Employee Attitudes and Turnover Are Issues at Yahoo!

Marissa Mayer, former vice president of Google Product Search, left the company to become CEO of Yahoo! in October 2012. At that time, Yahoo’s stock was selling for $15.74. In January 2016, it was selling for $29.77, after reaching a high of $52.28 in 2014. Investors were not happy with the drop in revenue—and market share—from 2014 to 2016. Some felt the company’s strategies were lacking and that new leadership was needed. Hedge fund investor Starboard Value LP demanded that the board fire Mayer.⁸¹

Let’s take a more detailed look at what happened at Yahoo!

According to a Dow Jones reporter, “Yahoo’s expenses have risen while revenue has declined in the three-and-a-half years since Mayer took the reins. In the first nine months of 2015, operating expenses totaled $3.9 billion, up 20 percent from the same period in 2014. During that same time, revenue excluding commissions paid to search partners dropped 4 percent to $3.09 billion.” Yahoo! also has been cutting costs via layoffs. The head count in 2016 was 10,700, down from a peak of 14,000 before Mayer arrived.⁸²

It is estimated that 33 percent of the workforce left the company in 2015. A CNBC reporter noted that Mayer’s concern about brain drain led her to approve “hefty retention packages—in some cases, millions of dollars—to persuade people to reject job offers from other companies. But those bonuses have had the side effects of creating resentment among other Yahoo! employees who have stayed loyal and not sought jobs elsewhere.”⁸³

Even more troubling is the manner in which some of these layoffs were executed. In 2014, “managers called in a handful of employees each week and fired them,” recalled one reporter. “No one knew who would be next, and the constant fear paralyzed the company, according to people who watched the process.” In March 2015, the situation got worse. “Mayer told the staff at an all-hands meeting that the bloodletting was finally over. Shortly thereafter, she changed her mind and demanded more cuts.”⁸⁴

In January 2016, Mayer jokingly told employees at a company meeting that “there are going to be no layoffs ‘this week.’” Insiders say these types of comments are eroding employee morale and leading to the exodus of key employees.⁸⁵

Key human resource decisions and policies likely contributed to poor employee work attitudes and turnover. The first was the company’s decision that employees could no longer telecommute. The head of human resources at the time, Jackie Reses, said, “We need to be one Yahoo!, and that starts with physically being together.” She defended the decision by stating, “Some of the best decisions and insights come from hallway and cafeteria discussion, meeting new people, and impromptu team meetings.” Reses believed that telecommuting hurt the company. “Speed and quality are often sacrificed when we work from home,” she said.⁸⁶ But the decision also created bad press for the company.

A reporter noted, “The new rule didn’t just frustrate Yahoo employees who were directly affected, it also set off a fair amount of debate and criticism on Twitter from entrepreneurs, tech company employees and journalists who cover the industry.”⁸⁷ This in turn likely created a negative impact on Yahoo!’s ability to recruit highly talented employees.

The second human resource decision was Mayer’s implementation of the quarterly performance review (QPR) system. This process allegedly led to the firings of more than 600 people in 2013. The system works by first having managers rank their employees into five categories, each with a quota: greatly exceeds expectations (10 percent of employees), exceeds (25 percent), achieves (50 percent), occasionally misses (10 percent), and misses (5 percent). Two “misses” ratings in recent quarters can result in termination. Many managers see this system as a forced curve, though Mayer contends the rankings instead serve as guidelines.

Anonymous postings on an internal message board suggested that managers did not agree with Mayer. Here is what one manager had to say:

“I was forced to give an employee an occasionally misses, [and] was very uncomfortable with it. Now I have to have a discussion about it when I have my QPR meetings. I feel so uncomfortable because in order to meet the bell curve, I have to tell the employee that they missed when I truly don’t believe it to be the case. I understand we want to weed out mis-hires/people not meeting their goals, but this practice is concerning. I don’t want to lose the person mentally. How do we justify?”⁸⁸

Other employees felt the system was vulnerable to human bias and was not fairly applied across levels of management. One commented:

“Will the ‘occasionally misses’ classification apply to L2 and L3 execs also? At every goals meeting, we find Page 76senior staff who missed even the 70 percent goals. Thus, by definition, they should be classified as ‘occasionally misses.’ Two such classifications, and that person should be let go, amiright? How about we set an example for the rest of the company and can a few of the top execs who miss (or who sandbag their goals to make sure they ‘meet’)?”⁸⁹

Employees have become even more fearful of the process given the number of layoffs.

Sadly, employee morale does not appear to be improving. Surveys conducted by Glassdoor revealed that “only 34 percent of Yahoo!’s current employees foresee the company’s fortunes improving. That compares to 61 percent at tanking, scandal-struck Twitter and 77 percent at Google.”⁹⁰

Another issue that may be causing feelings of inequity involves Mayer’s compensation package. “Executive pay at Yahoo! is essentially based on Alibaba’s stock price,” which is outside her control: Yahoo! has a 15 percent stake in Chinese web giant Alibaba, valued at $25.7 billion. “Of Mayer’s $365 million pay over five years, only 3.3 percent will actually be affected by her performance.”⁹¹ This policy goes against the common managerial practice of paying people for their performance.

So where does this leave Mayer and Yahoo! as a whole? Broadly speaking, threats of layoffs continue. The company, which lost $4.4 billion in the last quarter of 2015, announced it would lay off 15 percent of its workforce in 2016.⁹² Under pressure from investors such as Starboard Value LP, Yahoo sold its core business to Verizon Communications Inc. for $4.83 billion in 2016. The sale included Yahoo’s e-mail business, websites dedicated to news, finance, and sports; advertising tools; real estate; and some patents. It does not include “Yahoo’s cash or its shares in Alibaba Group and Yahoo Japan. After the deal closes, these assets will become a publicly traded investment company with a new name.”⁹³

APPY THE 3-STEP PROBLEM-SOLVING APPROACH TO OB

Step 1: Define the problem.

Step 2: Identify causes of the problem

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it, Which recommendation is desirable and feasible?

Use this case study to answer the questions below.

CASE CHAPTER 1: INTRODUCTION TO RESEARCH THE LAROCHE CANDY COMPANY

In 1864 Henricus Laroche started making high-quality chocolate in his kitchen in Ooigem, Belgium. Henricus learned his trade at a famous chocolate shop in Paris, and he and his wife began to make chocolate in bars, wafers and other shapes soon after Henricus had returned to Belgium to start his own business. The Belgian people loved Laroche’s chocolate and the immediate success soon caused him to increase his production facilities. Henricus decided to build a chocolate factory in Kortrijk, a nearby city in the Flemish province West Flanders. With mass-production, the company was able to lower the per-unit costs and to make chocolate, once a luxury item, affordable to everybody. The Laroche Candy Company flourished, expanded its product lines and acquired related companies during the following decades. Within a century the company had become Belgium’s leading candy-manufacturer employing over 2,500 people. Today, The Laroche Candy Company is one of the biggest manufacturers of chocolate and non-chocolate confectionery products in Europe. Under the present leadership of Luc Laroche the company has become truly innovative. What’s more, the company has adopted a very proactive approach to marketing planning and is therefore a fierce competitor in an increasingly global marketplace. The number of products the company produces and markets has increased dramatically; at this moment there are more than 250 Laroche Candy items distributed internationally in bulk, bags, and boxes. Luc Laroche, born in 1946, is the fifth generation of his family to lead The Laroche Candy Company. He is the great-great-grandson of company founder Henricus Laroche and the current Chairman and CEO of the company. But Luc is nearing retirement. He has planned to stop working in two to three years. Whereas stepping back from power is a very difficult thing to do for a lot of people, it is an easy thing to do for Luc: He is looking forward to spending time with his grand-children and to driving his Harley Davidson across Europe. What’s more, he has never found the time to play golf, and he is planning to spend “three whole summers learning it” if necessary. And yet, even though ‘letting go’ is not a problem for Luc, he still has his worries about his imminent retirement. As in most family businesses, Luc’s two children spent their share of summers working for the company. Luc’s oldest son Davy has repeatedly worked for the accounting department whereas Davy’s younger brother Robert has infrequently worked in the field. However, they have never shown a serious interest in the business. Davy, who is 35, currently works as an associate professor of management accounting at a reputable university in Belgium. Robert, aged 32, lives in Paris and has been working as a photographer for the last ten years. About twelve years ago, Robert told his dad, "I know you'd like me to come in the business, but I've got my own path to travel." Luc recalls responding that he respects that and that he does not want Robert to feel constrained; “I just want you to be happy” is what he has told Robert on that particular occasion. Ever since this conversation with Robert, Luc has put his hopes on Davy. A few days ago, Luc has invited Davy to have dinner at the famous restaurant “In de Wulf” in Dranouter, Belgium to discuss the future of the Laroche Candy Company. He wants to talk about his retirement and a succession plan for the company with Davy, who has serious doubts about taking over the company. Davy knows that for his dad the company is his life and like his dad, he wants the company to be successful in the future; but he just does not know whether it is a good idea to take over from his father. In an effort to maintain a balanced perspective on the issue, Davy has done some research on it. Hence, he has become very familiar with statistics about the failure rate of family transitions. These statistics have triggered numerous concerns and fears about taking over the company from his father. Luc and Davy discuss the future of the company during a memorable dinner in Dranouter. Luc tells Davy that he wants his son to take over the company, but Davy explains that he has qualms. He brings up his doubts and fears and alternatives such as going public, selling to a strategic acquirer or investor, or selling to employees through an employee stock ownership plan. Luc hardly listens to Davy’s concerns and strikes a blow for family business. “History is full of examples of spectacular ascents of family business,” he said after the waiter has refilled his glass for the fourth time in just over an hour, “the Rothschilds, the Murdochs, the Waltons, and the Vanderbilts, to name only a few. The Rothschilds, for instance, not only accumulated the largest amount of private wealth the Western world has ever seen, they also changed the course of history by financing kings and monarchs. Did you know that they supported Wellington’s armies, which ultimately led to the defeat of Napoleon at Waterloo? I bet you didn’t.” Davy raised an eyebrow. “I didn’t. But what I do know”, he replied, “is that only fifty years after the death of Cornelius Vanderbilt, who created a fortune in railroads and shipping, several of his direct descendants were flat broke. Apparently the Vanderbilts had both a talent for acquiring and spending money in unmatched numbers.” Davy leaned in closer toward his father. “Seriously dad, I do believe that strong family values are very important but I also feel that they may place restraints on the development of the company. It is commonly known that familism in Southern Italy is one of the main reasons for the slower economic development of the south relative to the north.” Luc sighed and looked at his son. “So, what does this all mean?” “Well, I think that the key question is whether family firms evolve as an efficient response to the institutional and market environment, or whether they are an outcome of cultural norms that might be harmful for corporate decisions and economic outcomes”, Davy replied with a gentle smile. “Don’t you think so?” “I … um … I guess I do.” Luc smiled back at his son. “I am not sure that I understand what you mean, but it sounds great. Let’s throw some money at it and hire a consultant who knows something about this. I’ll call McKinsey first thing tomorrow morning. Cheers.” “Cheers dad”, Davy echoed lifting his glass. Two weeks later, Paul Thomas Anderson, a senior McKinsey consultant, put forward the following problem statement in a meeting with Luc Laroche: What are the implications of family control for the governance, financing, and overall performance of the Laroche Candy Company?

QUESTIONS

1. What is business research?

2. Why is the project that Paul Thomas Anderson is doing for The Laroche Candy Company a research project?

3. Which steps will Paul take now that he has clearly defined the problem that needs attention?

4. Luc Laroche has decided to hire an external consultant to investigate the problem. Do you think that this is a wise decision or would it have been better to ask his son Davy or an internal consultant to do the research project?

5. What can (or should) Luc do to assist Paul to yield valuable research results?

6. How can basic or fundamental research help Paul to solve the specific problem of The Laroche Candy Company?

7. Try to find relevant books, articles, research reports and this issue. Use, among others, electronic resources of your library and/or the internet.

A report described teens' attitudes about traditional media, such as TV, movies, and newspapers. In a representative sample of American teenage girls, 42% said newspapers were boring. In a representative sample of American teenage boys, 45% said newspapers were boring. Sample sizes were not given in the report.

(a) Suppose that the percentages reported had been based on a sample of 50 girls and 60 boys. Is there convincing evidence that the proportion of those who think that newspapers are boring is different for teenage girls and boys? Carry out a hypothesis test using

α = 0.05.

(Use a statistical computer package to calculate the P-value. Use p_girls − p_boys. Round your test statistic to two decimal places and your P-value to four decimal places.)

State your conclusion.

We fail to reject H₀. We have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

We fail to reject H₀. We do not have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.    

We reject H₀. We have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

We reject H₀. We do not have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

(b) Suppose that the percentages reported had been based on a sample of 2050 girls and 2800 boys. Is there convincing evidence that the proportion of those who think that newspapers are boring is different for teenage girls and boys? Carry out a hypothesis test using

α = 0.05.

(Use a statistical computer package to calculate the P-value. Use μ_girls − μ_boys. Round your test statistic to two decimal places and your P-value to four decimal places.)

State your conclusion.

We fail to reject H₀. We have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

We fail to reject H₀. We do not have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.   

We reject H₀. We do not have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

We reject H₀. We have convincing evidence that the proportion of girls who say that newspapers are boring is different from the proportion of boys who say that newspapers are boring.

(c) Explain why the hypothesis tests in parts (a) and (b) resulted in different conclusions.

You are much less likely to get a difference in sample proportions as large as the one given when the samples are very large.

You are much less likely to get a difference in sample proportions as large as the one given when the number of boys vs. girls sampled are far apart.   

You are much less likely to get a difference in sample proportions as large as the one given when the number of boys vs. girls sampled are close together.

You are much less likely to get a difference in sample proportions as large as the one given when the samples are very small.

How does the role of the community/public health nurse differ from other nursing roles when educating clients (individual vs. population level health education) Suggest specific strategies that the community/public health nurse will use to address population health education issues.

Book Community/Public Health Nursing: Promoting the Health of Populations, 6th edition.

In general, if p is the number of predictor variables and k is the number of groups for the outcome variable in a DA, how many different discriminant functions can be obtained to differentiate among
groups? (This question assumes that the X predictor variables have a determinant that is nonzero; that is, no individual Xi predictor variable can be perfectly predicted from scores on one or more other X
predictor variables.)

Discuss with your classmates some possible economic effects of the healthcare legislation (original Affordable Care Act) passed by Congress. Some of its major provisions are listed and discussed in your textbook. Focus on the major provisions of the act, understanding that since the textbook was published, Congress has abolished the individual mandate. This is not to be a gripe session or an opinion session, but an evaluation of the provisions from an economics perspective.

9.) Write a MATLAB script that will read the Pressure and Temperature columns from the provided Excel file. Use a loop to calculate the linear best fit line for the data. You may only use the built-in functions sum, size, and length. Plot both the individual data points (red) and the fit line (blue) on the same graph. Include a title and axes labels.