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Everything we learned from Marissa Mayer on how not to run a company

Reuters/Beck Diefenbach
Tough times in Sunnyvale.
By Max Nisen
Published Last updated This article is more than 2 years old.

Yahoo CEO Marissa Mayer created a furor when she ordered the company’s remote workers back to the office in early 2013. But that move was minor compared to some of the deeper management issues at the company, according to an adapted excerpt of Nicholas Carlson’s upcoming bookMarissa Mayer and the Fight to Save Yahoo!, just published in The New York Times (paywall).

Mayer’s quarterly performance review system has caused serious problems, as has her tendency to take on too much herself, Carlson writes. The signs of trouble, previously documented by Kara Swisher at All Things D, include employees complaining on an internal message board about having to bend reviews to a bell curve instead of giving accurate assessments.

Carlson provides more detail:

Mayer also favored a system of quarterly performance reviews, or Q.P.R.s, that required every Yahoo employee, on every team, be ranked from 1 to 5. The system was meant to encourage hard work and weed out underperformers, but it soon produced the exact opposite. Because only so many 4s and 5s could be allotted, talented people no longer wanted to work together; strategic goals were sacrificed, as employees did not want to change projects and leave themselves open to a lower score.

The system created intentional skewing of managers’ assessments, Carlson writes:

One of the uglier parts of the process was a series of quarterly “calibration meetings,” in which managers would gather with their bosses and review all the employees under their supervision. In practice, the managers would use these meetings to conjure reasons that certain staff members should get negative reviews. Sometimes the reason would be political or superficial. Mayer herself attended calibration meetings where these kinds of arbitrary judgments occurred.

“Stack ranking,” where all employees are ranked relative to each other and the number of high scores is numerically limited, has generally fallen out of favor. Microsoft ended the practice, which was a longtime staple of the company’s management culture, last year.

The problems are precisely those Carlson describes at Yahoo. Human performance doesn’t really fall on a bell curve, and trying to force one ends up creating a climate of unhealthy competition and encouraging people who ingratiate themselves with managers—instead of top performers.

Other issues may be related to Mayer taking too much on and failing to delegate. Carlson writes that she has been directly involved in the design of mobile products, has to approve all programming decisions, and insists on reviewing every hire. All that, and she has a previously documented tendency to veer off-schedule.

Carlson describes a particularly galling consequence of that:

Every Monday at 3 p.m. Pacific, she asked her direct reports to gather for a three-hour meeting. Mayer demanded all of her staff across the world join the call, so executives from New York, where it was 6 p.m., and Europe, where it was 11 p.m. or later, would dial in, too. Invariably, Mayer herself would be at least 45 minutes late; some calls were so delayed that Yahoo executives in Europe couldn’t hang up till after 3 a.m. In theory, Mayer kept up with her direct reports through weekly individual meetings. In practice, she often went weeks without seeing them.

It has only been a little over two years since Mayer took the helm, and the company still has a hefty war chest of Alibaba stock. But activist investors are circling the company, and there’s genuine doubt on whether Yahoo has the ability to become the sort of market leading technology company Mayer would like it to be.

Quartz reached out to Yahoo for comment, but we have not heard back. We will update if we do.

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