If you cut perks, your best and brightest will leave much quicker, the elves leave middle earth. And then your company is essentially screwed, because you'll lose all of your key personnel. And you won't save very much money. This is the way of the bean-counters who know nothing of human motivation and morale. $1000 per employee is less than a percentage of their yearly salary.
If you instead decimate the company, many who survive the culling will be thankful to the company that they are keeping their job, and you'll actually save ~10% in salary costs and future obligations.
(The clever employees who see this coming will leave way before either scenario anyway)
Notice how I phrased it. It's not cost cutting. It's about investing in employees. That is something the "best and the brightest" love.
They are also not very interested in training, because they don't need it. They want to work on cutting-edge projects.
"Training" is something that the poor performers are going to flock to, because it benefits them. Which is the polar opposite of what the top performers want.
Instead, I'll just point you to Deming's work on management. He transformed Japan's post war economy into the powerhouse it is today. He's also responsible for the much of the transformation here in the USA during the 1980'ss & 90's.
Long story short: it's the goal of management to make workers successful. Re-training is the absolute best way of advancing the company.
Cutting perks will gut the company morale.
Re-training on the job is already available at most SV companies of this size. You want it, you get it.
The original article that called out the lavish party was explicitly doing so to paint Marissa as a CEO that spends frivolously, and the author wanted her to move that money from employees to the investors instead.
I wouldn't be so sure. I love a good conference. I don't care much for the content, but the networking opportunities are great. I mostly do trainings to build my "Rolodex;" I feel that this will only help me when I decide on starting my own business (I want to sell something that other businesses will use, and knowing someone inside of a business >>>> cold calling)
Someone remind me again why corporations pay their CEOs over 100m/year? And tell me about value, that's a huge chunk of change for someone in Yahoo!'s position, they could use that money to keep employees working.
Second, CEOs get paid lots of money because the market punishes firms that aren't growing and have no-name CEOs, and the cost of a name-brand CEO is probably more than cancelled out by avoiding that penalty. By the time Mayer was recruited, the market consensus was that Yahoo needed a turnaround CEO. There are no cheap turnaround CEOs for companies managing 4-5B in annual revenue.
Mayer's entire yearly salary is a rounding error compared to the total headcount cost of operating Yahoo, which is widely believed to be both tremendously overstaffed and larded with third-party contractor contracts.
Further, ask yourself: what exactly does it accomplish for Mayer to forego a salary in order to keep 1% (check my math, I might be way off) of Yahoo's workforce employed if that workforce isn't doing anything to improve Yahoo's outlook? Yahoo isn't a charity: everything it's employees do ostensibly have to have some hope of providing a return on investment.
http://thinkprogress.org/economy/2014/06/17/3449737/ceo-pay-...
The real question is: do success rates improve for sinking companies that hire a expensive CEO versus those that keep their existing leadership or hire no-name CEOs?
I skimmed the paper and couldn't find a counter argument, but I didn't understand all the jargon.
It's here in this picture:
http://static2.businessinsider.com/image/566edfb272f2c150028...
It is, however, weird to me that everyone's so quick to blame Mayer for that. She didn't make up the game. The game stays the game. If it wasn't Mayer presiding over the decline of Yahoo --- probably still after acquiring Tumblr! --- it'd've been someone else.
Disagree. If you bought YHOO in mid-2012 before Marissa joined, you'd have doubled your investment by now. I understand there's the option value of having invested in some better stocks, and YHOO's correlation to BABA, but one could still do a lot worse than doubling the investment.
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
If someone offered me a shitload of money to run a sinking ship, I would have taken the job, just as she did. With this level of compensation, she's all set for life, does not need another job ever. But, with her connections and name recognition, she will have no trouble finding one - trust me. It is a systemic problem with boards of directors hiring incompetent (but well-known) executives who keep screwing up one company after another. All about connections.
The decision to keep the BABA chunk versus spinning it off or distributing it to shareholders was CEO's decision, there were other interests at play urging other outcomes.
She still had a handle on the cost structure of the underlying business - expenses related to employee headcount, office leases, new project investments, outsourcing vs keeping things in-house - impacted the stock price to some extent, things could've been much worse.
I think she was set for life well before Yahoo! offer, and in light of recent developments with GOOG her Alphabet holdings might have appreciated at faster pace than her Yahoo! holdings.
Moreover, her decisions are not terribly out of line with her predecessors' decisions - Scott Thompson and Carol Bartz layed off, outsourced and cut expenses as well.
Could she have done a better job? Perhaps. Was she the absolute worst CEO Yahoo! could've landed? Probably not.
Columns from cringely paint a interesting, changing picture over the year http://www.cringely.com/tag/yahoo/page/2/
For the sake of exposition, let's say Mayer makes some $$MM/y, the exact number isn't really important to my point past a certain level, which she most certainly is.
What is she being paid that amount for? Let's explore each of the obvious options I see, and an expected common reaction (Had written logical, but that's not what I meant, since many common reactions are far from logical).
- To restore the company.
This clearly did not happen, if this was her job, she failed at it, and for most "normal people", getting paid that $$MM/y seems very off compared to what we might receive in such a failure.
- To as you say, preside over the decline. (age gracefully)
The argument I'll pose for the anti-Mayer sentiment in this case can be applied more broadly, but is most fitting here. One might expect this sort of role, in parity with firings, would include policies of waist tightening at all levels. I'm not even making a stance for or against these things in this argument, but the press about a slew of very exorbitant and very material benefits when paired beside firing of boots on the ground (again, not taking a stance, just observing the contrasting sentiments) give the _PERCEPTION_ of "let them eat cake", to put it glibly.
- To as you say as well earlier, be a face for the markets.
If we chose this explanation, realize the "figurehead effect" is a two way street. A famous CEO makes markets look positively on the company (is the thesis) regardless of the company, so if a company is doing badly, should not that emphasis also be on the CEO? It seems disingenuous that the CEO gets the credit for success but not for failure. I'm not saying this is logical, but it is consistent to placing significant value on a figurehead.
This last argument is the weakest, given that the markets probably take into account perceived CEO skills as part of "figurehead" status, but the BROADER market (sentiment of the people) likely can't inspect that deeply. So if the financial market loves kingmaking, the people get to see a king, and have their own expectations which do go both ways (in terms of lionizing success c.f. elon musk, and demonizing failure)
At the end of the day, each of these universes results in a very negative sentiment towards Mayer, thus my not being as surprised at that outcome.
She's being paid to take the personal risk of career-ending failure. It's a way for her to hedge the bet she made that she could turn the company around.
This goes for all CEOs, the high salary is not compensation for labour, it's a risk premium the shareholders pay to get someone to take the job. For example, in many jurisdictions, the CEO is personally responsible for certain crimes that employees are committing, e.g. the CEO can go to jail if the company commits tax fraud.
That said, it's also a complete old boys' network and the risk premiums are extremely inflated, but that's nepotism for you.
And I don't really think anything is career-ending for that matter. I mean, look at the mess there was after Carly Fiorina and she's found other things to do.
Your final line re: network/inflated premiums seems to agree with the broader sense of what I was saying, unless I'm misunderstanding?
"The beatings will continue until the morale improves" .... ever heard of that?
Again, I'm not suggesting cost cutting. I'm suggesting a move from frivolous expenses, to those which help make the employees more successful.
As I commented before, Deming was all about training employees over firing them.
The link you posted contains great tips for assembly-line factories filled with replaceable hourly workers. SV is.. not that.
I've been at companies who followed the above and ended first an annual 4th of July party, then scaled back the Christmas holiday party, then started cutting semi-regular, informal, socialization activities over lunches and what not.
There was nothing more damaging to morale at that firm than killing the few times a year we got to have a bit of fun on the company's dime. We worked hard so the CEO could buy another house, and the reward was "no bonuses, no parties this year." I watched the life drain out of that place.
Killing employee morale activities costing millions won't save jobs lost by spending billions or implementing anti-employee policies.
"No more parties. We're going to use the to retrain employees (instead of firing them) and avoid layoffs."
Mayer is turing out to be a terrible CEO.
This article describes the various multi-million dollar parties.
http://www.businessinsider.com/yahoo-ceo-marissa-mayer-blows...