Watching a Talent Management Strategy Destruct in Front of Our Eyes

Jun 19, 2008 Posted by

Watching what has been happening over at Yahoo over the past few months is sad.  It seems every notable blogger in and out of Silicon Valley has been critical of CEO Jerry Yang and board regarding the present (failed merger with Microsoft) and future (vision?) of Yahoo.

Back in May, a good friend, Jeff Nolan, posted a very critical observation of the company based on a meeting he had at their headquarters…

What struck me about the meeting was how little energy there is on that campus, it’s a dreadful place to be, even if just briefly. The other folks in the meeting just went through the motions. I saw the look in their eyes and knew what it meant, that “even though this may be a good idea, it ain’t gonna happen for reasons we have no control over.” In retrospect, I wish they just came out and said that from the get-go, we could have saved everyone’s time.

Fast forward just six weeks from Jeff’s post and what we have seen is literally the company and its executive ranks implode in front of our eyes.  In fact, three additional top executives resigned today.  TechCrunch has even begun to track the departed executives

So why the rapid and dramatic implosion?

  1. Drowning Stock options.  The Microsoft merger, at $38/share, would have been a nice reward to many of the executives sitting on loads of options.  Now that the merger has dissolved , the options are now worth around $22/share (today’s price), a significant reduction in each executives’ net worth.
  2. In-Demand Employees.  Yahoo is a nice brand to have on the resume.  Especially if it has been on there for more than 7-8 years.  Many of the executives are being wine-and-dined by the valley’s venture firms to either lead one of their portfolio companies or take a seat in their offices until they stumble on an idea, or company, to lead.
  3. The Entrepreneurial Itch.  Many of the executives at Yahoo came from one of their acquired companies.  These individuals have made lots of money and are idea creators not managers.

What could Yahoo have done to prevent the detrimental current state?  Good question. The Microsoft acquisition may or may not have helped.  Obviously, though, many of the executives have lost faith in the company and its leadership and it would be naive to think these exodus’ haven’t had an serious, negative effect on the entire workforce. 

What is (or should be) important to Yahoo right now is bench strength.  Since it will be virtually impossible to replace many of the leaders and exiting workforce, the company will be forced to rely on the support of their bench contributors to define the future. 

I guess we will quickly see if Yahoo can quickly adapt their talent management strategy.

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