Yahoo needs to seriously cut costs.It has 18,000 full time employees and contractors, and we’ve been hearing from insiders for a while now that it should probably have 10,000 fewer.
New CEO Marissa Mayer knows this, and she plans to fix Yahoo’s cost structure by cutting lots of people.
But she’s not going to do it in a massive, one-off layoff.
One of the Valley’s bigger brains is pretty sure this is a terrible idea.
(We can’t tell you which one, because people in the industry want to remain friends.)
This person writes:
The best metaphor for your Yahoo layoffs story is that it will be as if she is flying Predator drones armed with Hellfire missiles in continuous loops above the Yahoo campus. Every now and then, she’ll press a button and some group in the company will spontaneously explode.
It seems to us that one reason Mayer is avoiding a massive layoff is that she wants to avoid bad headlines and the massive morale implosion that piles of cardboard boxes and lines outside conference rooms can bring.
But as we said yesterday, sniper-style layoffs can degrade morale because employees feel like they will never end, and that they will be next. Sometimes its better to just rip off the band-aid.
Back in 2009, Tim Armstrong cut massive costs at AOL by offering employees who wanted to leave a generous buyout package – called a voluntary separation package or “VSP”
We asked our smart Valley source if maybe Mayer should follow Tim Armstrong’s lead.
This person said no.
“The problem with the buyout packages is that they adversely select — the best people tend to take them. You get paid for quitting with honour.”
“Over-staffing is a complete [drag] no matter how you try to carve it back. [Tech companies should] not over-hire during their growth years but they almost always do.”
“By far the best approach is a single layoff big enough to actually be a one-time event.”
“Almost no CEO actually has the nerve to do that, though.”
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