Scott Thompson, the new Yahoo CEO, held a conference call yesterday to report the first quarter earnings. He became the CEO in January, so it was his first time reviewing quarterly earnings with the shareholders. Since Scott Thompson took over, Yahoo’s stock value has lost 7% of its value. Yahoo, however, was struggling even before Scott became the CEO. Since he took over, Yahoo has not improved and continues to fall behind their competition. He is now being labeled as a struggling CEO.
Yahoo has many companies that are branches of their core business. Under Scott Thompson’s leadership, Yahoo will be shutting down or “transitioning” about 50 Web properties. In addition, Scott’s significant measures to reduce costs included his announcement earlier this month that Yahoo plans to layoff 2,000 employees. Yahoo also plans to have additional layoffs at some point in the near future. At the same time, when Scott Thompson became CEO, he was given the possibility of making $26 million this year if he performs well.
So are layoffs a good leadership decision as a new CEO?
The CEO makes major decisions all the time. The biggest decisions the CEO has to make are those related to cost cutting measures. So where should they cut? Layoffs should be the last resort when it comes to cost cutting measures. If an area of the company is not successful, it would be better to take those employees and use them in an area that is successful rather than lay them off. By doing that, you will maintain employee morale and send a message to the employees that they are the most important asset to the company. You will also benefit by having employees working for the company that already know the policies and procedures and the environment.
Should Scott Thompson layoff 2,000 employees with additional layoffs to come?
There are many factors that go into a decision like that, many of which are unknown to the public. In his situation, he is new to the organization so he doesn’t fully understand the culture. By laying off many employees he will get a lot of kick-back when/if he gets the $26 million bonus. Are there other cost cutting measures that could have been used to save the employees? Could they have done pay cuts instead of layoffs? What are your thoughts?
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