up the great work

    Hung

  3. Had to pipe in and share my agreement with your take on the practice of basing widespread terminations solely on ratings.

    When was the last time you worked in an organization where EVERYONE was fully calibrated on what constitutes “misses” or “partially achieves” or whatever it might be? In one organization, we factored in the EVP effect – “Oh, if Joe got a 3 from so-and-so, he must be REALLY good.”

    I’m okay with holding people accountable for their performance (or lack there of). But first show me that they were given feedback, the manager worked to help them improve, and no improvement was made .

    You’re right when you say the message becomes “be perfect or we’ll find someone who is.” Maybe that’s why employees tend to mention “development” as a reason for low engagement, leaving, etc.

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